Reuters / Food prices have eased slightly but this year’s droughts in key producer regions from the Black Sea to the U.S. Corn Belt are keeping cereal stocks at low levels, says a new report from the United Nations’ food agency.

“This season’s world cereal supply-and-demand balance is proving much tighter than in 2011-12 with global production falling short of the projected demand and cereal stocks declining sharply,” the report by the Food and Agriculture Organization stated.

Wheat production, which has also suffered heavily in the droughts in eastern Europe and central Asia, was seen falling 5.5 per cent to 661 million tonnes, the agency said. The Black Sea drought is set to cut wheat output in Russia and Ukraine by some 30 per cent, while Kazakhstan will see its crop down by more than half.

On wheat, FAO noted that levels were close to the average of the past five years and it said plantings in major producing regions next year would match or even increase over levels seen in 2012, pointing to a rise in production next season.

However, senior FAO economist Abdolreza Abbassian said the forecast was still very tentative and there would have to be a strong rise in production next year to ease pressure on prices.

“We’re not coming out too strongly on what we think about 2013 production — it’s just too early and speculative.”