Bumper grain crop to weigh on prices ©Eyevine Bumper crop: Combine harvesters in Ukraine The US drought of 2012, the worst since the Dust Bowl years of the 1930s, is finally releasing its grip on world agricultural markets. Propitious growing conditions from Brazil to Ukraine and the US have raised hopes of a sharp rebound in world cereals stocks, easing inflation pressures and pushing food security down the policy agenda. World corn, rice, soyabean and wheat production will break records this year, the US Department of Agriculture estimated this week. The International Grains Council in London expects grain inventories in critical exporters such as Argentina, Australia, Europe, Russia and the US to rise 40 per cent. The supply expectations have knocked the Dow Jones-UBS grains index down by a third in the past year. Restocked granaries will damp extreme price swings. "We are in for an exceptionally good year, perhaps one of the best in the last four or five years in terms of crop production," said Abdolreza Abbassian, senior economist at the UN Food and Agriculture Organisation. Corn prices rocketed past $8 a bushel a year ago as drought decimated the US crop. The shortfall drove up grain prices worldwide as farmers scrambled for substitute livestock rations. The US government this year predicts a record domestic corn crop of almost 350m tonnes, up 28 per cent from 2012, and the third biggest soyabean crop, of 88.6m tonnes. Corn was $4.55¼ per bushel in Chicago on Tuesday, down 3.6 per cent. Corn stocks left over from last year's stunted US harvest are expected to dwindle to 18.3m tonnes by the end of this month, the lowest in 17 years. By August 2014, stocks are forecast to double. Soren Schroder, chief executive of Bunge, the New York-listed agricultural trading house, said: "We're clearly in a transition from a very high-priced, super-tight stocks environment to one of possible sizeable surpluses." The US impact will be compounded by a healthy wheat crop in Europe and record corn and soyabean harvests in South America. "Brazilian farmers have had a great harvest this year," said Marcos Rubin, analyst at Agroconsult in Florianópolis, Brazil. US crops, planted late due to wet spring weather, could still be vulnerable to summer heat or an early frost. David MacLennan, Cargill's chief operating officer, said: "It ain't over yet, but so far conditions after a tough spring have been pretty good."