Australian officials have slashed their forecast for world wheat prices - predicting, unlike some other commentators, a rise in stocks - in a report which warns that a smaller harvest will not lift the barley market either.

Wheat price will average $180 a tonne in 2010-11, Abare, Australia's commodities bureau, said cutting $16 a tonne from its initial forecast and implying a $29-a-tonne slump in prices year on year.

The estimate reflected a higher hopes for world production, which Abare estimated would come in at 658m tonnes, 2m tonnes higher than initially expected, although it was not clear that the data had been adjusted for recent concerns of a slump Canadian sowings due to heavy rain.

Consumption, meanwhile, would remain relatively static, with low wheat prices not having "any significant influence" on food use of the grain.

And use as a livestock feed was also set to remain "largely unchanged", thanks to "ample supplies" of alternative grains.

Looser market 

"It is expected that world production will exceed consumption for a third successive year," Abare said.

The increase would raise stocks by 6m tonnes to 202m tonnes, lifting inventories as a proportion of consumption to 31%.

The stocks-to-use ratio for wheat is a key metric of the availability of supplies, which in turn has a big influence on prices, falling to 20% between 2006-08, when prices spiked.

Softer barley 

This abundance of other grains would hold back barley prices too, despite a drop of 7m tonnes in global production to 141m tonnes.

"Because of the greater availability of feed alternatives such as corn and wheat, world barley prices are forecast to average lower in 2010-11," Abare said.

The fall in output would be lead by the European Union, the top-ranked producer of the grain, where sowings will fall by 7% to 13m hectares, hastened by the removal of intervention support.

Plantings will be lower in the Black Sea states too, thanks to weak prices, with Russia's crop set to fall by more than 10% to 16m tonnes.

Abare trimmed its estimate for the indicator price for coarse grains - corn, free on board in the US Gulf - by $4 a tonne to $153 a tonne.