MILAN (Reuters) - World wheat prices are set to be high and volatile in the coming months but they are not yet threatening to trigger global food inflation, an economist at the UNs Food and Agriculture Organisation said on Friday. Expected wheat output shorfalls in drought-hit Russia, the worlds third biggest wheat exporter last year, and prospects of export curbs in neighbouring Ukraine have set international grain markets on fire in the past couple of months. We are coping with this problem (of output shortfalls) this year by taking on inventories... As inventories shrink, we are going to have even more volatility than we do today, FAO economist and cereals analyst Abdolreza Abbassian told Reuters in a telephone interview. The current conditions will prevail for some time to come, until we have firm information about production prospects in 2011, usually it means until April-May next year, he said. The FAO is set to cut its 2010 world wheat output outlook by 5-7 million tonnes from a previous forecast of 651 million tonne and trim global wheat stocks estimate by a couple of million tonnes to take into account Russias shortfalls, Abbassian said on Thursday. Wheat output in the drought-ravaged Russia is likely to fall to 42-43 million tonnes in 2010, about 20m tonnes down on 2009, he told Reuters Insider on Friday. Last year Russias total grain harvest was a bumper 97 million tonnes. If bad weather continues in Russia and hits other major producers in the northern hemisphere who are getting ready for winter plantings campaign, next seasons global wheat supplies would be at risk, he said. But such a possibility is very small at present because weather conditions appear to be improving in Russia, he said. Surging wheat prices are likely to prompt farmers around the globe to sow more wheat for the next season, creating a theoretical possibility of a wheat glut, he added. NO INFLATION RISK YET As long as price surges are limited to wheat it does not pose a threat of global food inflation, Abbassian said adding to previous comments that a protracted wheat rally may eventually push food prices higher. To talk about food inflation when the bulk of the increase is in wheat is a bit too early, he said on Friday, pointing also to a global economic context of deflationary pressure. However, countries where food accounts for a great part of inflation index, for example India , may see a risk of food inflation, he said. FAOs food price index, a measure of monthly changes in international prices of a basket of food commodities, is set to be higher in August than in July when it hit a 5-month high and is likely to keep rising in the next 2-3 months, Abbassian said. The index rise in August will be driven by cereals, sugar and vegetable oils and fats, he said. Abbassian brushed off a recurrent idea of creating global grain stocks as a means to ensure stable supplies and rein in prices volatility as not practical. Who is going to control them? who is going to pay for it? none of these (issues) are clear. No single country will take a responsibility for it and no institution has a capacity to do that, he said. Instead, exporting and importing countries should select top level food representatives to tackle eventual crisis situations just as finance ministers and central bankers deal with turmoil on financial markets, he said. People ... who could get together with counterparts in other countries and talk about how they can solve problems. Just doing that will help (calm markets), he said.