By Nick Bryant
BBC News, Sydney
Australia has slashed its official forecast for wheat production because of the ongoing drought.
Droughts and floods have cut harvest forecasts worldwide
The government said it expected farmers to grow 15.5m tons of wheat, a 30% reduction from its previous forecast.
The news will put further pressure on the global price of wheat, which is already at record highs.
The problems have been compounded by crop failures in the northern hemisphere and an increase in demand from developing countries.
Australia is normally second only to America in the amount of wheat it exports.
So when farmers harvest less than they expect it has a knock-on effect around the world, prompting things like food protests over the price of pasta in Italy.
After one of the best starts to a growing season for years, dry weather in recent weeks has forced the Australian government to slash its crop forecasts.
It said the amount of wheat harvested would be 30% lower than it originally predicted.
Even that might prove an optimistic assessment with farmers warning that if there is not heavy rain over the next few weeks, their crops will be even more meagre.
Up until now, September's rainfall has been below average and adverse weather has already reduced harvests in Europe and North America.
International wheat prices have risen by over 350% in the past five years, with global reserves now at their lowest level since the early 1980s.
At a time of shortened supply, the world is also experiencing an increase in demand.
Eating habits are changing in emerging countries like China with improved diets and a greater preference for meat, which drives up the demand for feed for livestock.
The growing popularity of biofuels which can be made from wheat has added to the pressure on prices.
Cars are now competing with cattle and consumers for access to these dwindling crops.