The International Grains Council cut its estimate for world corn and wheat stocks, to below much-watched US estimates, citing further crop damage from the round of weather woes now threatening Australian crops.

The intergovernmental group trimmed its forecast for world corn inventories at the close of 2012-13 to a six-year low of 118m bushels, citing a 4.9m-tonne downgrade to its forecast for the European Union crop.

And it cut its forecast for season-end wheat stocks by 5m tonnes to 175m tonnes, thanks to further downgrades to production in the EU and Russia, and Australia, which is close to starting its harvest of a crop which has, like many in the northern hemisphere, been tested by dry weather.

The production and inventory data were for both crops lower than those that the US Department of Agriculture produces, and which are closely watched by markets.

And they leave the world looking at total grains stocks at the close of 2012-13 at their lowest in five years.

Key dynamic

On one crucial score, grain inventories will end the season even tighter than in 2007-08, a season in which tight supplies drove prices to record highs which, in Chicago wheat, still stand, with the front contract topping $13 a bushel in February 2008.

"The outlook for the major exporters is becoming increasingly tight," the IGC said.

This figure is important as it is only these grains that are readily available to the world market, with India and, especially, China rarely exporting significant amounts from their large stockpiles.

'Barley market particularly tight'

And on the important measure of stocks-to-use, which in rating a crop's availability gives an indication of its price potential, grain inventories will end 2012-13 at 18.4%, down 1.8 points year on year.

Five seasons ago, as grain prices rallied, the stocks-to-use figure was 18.1%.

Besides the squeezes in corn and wheat, "the barley market is also particularly tight as stocks have declined for three consecutive years", the council said.

Wheat area to rise

The data came hours after the US revealed that its own inventories had started 2012-13 at less than 1bn bushels, and well below market expectations, an announcement which sent corn futures up their daily limit in Chicago.

While the council failed to put a figure on its estimate, the percentage equates to an extra 4m-5m hectares.

US farmers are widely expected to sow potentially 2m acres more corn for next year's harvest.