A call for more supplies from the Indian Government sent the price of wheat soaring to record levels on commodity exchanges yesterday, as grain traders reacted to urgent tenders from grain importers and the lowest global stock levels for 25 years.

India is the world’s second-largest wheat producer after China, but orders from Delhi to build up buffer stocks sent the price of a bushel climbing 30 cents to $7.88 a bushel on the Chicago Board of Trade, a record.

In France, where concern is mounting about rising food prices, the price of November milling wheat gained €10 to €256, the highest ever.

Droughts, floods, production shortfalls, burgeoning demand and dwindling stocks have created a harvest season panic that has buoyed the price of wheat ever higher. Since April, it has risen 75 per cent on both sides of the Atlantic after recent tenders from Egypt and India, where governments are taking precautionary action to boost stockpiles.

India’s agricultural revolution transformed the country into a net grain exporter, but last year it suffered a weak harvest and returned to the world market aggressively.

The International Grains Council expects India to import more than three million tonnes this year, despite an improved harvest. Analysts believe that there is growing anxiety that the country had benefited from a succession of good monsoons. Were the climate pattern to change, India could find itself short.

“Global inventories are at their lowest for 25 years,” Sudakshina Unnikrishnan, an analyst for Barclays Capital, said. “The market is deprived of any kind of buffer.”

The Indian tender drew more than half a million tonnes in response at prices of about $400 per tonne, including shipping costs. These have soared because of a shortage of dry bulk carriers, pushing up further the cost of food for importers.

Sharad Pawar, the Indian Farm Minister, said that wheat purchase would continue on a regular basis to build a large stockpile ahead of the harvest in April.

Anxiety is mounting at the World Food Programme (WFP), which coordinates supplies for famine relief, about the impact of dwindling stocks of vital commodities. The organisation feeds about 90 million people every year and is concerned about both prices and the availability of food as pressure mounts to earmark land for the production of biofuels.

For farmers who can respond to increased demand by producing a bit more, the high prices are an opportunity, but the WFP is concerned about those who can only just feed themselves in a good year.

“Most of the people we feed are subsistence farmers producing just enough. The outlook for them is very bleak,” a WFP spokesman said.

The International Grain Council cut its forecast of world grain production by seven million tonnes this month to 607 million tonnes, as it assessed the impact of a wet summer in Northern Europe, weak output in Ukraine and drought in Argentina and Australia.

Food for thought

In the year to June 2008:

—The world will produce 607 million tonnes of wheat

—The world will consume 614 million tonnes

—In three years, global wheat stocks have fallen dramatically from 140 million tonnes to 111 million tonnes During the same period, wheat exports from the big five (European Union, United States, Canada, Australia and Argentina) has halved to 29 million tonnes

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive