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EU leading revival in world wheat prospects - UN

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The European Union may drive a recovery in world wheat production in 2013-14, the United Nations said, even as it lifted by 20m tonnes estimates for the latest global grains harvest too.

"Early prospects for 2013 cereal production point to increased world wheat output," the UN's food agency, the UN Food and Agriculture Organization, said.

"Contributing largely to this outlook is an estimated 4-5% increase in the winter wheat area in the European Union where, additionally, winter wheat conditions have been generally favourable so far."

The EU, as a region, is the world's top wheat producer, ahead of China and India.

Other estimates

The 4-5% rise in EU winter wheat area - a figure which an FAO spokesman confirmed to related to sown rather than harvested acres - would appear more generous than some other commentators have factored in.

Strategie Grains has pegged the overall EU overall wheat sowings - spring and winter, and including the durum variety used to make pasta - rising by 3.1% to 26.5m hectares, while the International Grains Council has foreseen a 3.2% rise.

Winter wheat accounts for the majority of EU sowings.

France, the EU's top wheat producer, has estimated that its overall soft wheat area - that is, excluding durum - will rise by 1.6% to 4.87m hectares.

Winter wheat sowings in the UK, the bloc's third-ranked wheat grower, are believed to have dropped by at least 10% as the tail end of the country's second-wettest year on record prevented field work.

World picture

The FAO also highlighted that prospects are "satisfactory" in Russia and Ukraine, where winter plantings had remained in line with the previous year's levels.

"Moisture conditions are somewhat improved" in the region, except for areas of southern Russia, an important source of export supplies, which was worst affected by drought last year.

And prospects are "reported favourable" in China, boosted by a higher minimum purchase price which has encouraged seedings, the FAO said, in comments which contrast with fears from some other observers earlier in the winter of potential damage from unusually cold temperatures.

"In India, plantings are around last year's good level, and another bumper crop is in prospect," the organization said, raising the drought-hit US as the exception to the upbeat picture.

Price risk remains

The comments came as the FAO raised by 20m tonnes to 2.30bn tonnes its estimate of world cereals production in 2012-13, including a 2.6m-tonne upgrade, to 662.0m tonnes, in the figure for the wheat harvest.

The main uplift was in ideas for corn output, in China and the Black Sea.

Nonetheless, with the agency raising also its estimate for world grains consumption, it made only a small upgrade to its forecast for world grain stocks at the close of the season, and cautioned over the potential still for price spikes.

"Given the tight supply situation, weather remains an important determinant of prices," Abdolreza Abbassian, the FAO senior grains economist, said.

"For several cereals, production needs to increase significantly this year in order to avoid unexpected price surges."

On FAO measures, world cereals prices dropped 1.1% last month, "mostly reflecting improved crop conditions", although overall food prices stayed flat, lifted by a recovery in palm oil values "on account of fresh import demand".


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