THE WORLD grains markets took a big hit this week after an announcement by the US Department of Agriculture that a much better harvest than expected has been achieved for both grains and oilseeds.

The upshot of that was tremors and falls throughout the market across the world, according to Rabobank, a bank which is tied to agriculture and which has specialist exeprtise in analysis of the industry.

The USDA reports that global supplies of the major grains and oilseeds markets are more plentiful than previously anticipated, and Rabobank says that the market has been ‘shocked’ by upgrades to US corn yield to a record level.

Combined stocks of these three major crops are now estimated to jump 3% in 2009/10 to their highest level since 2001/02. Importantly, these stocks of 365m tonnes will be 22% higher than recorded in the 2006/07 season, when grain and oilseed prices spiked to record high levels.

US corn production estimates have been increased by 230m bushels to a record 13.15bn bushels, reflecting a 300,000-acre increase area and a 2.3 bushel per acre increase in yield, to 165.2 bushels per acre.

This means a global abundance of feed wheat looks set to maintain pressure on corn exports throughout 2010. Global wheat stocks were also lifted by a further 4.5m tonnes to 195.6m tonnes, reflecting weaker demand and higher production in Russia.