Russia on Thursday imposed a ban on grain exports and staples such as bread, flour and beer are set to rise as the price of wheat has risen to highs not seen since the 2007/08 global food crisis.

Vladimir Putin, Russian prime minister, announced the ban on all the country’s grain exports on Thursday  effective within 10 days, following the worst drought in at least 30 years, which has fanned wildfires across the country. Russia is the world's third biggest grower of wheat and the December delivery price rose  9.75 cents, or 7.9%, to close at $8.1525 a bushel Thursday on the Chicago Board of Trade, after advancing by the CBOT’s 60-cent limit to $8.155, the highest level since August 2008. September futures rose the daily limit to $7.8575. The US wheat futures are up more than 80% since mid-June, the sharpest rally in nearly 40 years. Meanwhile, European wheat prices jumped more than 12% to €236 a tonne on record trading volumes.

Shares of big food companies fell Thursday and Russia's agriculture ministry’s most recent forecast of 2010 production is at 70m-75m tonnes, down from an estimated 85m tonnes a fortnight ago. Last year, the harvest was 100m tonnes.

The UN's Food and Agriculture Organization (FAO) said this week that the impact of unfavourable weather events on crops in recent weeks has led the agency to cut its global wheat production forecast for 2010 to 651 million tonnes, from 676 million tonnes reported in June.

But despite production problems in some leading exporting countries, the world wheat market remains far more balanced than at the time of the world food crisis in 2007/08 and fears of a new global food crisis are not justified at this point, FAO said.

A continuing, devastating drought afflicting crops in the Russian Federation, coupled with anticipated lower outputs in Kazakhstan and Ukraine have raised strong fears about the availability of world wheat supply in the 2010/11 marketing season.

The FAO said turmoil in global wheat markets, which has intensified in recent weeks, is evidence of the growing dependence on the Black Sea region, an area renowned for erratic yields, as a major supplier of wheat to world markets. In addition, an expected production decline in Canada, another major producer and exporter of wheat, has reinforced market worries.

This rapid increase in prices is prompting concerns about a repeat of the crisis of 2007/08.

The FAO said after two consecutive years of record crops, world inventories have been replenished sufficiently to cover the current anticipated production shortfall. Even more importantly, stocks held by the traditional wheat exporters, the main buffer against unexpected events, remain ample.

Jacques Diouf, director-general of the FAO said that global grain stocks were at about 528m tonnes, up from a 30-year low in 2007-08 of 427 tonnes.

Robert Rennie, currency strategist at Westpac Bank, speaks to CNBC's Martin Soong, Karen Tso and Sri Jegarajah about the impact of wheat price appreciation on the forex markets and other soft commodities: