International Grains Council analysts lifted hopes for grain supplies in 2011-12, despite setbacks to Argentine and Brazilian crops, coming near to ditching expectations for a production shortfall.

The intergovernmental group raised by 14m tonnes to 1.830bn tonnes its forecast for the world harvest of grains including barley, corn, rice and wheat.

That left the figure only 1m tonnes short of consumption - compared with estimates earlier in the season of a 16m-tonne deficit.

"The global grains outlook eased somewhat… as crop estimates for wheat and corn were revised upwards, notably in China," the influential group said.

Indeed, the new figures took the stocks-to-use ratio, a key pricing metric, for world grains above 20%, with the data implying world inventories equivalent to last 74 days of use, tight on a historical basis, but signalling easier stocks than earlier in the season, when the world was looking at reserves equivalent to 68 days' use.

'Still on for records' 

The IGC acknowledged the widespread concerns that "hot and dry weather has cut yield prospects" for corn in Argentina and Brazil, where it highlighted a "worsening outlook".

However, both countries are "still expected to produce record crops".

And, with China and Ukraine enjoying "especially large" crops, the IGC added 8m tonnes to its estimate for the world harevest, and cut its forecast for the production deficit in the grain to 6m tonnes.

On the consumption side, growth in world feed demand for corn was, at less than 3%, set to come in "below the recent average", while thanks to "flatter ethanol demand, global industrial use is forecast to expand less quickly than in recent years".

Wheat prospects

For wheat, the IGC lifted by 7m tonnes to a record 690m tonnes its forecast for the world harvest in 2011-12, citing "better-than-anticipated results in the southern hemisphere, especially in Argentina and Australia".

The extra supplies fed through into a stocks upgrade of 4m tonnes, leaving carryout inventories for 2011-12 at 204m tonnes, only 2m tonnes lower than the 1999-2000 record, on IGC estimates.

And production is set only to see a small decrease in 2012-13, to 685m tonnes, underpinned by a rise in sowings, but factoring in less generous ideas for countries such as Australia which enjoyed unusually benign conditions the previous season.

The estimate for sowings was kept at 225m hectares, the highest since 1998, and a 1.7% increase from 2011-12.

"Most of the increase [in area] is expected in North America and the former Soviet Union, boosted by attractive domestic and international prices."