The International Grains Council said it lowered its estimate of world wheat production for 2010/11 by 13 million metric tons, to 651 MMT -- but that's still the third largest crop on record.

Wheat production in 2009/10 was estimated at 677 MMT, IGC said.

Wheat carryover stocks were cut to 192 MMT, down from 201 MMT in the June estimate and 197 MMT last year. The 2009/10 stocks were an 8-year high, IGC stated. Stocks held by major exporters remained unchanged at 50 MMT (well above the 31 MMT in 2007/08).

In the corn, IGC cut world production 1 MMT to 823 MMT, which will still be record high, compared to 805 MMT a year ago. Carryover corn stocks are estimated at a 4-year low of 134 MMT, down 3 MMT from last month and below the 140 MMT last year.

"Wheat futures in the U.S. reached their highest levels in over a year with considerable speculative activity, but export values nevertheless became increasingly competitive against other origins, with this year's ample availabilities likely to spur a sharp recovery in foreign sales," IGC said in comments on its website.

In comments about the outlook for 2010/11, IGC said drought is cutting northern hemisphere wheat and barley production and prompting a downward revision in feed use forecast. Corn feed use is expected to rise, but growth in industrial use of corn will again outstrip the rise in feed use, IGC said.

Reduced wheat trade is about equal to the increase in corn trade, IGC stated. "Offsetting the expected reductions in exports by Russia and Ukraine are significant increases in shipments forecast for the U.S. and Argentina, with global availabilities remain ample."