Wheat: More "Turmoil" or "Unwarranted"?

from Agrimoney.com:

The United Nations warned over the world's dependence on "erratic" Black Sea wheat as it cut its forecast for the world crop by 15m tonnes, injecting extra zest into the grain's renewed rally.
Wheat for November delivery closed at two-year highs in both Paris, where it finished up 2.3% at E209.00 a tonne, and London, where it ended 2.3% higher at £151.50 a tonne.
Chicago wheat for September hit $7.30 a bushel, a fresh 22-month high for a spot contract.
The rises reflected continuing concerns about Russian wheat exports, and followed a cut to 651m tonnes in the UN Food and Agriculture Organisation's forecast for the global crop.
The FAO attributed the revision to the "devastating drought" in Russia, and lower harvest forecasts expected for its Black Sea neighbours Kazakhstan and Ukraine, adding that the shortfalls "raise the likelihood of higher wheat prices compared to the previous season".
Furthermore, the drought threatened problems for winter grain plantings, "with potentially serious implications for world wheat supplies in 2011-12". Russian farmers usually begin sowings for next year's harvest in the last half of August.Indeed, the "turmoil" in wheat markets caused by the woes of the former Soviet Union trio illustrated the perils to importers of depending so heavily on the region.
"The turmoil… is evidence of the growing dependence on the Black Sea region, an area renowned for erratic yields, as a major supplier of wheat to world markets," the FAO said.
The US Department of Agriculture describes Kazakhstan and Russia's Volga Valley, which has been particularly badly hit by drought, as zones of "risky agriculture". Kazakhstan is prone to droughts two out of every five years.

Tender results
The UN's warning came as Russia won its second tender in a week to supply wheat to Egypt, the world's biggest importer of the grain, and is set to supply 180,000 tonnes at prices of $252-270 a tonne, excluding freight.

Jordan also bought 50,000 tonnes of Black Sea wheat, at $297.92 a tonne, including freight.

However, analysts have warned against interpreting tender victories early in 2010-11 as a sign that Russia's wheat supplies are deeper than had been feared, saying they may just reflect long held stockpiles, and the relatively strong, and early, harvest in southern areas nearer to ports.

Latest data from Russia's farm ministry showed the grain harvest falling behind last year's at this time, even thought an extra 2.4m hectares has been harvested.

The average yield was 2.22 tonnes per hectare, lower than the 2.32 tonnes per hectare reported as of July 29, as combines swept into areas worse affected by drought. The year-ago figure was 2.78 tonnes per hectare.

'Fears unwarranted'

The FAO added that, despite the production problems in the Black Sea and Canada, where farms received too much rain, the wheat market was "far more balanced" than in the run up to the last price spike, in 2007-08.

Furthermore, the booming global economic conditions, and bottlenecks in supplies of other crops, such as rice, which fostered price rises then were "not posing a threat so far".

"Fears of a global food crisis are unwarranted at this stage," the organisation said.