UPDATE 1-IGC cuts grain stocks forecast to five-year low

* Grain inventories at major exporters seen at 17-year low

* Maize stocks seen sinking despite contraction in demand

* Grains demand to fall for first time since 1998/99

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LONDON, Oct 25 (Reuters) - The International Grains Council on Thursday cut its forecast for global maize and wheat crops in 2012/13, further tightening supplies with grain stocks at the end of the season seen sinking to a five-year low.

``Inventories (of grain) for the major exporters will be even tighter and the smallest for 17 years,'' the IGC said in a monthly market report.

The IGC cut its forecast for total grain stocks at the end of the 2012/13 season by 4 million tonnes to 328 million, now representing a fall of 44 million or 12 percent from year-earlier levels.

``Reduced availabilities and higher prices are expected to ration demand, resulting in the first year-on-year fall in grains consumption since 1998/1999,'' the IGC said.

The IGC cut its forecast for the global maize crop in 2012/13 by 3 million tonnes to 830 million, mainly reflecting lower estimates for the United States and Ukraine.


A severe drought in the U.S. has contributed to a sharp fall in global maize production this season from the record 876 million tonnes harvested in 2011/12.

The U.S. maize crop was seen at 272.0 million tonnes, down from a previous estimate of 275.0 million and well below the prior season's 313.9 million.

The IGC also cut its forecast for the maize crop in Ukraine to 19.0 million tonnes from 20.0 million.

``Northern hemisphere production prospects have mostly worsened. Although sowing is slightly delayed, the outlook for South American crops remain mostly favourable,'' the IGC said.

The IGC's forecast for Argentina's maize crop was raised by 1 million tonnes to 26 million while the projection for Brazil was kept at 72.0 million.

Global maize consumption in 2012/13 was downwardly revised by 1 million tonnes to 848 million, down from the prior season's 872 million.

``Despite a forecast 3 percent contraction in demand, the stocks outlook has tightened further - end season inventories in the major exporters could shrink by almost one quarter,'' the report said.

The IGC also cut its forecast for the global wheat crop in 2012/13 by 2 million tonnes to 655 million.

``Lower yields in the EU and Kazakhstan, as well as deteriorating prospects in Argentina and Australia, reduced the forecast for world (wheat) production,'' the IGC said.

(Reporting by Nigel Hunt; editing by Keiron Henderson and Jason Neely)