Wheat consumption will hit a record despite soaring prices because of a dearth of alternatives in Russia, the International Grain Council said, as it made a further cut to its estimate for the world crop.

The influential intergovernmental group slashed by 7m tonnes, to 644m tonnes, its estimate for global wheat output in 2010-11, leaving production on track to fall by 33m tonnes year on year.

The revision reflected in the main the drought in the former Soviet Union, the key driver behind July's jump in wheat markets, but also "adverse weather" in Australia, where dryness in western areas has curbed yield prospects.

Despite wheat prices remaining elevated, the council lifted its estimate for world wheat consumption by 2m tonnes, deepening to 13m tonnes the production shortfall, as Russia's burgeoning livestock industry struggles to source feed supplies.

"Although recent high prices have reduced projected feed use of wheat in parts of Asia and the European Union, this is more than outweighed by an increased forecast for Russia," the IGC said.

Indeed, Russia's overall wheat consumption would hit 49.7m tonnes, 6m tonnes higher than previously forecast, because of demand from livestock farmers who had "limited supplies of other feed ingredients, including barley".

'High side of expectations'

Nonetheless, Russia was set to remain a wheat exporter, of 3.5m tonnes, a considerable fall year on year but enough to outpace purchases abroad of 1.0m tonnes and avoid the country returning to the fold of net importers.

The estimates came as the US Department of Agriculture unveiled weekly US wheat sales of 1.08m tonnes, more than 100,000 tonnes more than analysts had expected.

"This morning's [USDA] report surprised to the high side of expectations," broker Benson Quinn Commodities said, flagging that Egypt, the world's biggest wheat importer, featured high on the list of buyers, with purchases of 136,000 tonnes.

'Lost the cushion'

At rival broker US Commodities, president Don Roose highlighted the drop to 184m tonnes in the IGC's forecast for world wheat stocks at the close of 2010-11, reflecting the supply shortfall.

"It's started to get to an area where we are starting to watch," he said.

"The bottom line is that we have lost a big cushion, and we have to be careful from now on," he added, noting the potential for further hiccups from further dry weather in Western Australia and Argentina, or an early spring frost in Canada, where the crop is about two weeks behind in its development.

The reports were credited with helping spur a 1.4% jump to $6.56 � a bushel in Chicago wheat for September.

In Europe, Paris wheat for November finished 1.1% higher at E216.25 a tonne, with London's feed wheat lot adding 0.5% to �148.00 a tonne.