Wheat inventories may be put on course for a 23% drop in the US, and America's corn stocks shown heading for a 14-year low, in fresh benchmark estimates for world crops.

Most analysts believe the US Department of Agriculture will, in its latest monthly flagship report on global crop supply and demand, cut estimates for America's corn yields this year, and stocks of both grains at the close of 2010-11.

However, Rabobank analysts believe the report, due later on Friday, will cut the estimate for wheat inventories at the close of the year by 200m bushels (5.4m tonnes) to 750m bushels.

The bank sees the corn inventories forecast being sliced by 360m bushels to 950m bushels (24.1m tonnes), the lowest figure since 1996-97.

With corn use some 30% higher than 14 years ago, the estimate implies a significantly tighter market, which Rabobank believes is the reality following the devastation that drought has wrought on crops in the former Soviet Union.

Room for revisions 

"The USDA has significant room to cut its grain production forecasts for 2010-11," Rabobank analyst Luke Chandler told Agrimoney.com.

"Exports and probably production in Australia are too high. The estimate for Argentina is probably 2m tonnes too high."

Wheat stocks in all major exporting countries, of which America is the biggest, will be run down, rationing demand and spurring demand for other grains - of which corn is the natural alternative for feed.

"It is possible that something could crop up, like Russia liquidating its poultry. But that does not look likely," he added.

Too quick to ripen

The comments come amid waning hopes for US yields, with analysts seeing the USDA as cutting its corn yield estimate by about 2 bushels per acre, from last month's 165.0 bushels per acre – an unusual dynamic.

Only once in the last six years has the USDA cut its yield forecast between August and September – in 2006, making a 2.5 bushels-per-acre reduction, said Darrell Holaday at US broker Country Futures.

However, the potential for this crop had been curbed by hot weather which had accelerated its maturation, Roy Huckabay, a principle at Linn Group, said.

Furthermore, the heat had reduced crops' weight simply by drying them out, he said, pointing to a harvest in Ohio where moisture levels had come in at 13.5% compared with a standard 15.5%.

"Just there you have lost two points on your crop," he said.

Daring downgrade? 

The observations are being borne out in early harvest results, which many traders have said are not improving fast as had been hoped as combines roll in more northern states from the drier south.

Indeed, with crops ripening fast, and harvest progressing apace, some observers believe the USDA will have the evidence for a bold revision.

"The one thing that is unusual is the maturity this year, and that is why there is the belief that the USDA will have more information for the September report compared to normal," Mr Holaday said.