World wheat production is likely to shed 5 percent to 647 million tonnes next season, against a record 682 million tonnes harvested in 2008, due to a drop in area sown, US analyst AgResource told Reuters on Wednesday.

"I'm forecasting a 30 to 35 million tonnes decline in global wheat production largely because of lower seeding," AgResource President Dan Basse said at the GlobalGrain2008 conference in Geneva. He gave Reuters a detailed estimate on the sidelines.

AgResource's estimates, like those released by the US Department of Agriculture, include soft wheat and durum output.

Basse did not provide detailed estimates for the US, Russian or Australian crops but forecast the European Union wheat output would shed 8 million tonnes at 142 million, which would lead to a slight drop in exports in the 2009/2010 season.

Ukraine was seen harvesting a 22 million tonnes crop, down from 25.5 million tonnes in 2008, due to a drop in sowings.

Australia, which suffered a severe drought last year that slashed its wheat crop, contributing to the rally in prices, was expected to see its wheat harvest recover this year.

"We don't have an abundant wheat supply globally even though we may have large turnovers in some countries individually," Basse told the conference.

The world produced a record high wheat harvest in 2008 as farmers, attracted by the surge in prices, increased sowings. This lead to a collapse in global prices, amplified over the last months by fears that a recession would slash grain demand.

The world's benchmark price, the front-month contract on the Chicago Board of Trade futures market, closed at nearly $5.3 per bushel on Tuesday, weighed down by dull demand and spillover pressure from a fall in crude oil and stock markets.

But the analyst warned that prices remained fragile and that volatility would continue to prevail.

"If we have a weather problem next year in wheat, we need to remember that we don't have a cushion to cover ourselves," he said, pointing to tight global stocks despite a hefty crop this year as global demand continued to increase.

"It does not take much to shift the scale from wheat being a $4 to $5 (per bushel) commodity to being a $9, 10$ or $11 commodity in a very short period of time."    

Unforeseeable events left aside, Basse said he expected the "bull market" to return around February, March next year as investors regain confidence and take account of rising demand in fast-developing countries and a still expanding biofuel sector. -Reuters