Forecasts for global wheat production in 2010-11 have been cut by the US Department of Agriculture (USDA), although analysts had predicted worse.

Around 643m tonnes of the crop are expected this agricultural year compared with last month's forecast of 645.7m. That's still more than the 614m tonnes penciled in by experts.

The terrible drought and wildfires in Russia are blamed for the 5.5% year-on-year decline in output. But today's news was enough to send prices higher.

Consumption is also expected to drop, down to 661m tonnes, which means grain reserves will have to come down by about 9%.

Earlier this week, Russian president Dmitry Medvedev said his country, one of the world's biggest producers, will lift its grain export ban when it finds out what's been harvested.

Last month, news of the ban pushed wheat prices to 23-month highs. It exported a quarter of its output of the grain last year.

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