Wheat is the most vulnerable of the major crop to price falls in 2011-12 - and thereafter - thanks to its small use in making biofuels, Australian officials said.
Sowings of wheat, coarse grains and oilseeds will grow by 3-4% in the season, as high prices encourage farmers to bring less productive land into production, crop bureau Abares said.
However, while the extra production will work to depress prices of all three crop types, wheat will suffer most, with average values in 2011-12 falling 19% below those in the current season, with "increased supplies forecast to outweigh a rise in demand".
Prices of corn, the benchmark coarse grain, and oilseed bellwether soybeans will be supported by faster-rising demand, largely from the biofuels plants swallowing an ever-greater portion of output.
Both corn and soybean prices will average 10% less next season.
Industrial factor
Already, the amount of US corn, the world's biggest crop, used in making bioethanol has risen sixfold to 125m tonnes over the last decade.
For vegetable oils, largely soyoil and palm oil, world industrial use has more than tripled to 33m tonnes over the same period, "increased markedly as a result of government policy in European Union countries, as well as Argentina, Brazil, Malaysia and the US", Abares said.
"The industrial use of vegetable oils is expected to continue to rise because of biodiesel mandates in these countries," the bureau added, forecasting a further increase in demand for corn by bioethanol plants too.
This will bring long-term support for prices too, with corn averaging some 18% less in 2015-16 than this season, and soybeans values falling by one-quarter.
Wheat prices will fall by one-third over the same period.
Deficit, or surplus?
Abares forecast a world wheat crop of 675m tonnes this season, thanks to increases in all major growing countries except the US, which enjoyed especially strong yields in 2010-11.
The estimate, which pegs output 5m tonnes higher than world consumption, is markedly more optimistic than a forecast from the Canadian Wheat Board on Monday of a 653.3m-tonne crop, insufficient to meet demand.
Abares placed the world coarse grains crop at 1.15m tonnes, a 6.1% rise, with oilseeds output expected to increase by 5.2% to 467m tonnes.
The bureau was more upbeat than US Department of Agriculture forecasts revealed last week on prospects for the American soybean crop, pegging it at 97m tonnes, or 3.56bn bushels, some 200m bushels higher than the USDA guess.
On corn, Abares forecast a US crop of 344m tonnes, or 13.15bn bushels, about 600m bushels less than the USDA is counting on.
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