Global corn inventories to decrease further in 2011-12

World corn production is expected to set a new record, but unless yields are exceptionally high, a second consecutive drop in world supplies is projected, according to the International Grains Council (IGC).

The influential intergovernmental group, in its first outline forecast for the forthcoming corn season, said that production was likely to beat the all-time high of 813 million tonnes set in 2009-10.

"Given initial planted area assumptions and, assuming trend yields, larger corn harvests are forecast in several key producers, including the US and China," the council said.

However, with demand "strong", the increase in production may not be enough to rebuild supplies, currently heading towards their lowest for four years.

Unless yields are exceptionally high, corn availabilities are projected to remain tight, with closing stocks set to fall for a third successive year.

The comments came minutes after the USDA forecast that corn stocks in America, the top producer of the grain, would rise by a "modest" 190 million bushels to 865 million bushels, staying below the psychologically important 1 billion-bushel mark for a second season.

The USDA forecast reflected in part greater expectations for corn consumption by ethanol plants, which the IGC also flagged in lifting by two million tonnes its estimate for industrial use of the grain in current 2010-11 season.

For wheat, the IGC lifted by two million tonnes to 672 million tonnes its estimate for the 2011-12 world harvest, leaving it second only to the record 2008 crop. Nonetheless, with consumption also rising, global wheat supply and demand is projected to be broadly in balance.