Wheat prices, which stand near an eight-month low in Chicago, are at risk of further falls thanks to ample supplies and the ferocity of Black Sea exports, the United Nations has said, raising its estimate for the global harvest.

World wheat stocks are set to ease in 2010-11, as livestock farmers take advantage of low prices and utilise greater quantities of the grain in feed rations, the UN's Food and Agriculture Organisation (FAO) said.

In the European Union, feed use will top 58m tonnes, consuming one wheat grain in every 12 that the world produces.

However, the decline in inventories will be insufficient to put a squeeze on supplies built up by strong harvests over the past two years, and with another one in the offing.

'Downward pressure'

"Total wheat supply in 2010-11 will be more than adequate to meet anticipated demand," the FAO said.

This pressure was being exacerbated by the growing presence on export markets of the Black Sea grain producers who were, bar Ukraine, which will see a decline in production, set for another year of brisk trade.

Even in the EU, whose competitiveness on export markets has been helped by the collapse in the euro, "large surpluses in the Black Sea region are dampening prospects for very strong increases" in shipments.

Furthermore, the Black Sea's performance "could contribute to a further drop in international prices".

Higher hopes

The comments came as the FAO raised by 1.2m tonnes to 676.5m tonnes its forecast for world wheat production in calendar 2010, while failing to outline reasons for the change.

Consumption would also rise, by 12.2m tonnes to 675.0m tonnes, lifted by feed use and growing demand from bioethanol plants.

Nonetheless, inventories would remain sufficient to keep the stocks-to-use ratio at 29.0%.

This ratio is a key measure of market tightness, which in turn is a big determinant of prices, and stood at 22.5% as prices spiked two years ago.