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World grain production is forecast to fall 3 per cent in the coming crop year as the record harvest in 2016 has taken its toll on corn and wheat prices, according the International Grains Council.

Despite the output decline, the high level of inventories is expected to keep grain markets well supplied. The IGC said: “Although some retreat in production is projected, the elevated level of opening stocks will almost offset the fall.”

The predictions from the intergovernmental organisation echoes expectations of leading agricultural traders, whose bosses told the Financial Times Commodities Global Summit in Lausanne, Switzerland, this week that key food markets are likely to remain oversupplied for at least three more years.

Farmers are expected to increase the planted area for soyabeans in 2017, which is likely to boost production from the all-time peak of 341m tonnes. Despite the expected rise in output, inventories could fall due to firm demand, the IGC said.

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