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FAO Sees Bigger 2010 Grain Crops, Price Pressure

World cereals output is expected to rise this year to near-record highs, swelling overall supplies and putting pressure on already weakened prices, the UN’s food agency said June 3.

The global wheat output is forecast to fall for the third consecutive year, but at 676.5 million tonnes it would still be close to 2008 record levels, the Food and Agriculture Organization (FAO) said, raising its earlier forecast for 2010.

Overall cereals output is seen rising 1.2 per cent to 2.280 billion tonnes on the back of a 1.4 per cent gain in coarse grains output, the FAO said in its Food Outlook (www.fao.org),trimming both earlier forecasts based on the latest data.

A 0.9 per cent fall in wheat output this year is expected to be almost entirely offset by larger opening stocks, but stocks are expected to drop one per cent to 194 million tonnes at the end of the season in 2011, the agency said.

“Against the backdrop of an economic slowdown in many countries, this generally favour-able wheat supply outlook is likely to maintain downward pressure on internat ional prices,” the FAO said in its report.

Competition between major producers is seen heating up as all are expected to have large supplies, but European exporters may benefit from a weaker euro against the U. S. dollar, the Rome-based FAO said.

However, a large surplus in the Black Sea region is likely to put a lid on a surge in EU exports, it said.

Maize output is expected to rise to 835 million tonnes from 815 million tonnes with likely record crops in the United States, the world’s biggest producer and exporter.

Maize prices are seen coming under more pressure from brimming supplies of alternative feed, including wheat, meals and distilled grains.

Global sugar output is expected to rise 3.5 per cent to 156.3 million tonnes in the 2009-10 marketing year, the report said, but forecast a deficit of 6.3 million tonnes.

Early estimates for 2010-11 show that sugar output is likely to rise sharply due to higher sugar cane plantings as farmers benefit from higher prices and lower fertilizer costs. That could lead to a small surplus for the first time since 2007-08.

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