Australian officials flagged the risk posed by India to wheat prices even as they came in with a lowball forecast for world inventories of the crop, and hiked forecasts for values of the range of grains and oilseeds.

The Abares commodities bureau hiked to $350 a tonne, from $260 a tonne, its estimate for the average price of hard red winter wheat as offered for export in US Gulf of Mexico ports.

"This forecast reflects an expected fall in the supply of wheat in major exporting countries, particularly in the Black Sea region, and expected strong demand for feed wheat in the US and China," the group said.

The upgraded price is equivalent to some $9.50 a bushel, well ahead of the value that Kansas hard red winter wheat futures were pricing in on Tuesday, of $9.05 a bushel for December delivery and a small premium, to $9.19 a bushel, for holding on until March.

Wheat futures on Tuesday managed a small rebound from the sharp drop in the last session and, indeed, the grain proved among the stronger agricultural commodities in early deals, helped by data showing US farmers slightly behind the pace with autumn sowings of the crop.

'Downside risk'

However, Abares highlighted as a "downside risk" to its price forecast "the potential for a significant volume of wheat to be exported from India", after the country's government in September 2011 lifted a four-year old ban on shipments, and has continued to signal a willingness to trade.

Abares said that while India "is not typically a major exporter of wheat", its shipments "are forecast to reach around 5m tonnes in 2012–13", helped by a succession of strong harvests.

Exports at this level would approach the 5.7m-tonne record set nine years ago, besides potentially exceeding the US Department of Agriculture figure of 4.5m tonnes.

Abares flagged the rise in India's state-held stocks of the grain to 47.5m tonnes as of the start of last month, more than twice the government target.

Feed wheat use

The Abares price estimates factored in forecasts for world stocks at the close of 2012-13 of 169m tonnes, well below the 176.7m tonnes expected by the US Department of Agriculture and a forecast of 180m tonnes by the International Grains Council.

Consumption of feed wheat in China, which the USDA sees staying stable, "is expected to increase in line with a forecast increase in livestock production in that country", Abares said, foreseeing a notable increase in the US too.

Forecasts raised

The bureau also raised its forecast for the average US corn price, as at Gulf ports, in 2012-13 by $74 a tonne to $318 a tonne, and of feed barley, as measured in the French port of Rouen, by $44 a tonne to $292 a tonne.

"These forecast price increases are driven mainly by severe drought conditions in the US and dry seasonal conditions in the Black Sea region, leading to a reduction in coarse grains supply in 2012–13," Abares said.

In oilseeds, the bureau hiked its forecast for average soybean prices in the Dutch port of Rotterdam by $140 a tonne to $655 a tonne.

"This forecast increase reflects an expected decline in US soybean production and considerably lower carryover stocks caused by a fall in soybean production in 2011–12."