The United Nations lowered the bar on hopes for the Argentine wheat harvest, and countered upbeat hopes for Canada too, as it downgraded forecasts for world production.
The UN's food agency, the Food and Agriculture Organization, slashed by 5m tonnes its forecast for world production in 2014-15, taking it to 705m tonnes, but reducing the gap with less generous figures from the likes of the International Grains Council and the US Department of Agriculture.
The estimate for the rebound stocks over 2013-14 was near-halved to 6.8m tonnes, with inventories expected to close the season at 163.3m tonnes.
The downgrade reflected largely a cut to 9.5m tonnes in the estimate for the crop in Argentina, the southern hemisphere's second-ranked exporter, well below the IGC and USDA estimates of 12.0m tonnes.
The FAO warned that even its current forecast "may not materialise due to dry weather in recent months".
'Severe crop losses'
However, the FAO also warned of damage elsewhere in South America, where it flagged "severe crop losses due to frost in Brazil and Paraguay", a factor which has boosted local prices besides contributing to the recovery in world wheat futures.
Wheat flour prices in Argentina and Bolivia have soared more than 80% year on year, as of August, and hit a record in Brazil which, following frost damage to its own crop and "the disruption of Argentina wheat exports", has "switched to importing wheat from the US, becoming the second most important US wheat buyer this year".
And the agency also cautioned over ideas of a strong Canadian crop too, saying that "prospects for the 2013 wheat harvest have deteriorated with late summer heat and moisture stress, especially in Saskatchewan, which accelerated ripening and likely reduced yields".
The FAO stuck with the Statistics Canada estimate of 29.2m tonnes, which is due for revision on Friday, when many observers believe a far higher figure could be in the offing, with Rabobank on Wednesday, predicting the crop at a record 34.0m tonnes.
However, while official data on the wheat have continued to indicate strong yields, some other commentators have urged caution, with Gail Martell at Martell Crop Projections noting that "August was incredibly dry with no rain in Saskatchewan's northern wheat districts.
"A late summer heat wave further stressed wheat."
The FAO's revisions come at a sensitive time for wheat markets, which have seen prices hit multi-month highs on both sides of the Atlantic thanks to ideas of resilient demand, from the likes of Brazil and China, at a time when supply prospects have been compromised by weather setbacks.
"The projected increase in wheat import demand is expected to be met largely by higher exports from the former Soviet Union countries, while shipments from Australia and Argentina are likely to decrease," the agency said, nudging its forecast for world wheat trade in 2013-14 higher to 141m tonnes.
Russian exports were pegged at 14.5m tonnes, well below the USDA forecast of 17.0m tonnes, but a little above the IGC figure of 14.1mm tonnes.
Rains have reduced in particular the volume of quality Russian wheat up for grabs, with the FAO noting the rainfall in the Volga and Central regions of the country "is a concern for fieldwork and may limit plantings in affected areas" too.
The comments came as the agency revealed that world food prices had continued to fall last month, despite the more buoyant wheat markets, with an index falling 1% last month to 199.1, dropping below 200 for the first time in three years.
The drop reflected the tumble in prices of corn and rice, with values of many other food commodities, including dairy, meat and sugar, showing small rises.