World grains production will fall by its most in five years next season, the International Grains Council said, as it made “sizeable” downgrades to its forecasts for corn and wheat harvests.

The intergovernmental group slashed by 23.7m tonnes its forecast for world grains output in 2022-23 – expanding nearly to 40m tonnes the dip in production expected from last season.

“Smaller wheat, maize (corn) and sorghum harvests are projected to limit 2022-23 world total grains production to 2.251bn tonnes,” the IGC said, foreseeing what would be on its data the largest dip in global output since 2017-18.

Wheat woes

The world wheat harvest forecast for next season was cut by 10.9m tonnes to 769.0m tonnes, widening to 12.1m tonnes the drop expected from 2021-22.

The forecast for India’s heat-tested crop was downgraded by 6.3m tonnes to 105.0m tonnes, with the country’s exports, following the curbs announced last weekend, now expected to dip by 3.0m tonnes year on year to 4.9m tonnes.

The IGC last month forecast India’s exports in 2022-23 at 9.5m tonnes.

Argentine, European Union and US wheat crops were also downgraded, more than offsetting upgrades to hopes for Australian and Russian harvests.

Argentine, US downgrades

For corn, the US received a production downgrade too, of 9.3m tonnes to 367.3m tonnes, after a slow start to the sowing season, which has prompted many analysts to trim yield and area expectations.

The forecast for Argentina’s crop was reduced by 3.0m tonnes to 60.6m tonnes, as the IGC cut by 13.4m tonnes its forecast for world corn output in 2022-23.

At 1.18bn tonnes, the world harvest would be 30.1m tonnes below the 2021-22 result, also the biggest production drop in five years.

‘Demand rationing’

With grain production prospects weaker, the IGC slashed its expectations for demand too – by 22.9m tonnes to 2.28bn tonnes, putting an unusual contraction on the cards, of 7.5m tonnes.

This would be “the first year-on-year contraction since 2015-16”, the IGC said, forecasting livestock feeders bearing the brunt of the decline.

“Feed demand [will be] curbed by elevated market prices and resultant demand rationing.”

Nonetheless, the IGC reduced its forecasts for world corn and wheat stocks at the close of next season to multi-year lows, including reductions to inventories expected in major exporters, whose supplies are particularly influential on world market prices.

Price spike

The IGC also noted a surge of 9% month on month in its wheat price index, thanks to India’s export ban.

“With worries about global exportable supplies exacerbated by India’s recent export ban announcement, the IGC GOI wheat sub-Index spiked to a 14-year high,” the council said.