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UPDATE 2-Argentina works to ensure domestic wheat supply, export cap rumors swirl

(Adds volume of trade with Brazil and Abitrigo's comment)

By Hugh Bronstein and Maximilian Heath

BUENOS AIRES, Jan 27 (Reuters) - Argentina is looking for ways to ensure ample domestic wheat supplies without resorting to shutting down exports, a top official said on Wednesday, as farmers fretted about possible state intervention in the markets.

The government, worried about food price inflation, recently tried to limit corn exports, but the idea was beaten back by growers. Now the focus is on wheat, with rumors swirling around the Pampas grains belt that export limits might be on the way.

"In the case of wheat, we are seeing what we can do to ensure that we have enough in the country without closing the export market," Agriculture Minister Luis Basterra told local radio.

"There is room for the wheat value chain to allow for the provision of the domestic market," he said.

Argentina is the world's No. 7 wheat supplier.

"We will meet over the coming days with the government. They do not want to intervene in the market or limit wheat exports, but everything is on the table," Gustavo Idigoras, head of Argentina's CEC export companies' chamber, told Reuters.

Most of Argentina's wheat exports go to neighboring Brazil, which bought 4.5 million tonnes of it in 2020.

Rubens Barbosa, head of Brazil's wheat millers group Abitrigo, said Argentina's wheat exports are expected to be 11 million tonnes overall in 2021.

"Abitrigo is confident that Argentina will be able to fulfill its commitments to Brazilian millers," he said.

Chicago Board of Trade wheat futures were down on Wednesday but hovered near 6-1/2-year highs set in mid-January. The market has drawn support from expectations of tightening global supplies of wheat, as well as corn and soy.

Russia, the world's top wheat supplier, has approved a higher export tax on the grain to start on March 1, in its latest push to control rising domestic food prices.

The Argentine government says that of the 17.2 million tonnes of 2020/21 wheat recently harvested, 10 million tonnes will be exported. Official data also shows that exporters have already bought 8.9 million tonnes of 2020/21 wheat.

Argentina recently proposed a two-month suspension of corn exports and then a daily limit on international shipments. It ditched both plans following objections from farmers.

But the proposals showed Argentina is willing to limit exports in a bid to slow increases in domestic food prices. The country's overall inflation rate was 4% in December alone.

"We are concerned that there my be some kind of unofficial deal between the government and traders to reduce wheat and corn exports," said Santiago del Solar, a grower in the bread-basket province of Buenos Aires.

"We need transparency in the grain markets. We need to know what is going on in order to invest and produce," he added.

Idigoras said no unofficial deal had been struck. (Reporting by Hugh Bronstein and Maximilian Heath; additional reporting by Julie Ingwersen and Ana Mano; Editing by Kirsten Donovan, Steve Orlofsky and Marguerita Choy)

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