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US cuts wheat production forecast | US cuts wheat production forecast |
(about 1 hour later) | |
The US Department of Agriculture (USDA) has cut its forecast for global wheat production in 2010-11, but by less than expected. | The US Department of Agriculture (USDA) has cut its forecast for global wheat production in 2010-11, but by less than expected. |
The department now predicts total output of 643 million tonnes for the current agricultural year, down from its August forecast of 645.7 million. | The department now predicts total output of 643 million tonnes for the current agricultural year, down from its August forecast of 645.7 million. |
Analysts had expected an even lower number of 641 million tonnes. | Analysts had expected an even lower number of 641 million tonnes. |
But this still means the USDA expects output to fall 5.5% from last year, mainly because of a drought in Russia. | But this still means the USDA expects output to fall 5.5% from last year, mainly because of a drought in Russia. |
The price of wheat dropped following the release of the forecast. | |
There was more positive news when Ukraine's prime minister, Mykola Azarov, said that the country would not follow Russia in restricting grain exports. | |
Russian outlook | Russian outlook |
On Monday, Russian president Dmitry Medvedev announced that Russia would only lift its grain export ban when it was clear how much had been harvested. | |
Russia, one of the world's biggest producers of wheat, barley and rye, has been hit hard by drought and wildfires. | Russia, one of the world's biggest producers of wheat, barley and rye, has been hit hard by drought and wildfires. |
The subsequent export ban caused global wheat prices to rise sharply on the international commodity markets. | The subsequent export ban caused global wheat prices to rise sharply on the international commodity markets. |
The USDA report also revised down its 2010-11 forecast for Russia to 42.5 million tonnes, meaning that it now expects a 31% drop in Russian output compared with last year. | |
As a result, Russian wheat inventories are expected to more than halve to below 5 million tonnes by next summer. | As a result, Russian wheat inventories are expected to more than halve to below 5 million tonnes by next summer. |
Ukraine, another huge grain exporter, was considering a ban, forcing several large customers, including Egypt to search for alternative supplies. | |
But Mr Azarov said that despite a long drought, the country had managed to harvest enough grain to meet domestic and export demand. | |
"We do not plan any kind of limits on exports," Mr Azarov told regional officials in the southern Crimea region. | |
The USDA's forecast for global consumption was also revised down slightly - to 661m tonnes - although this still means governments are expected to run down their grain reserves by 9% to meet demand. |