Australian officials have slashed their forecast for world wheat prices and predicted a rise in stocks.

Abare, Australia's commodities bureau, said wheat price will average US$180 a tonne in 2010-11, cutting US$16 a tonne from its initial forecast and implying a US$29-a-tonne slump in prices on-year.

The estimate reflected higher hopes for world production, which Abare estimated would come in at 658 million tonnes, two million tonnes higher than initially expected, although it was not clear that the data had been adjusted for recent concerns of a slump Canadian sowings due to heavy rain.

Consumption would remain relatively static, with low wheat prices not having "significant influence" on food use of the grain, Aber said. The use of wheat as a livestock feed was also set to remain largely unchanged due to "ample supplies" of alternative grains.

"It is expected that world production will exceed consumption for a third successive year," Abare said.

The increase would raise stocks by six million tonnes to 202 million tonnes, lifting inventories as a proportion of consumption to 31%.

The stocks-to-use ratio for wheat is a key metric of the availability of supplies, which in turn has a big influence on prices, falling to 20% between 2006-08, when prices spiked.