Nov. 18 (Bloomberg) --Wheat and corn advanced after the United Nation’s forecast that harvests will lag behind demand, tightening global supplies. The March-delivery wheat contract gained as much as 1.4 percent to $6.81 a bushel in Chicago and traded at $6.8075 at 12:20 p.m. Singapore time. March-delivery corn rose as much as 1.8 percent to $5.4875 a bushel before trading at $5.47. Global output of cereals, including wheat and corn, will drop to 2.216 billion metric tons in the 2010-2011 season from 2.263 billion tons a year earlier, the U.N. Food and Agriculture Organization said in a report yesterday. That’s less than the estimated demand of 2.254 billion tons, the FAO said. “We believe the crop size for next year will be critical in setting the tone for stability in international markets,” said Ker Chung Yan, an analyst at Phillip Futures Pte. Production shortfalls, caused by weather events including the severe drought in Russia and Ukraine “negatively influenced the outlook for global cereal supply,” the U.N. agency said. “Rarely have markets exhibited this level of uncertainty and sudden turns in such a brief period of time.” Global wheat output will drop 5.1 percent to 647.7 million tons in the 2010-2011 season, less than the estimated demand of 668 million tons, the FAO said. Soybeans for January-delivery rose 0.6 percent to $12.1450 a bushel in Chicago at 12:21 p.m. Singapore time. Vegetable-oil inventories will be equal to 13.2 percent of demand, “a critically low level,” the FAO said, adding that stockpiles of oilseed-meal will fall to 16.4 percent, it said. Oils are crushed from oilseeds including soybeans, rapeseed and palm kernels, and what’s left behind is the meal mixed in livestock feed. To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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