Apart from an unexpectedly deep cut to its forecast of U.S. soybean stockpiles, the U.S. Agriculture Department's monthly report made surprisingly large upward revisions to global inventories of nearly every type of grain — a welcome respite for consumers after over a year of steadily thinning supplies.

A record rice crop in India, higher wheat supplies from Kazakhstan and a record corn harvest in China all contributed to an overall more upbeat assessment of world supplies, although traders warned that conditions may yet tighten.

"Global grain stocks are incredibly high relative to the previous month — that's the most bearish thing," said Terry Reilly, analyst for Citigroup.

Grain prices were set to open mixed as traders focused on news of another round of heavy Chinese corn imports and the possibility of curtailed Russian wheat exports — neither of which were factored into this month's USDA report.

A 182 million-tonne corn harvest in China — up 2 percent from its September forecast — would help meet higher feed demand, the USDA said, maintaining an estimate that China would import 2 million tonnes of corn in the year to next September.

That figure appeared likely to fall far short, however, after news on Wednesday that Sinograin, which manages China's government reserves, had bought 1.5 million tonnes of corn and more than 900,000 tonnes of soybeans.

U.S. corn and soybean crops were shaved by 1 percent, as expected by traders, but market players were surprised by a tight outlook for soybeans. Supplies would be thin for the fifth year in a row with ending stocks cut by 3 percent.

CHINA PUNCH

China is the world's largest importer of soybeans and cotton and is expected to become a major corn buyer. The U.S. Grains Council, a trade group, says the China corn crop is smaller than USDA projects, so China will need up to 10 million tonnes of imports.

Corn futures soared by 6.6 percent on Tuesday at the Chicago Board of Trade, the largest percentage gain in 15 months, on talk of China seeking corn and soybeans and concern about U.S. yields.

Near-perfect summer weather boosted Kazakhstan's wheat crop to 19 million tonnes, up 19 percent from the month-ago estimate, said USDA, and double last year's drought-cut harvest.

With the harvest in full swing, USDA forecast the U.S. corn crop would be the fourth-largest on record, down 1 percent from its September estimate due to a smaller harvest area. In a survey, traders had expected the corn estimate to drop by 1 percent.

USDA held yields at the same rate as September — 148.1 bushels an acre, the lowest since 2005. It said soybean yields would be the second-lowest since 2003.

The soybean stockpile was forecast at 160 million bushels at the end of 2011/12, 12 percent smaller than traders expected. USDA said the stockpile at the start of the year was smaller than expected and the crop would be slightly smaller.

As expected, USDA lowered its forecast of the soybean crop by 1 percent for the sixth-largest crop on record, down one notch, like corn, in a month. Yields are down and the less land is being harvested.

Wheat stocks were forecast for 837 million bushels, 14 percent larger than traders expected. USDA said less wheat was being used in livestock feed than expected and exports were lagging.