GLOBAL wheat prices are likely to remain subdued in the short term, following the release of a report showing world stocks will climb further this year.
The US Department of Agriculture's May crop report has forecast world wheat stocks to grow by another five million tonnes this year to 198.1 million tonnes, a 2.4 per cent rise on 2009-10 stock levels.
That falls just short of the wheat stock record of 204.3 million tonnes, set in 2000-01.
In its first forecast for the 2010-11 grain crop, the USDA has estimated the global wheat harvest to be 672.2 million tonnes, 7.8 million tonnes smaller than the 2009-10 harvest but still the third largest crop on record, behind the past two harvests.
World wheat consumption has been tipped to rise to 667.5 million tonnes, a substantial increase from the 651.7 million tonnes consumed last year, but not enough to start eating into the massive global stocks.
Chicago Board of Trade prices hardly reacted to the forecast, with July contract prices remaining relatively unchanged at $US4.93/bushel, or $A203/tonne, after the report was released.
But by the end of last week, CBOT prices had plunged to $US4.72/bushel, or $A197 /tonne.
CBH wheat trading manager Chris Brown said the large wheat stocks were likely to mean depressed prices for Australian farmers in 2010-11.
"This is the second year of the bear cycle," Mr Brown said.
"Wheat prices have come under extended pressure.
"Plantings (in the northern hemisphere) haven't reacted to the low prices.
"There will be at least another year of flat prices."
The USDA's opening estimate for the Australian crop is 22 million tonnes.
The US winter crop area is estimated to be 8 per cent lower than in 2009-10.
Overall, the USDA is forecasting a US wheat crop of 55.6 million tonnes this year, well below the 60.3 million tonnes harvested last year.
Canadian growers are also expected to produce less wheat this year, with the USDA tipping a 24.5 million tonne crop, two million tonnes less than last season.
Good growing conditions in Europe will see EU countries lift wheat production by 4.5 per cent, to 145.1 million tonnes.
In contrast, production in former Soviet Union states is likely to fall 5.6 million tonnes, to 108.1 million tonnes.
The world's largest wheat producer, China, is expected to produce a slightly smaller crop this year, at 112 million tonnes.
The USDA is forecasting a record global corn crop of 835 million tonnes, an increase of 26.5 million tonnes from 2009-10, the previous biggest crop.
