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UPDATE 1-Biotech wheat could slam U.S. wheat prices -report

* European Union and Japan opposed to biotech wheat

* Lost exports could send U.S. spring wheat down 40 pct (Adds comments)

CHICAGO, Jan 27 (Reuters) - U.S. wheat prices could fall by 40 percent or more if industry efforts to develop a biotech wheat succeed, according to an industry report issued on Wednesday.

The report, issued by the Western Organization of Resource Councils, a farmer and rancher group, cited persistent opposition to genetically modified wheat in Europe, Japan, and other Asian countries. It said buyers in those countries probably would shift purchases away from the United States, if a biotech wheat was commercialized here.

The price of U.S. hard red spring wheat would fall 40 percent, the report predicted, and the price of durum wheat would drop 57 percent.

“Introduction of genetically modified wheat in the United States is a risky proposition,” said the report’s author, industry consultant Neal Blue, a former research economist at Ohio State University.

Any biotech wheat is still years from commercialization as companies like Monsanto Co MON.N, Dow DOW.N AgroSciences, and others research various improvements to the crop through genetic modifications and other means.

Monsanto, a leading developer of corn and soybeans genetically altered to tolerate herbicide treatments and resist pests, backed off a plan to commercialize herbicide-tolerant “Roundup Ready” spring wheat in 2004. At the time, the industry feared the new wheat would hurt U.S. export business.

Monsanto said last year it was starting a new biotech effort focused on making wheat plants more drought tolerant, more efficient in the use of nitrogen and higher yielding.

U.S. wheat acres have been declining in recent years as farmers shift to more profitable crops. Several wheat industry groups have asked Monsanto and rival seed companies to develop better wheat seed.

Currently no biotech wheat is grown on a commercial scale anywhere in the world due to opposition from consumers and food industry players.

The report issued Wednesday said consumers in the European Union and Japan remained opposed to biotech wheat, and labeling and traceability requirements would make it difficult to sell genetically modified wheat there, the report said.

“Some in the wheat industry seem intent on pushing genetically modified wheat,” said Todd Leake, a wheat farmer and member of the Dakota Resource Council. “This report strongly suggests they should be very cautious and listen to the customer.”

U.S. Wheat Associates President Alan Tracy said the wheat industry was working to improve international acceptance of biotech wheat in advance of commercial introductions, which are still several years away.

“The U.S. wheat industry has pledged to our customers that we will continue to supply them with the products they need,” said Tracy. “U.S. wheat growers generally recognize that, if our industry is to prosper, we need to take advantage of technological changes, and that to feed 9 billion people by mid-century, the farmers of the world need to do so as well.” (Reporting by Carey Gillam; Editing by David Gregorio and Walter Bagley)