Global wheat production during the 2012-13 crop year is forecast to fall to 649.30 million metric tons from 695.69 million tons a year earlier, a prominent U.S. commodities analyst said Wednesday.

Dan Basse, president of AgResource said grain markets have decoupled from world economic woes, which is characteristic of a supply-driven bull market, and added that moving forward, China's demand for grain shows no signs of slowing.

The analyst added that he feared that extreme weather conditions will persist in 2013, a key factor for the future direction of grain market prices.

In countries such as Russia and Ukraine exporters oversold available grain stocks this year, he told a conference in Geneva.

"As a result of restricted FSU (Former Soviet Union) trade, North America must supply world grain importers in the first-half of 2013 and Latin America afterwards," said Mr. Basse.

Mr. Basse warned that European Union export licenses are growing at a very fast rate and this leaves limited stocks to be sold to nations seeking to import wheat. "I believe export sales must slow," he said, especially as FSU exports are already exhausted.

The U.S. and Canada will set the world price direction for wheat in the first-half of 2013 since U.S. soft red winter wheat is the world's cheapest, said Mr. Basse.

Write to Neena Rai at neena.rai@dowjones.com

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(END) Dow Jones Newswires

November 14, 2012 05:26 ET (10:26 GMT)