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IGC Cuts 2020-21 Production Forecast
1/14 8:42 AM

(Dow Jones) -- The International Grains Council cut its forecasts for global grain production in the 2020-21 season on Thursday, owing in part to worsening expectations for South American crops amid dry weather.

The intergovernmental body said it now forecasts total grain harvests of 2.21 billion metric tons, ten million tons less than it forecast in its last report in November. Nonetheless, the figure would still be the highest ever. The IGC estimates that total grain production in the 2019-20 season stood at 2.19 billion tons.

The IGC lowered its forecasts for 2020-21 global corn crop by 13 million tons to 1.13 billion tons. It also downgraded its forecast for soybean production to 359 million tons from 365 million tons.

Forecasts for rice production were left unchanged at 503 million tons while wheat production forecasts were revised moderately lower, by 1 million tons to 768 million tons.

The downgrade comes amid dry weather in South America, thanks to the La Niña weather phenomenon, which has raised concerns about the health of the continent's crops, among them corn and soybeans.

In response to the dryness, Argentina had imposed a two-month long ban on exports of corn from Dec. 30 in order to ensure ample supplies for its citizens but overturned the ban on Jan. 11 with an export quota of 30,000 tons a day.

In recent months, Russia has also levelled a quota on grain exports and export taxes on wheat, in order to stabilize domestic food prices.

On Tuesday, Egypt -- the world's largest wheat importer -- cancelled an international wheat tender after receiving just four offers at high prices. Analysts attributed the few offers to reports that Russia was considering a hike in its new wheat export taxes.

Global grains prices, which have been climbing since the middle of last year, are currently hovering close to their highest levels in around six years, thanks to a combination of dry weather, strong demand in Asia and lingering supply constraints brought on by the coronavirus pandemic.

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