Wheat prices reach record level

Bad weather in key grain growing areas such as Canada and parts of Europe has limited supplies as demand has risen, sparking fears of a supply shortfall.

Surging prices are also expected to have widespread fallout for consumers.

While it will mean higher bread prices, it could also trigger an increase in meat and dairy prices as farmers battle to pass on rising feed costs.

Global wheat stockpiles will slip to their lowest levels in 26 years as a result, official US figures predicted earlier this month.

Output fall

The dire forecast came as Canadian officials said the country expected its harvest to be slashed by a fifth as a result of drought.

Meanwhile, its rival Australia - the world's third-largest wheat exporter and a key supplier to Asian regions and South America - has also warned harvests may be reduced by warmer-than-expected temperatures experienced in the spring.

Crops in the Black Sea area of Europe, however, have been ruined by bad weather, while Chinese production is expected to fall by 10% as a result of both flooding and droughts.

And as supplies fall, demand from emerging economies such as India is increasing - factors which helped push prices to record highs of $7.44 a bushel on the benchmark Chicago Board of Trade market in the US on Thursday.

In the UK, prices have also soared, with bread-making wheat now fetching about £200 per tonne - double last year's level.

While surging prices are beneficial to wheat growers, they do bring further problems.

A World Food Programme spokesman said the increases could mean its budget would not stretch far enough to help those affected by natural disasters.

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