Wheat values continue to rally as the true extent of falling world stocks and production is revealed in an NFU report released this week.

Global wheat output has fallen for the third consecutive year following poor harvest conditions, especially in the EU, Canada and India, says the organisation’s World Harvest Update.

Production forecasts have been cut again, with the latest August figures showing a slide from 603m tonnes to 593m tonnes, said NFU chief economist Carmen Suarez.

Wheat production had failed to meet global demand, currently about 611m tonnes, for the fifth time in six years, she added.

At the same time, world wheat trade was likely to increase 3% to 112m tonnes as imports increased to countries experiencing a shortfall.

However, Ms Suarez said the fall in production would not necessarily lead to a shortage of wheat. “Demand has been exceeding production for a number of years, but if stocks continue to decrease at the same rate, by the end of this year we will have less than 60 days of consumption left, rather than the more than 100 days that we should have”.

“But if the price is right there’s no need to have a scarcity. Some people who have stopped producing will go back, as long as the market is functioning properly.”

UK feed wheat values had risen by at least 3/t to almost 80/t and were up 30% on the year, said independent grain trader Robert Kerr. Milling premiums for spot delivery had risen to 10/t but had not moved for longer positions.

Mr Kerr warned against farmers becoming complacent and “forgetting” to sell. But he said the market was still very well supported and was not heading for an imminent crash.

“I’m not suggesting there are bears in the woods – this is a bull market.”Grainfarmers’ head of wheat, David Doyle, said: “When prices have moved up dramatically and so quickly, there could be a correction. However, the underlying market is firm.”