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Shares in brewers and food producers have fallen on fears that rising wheat prices could hit their profit margins.

Wheat prices have risen 25% this week as drought and fires have devastated crops in eastern Europe and led to Russia banning the export of grain.

Shares in Danish brewer Carlsberg fell 5.1%, while Diageo, which owns brands such as Guinness, shed 2.2%, and Associated British Foods fell 1.5%.

The Food and Agriculture Organization has played down fears of a food crisis.

On Wednesday, the FAO cut its global wheat production forecast for the year, but said that fears of a world food crisis were "not justified at this point".

That's largely because global wheat stocks have risen substantially in the past couple of years, peaking in June at just under 194 million tonnes, according to US government estimates.

Prices surge

Latest figures showed a reduction in July, down to 187 million, following severe droughts in Russia and Kazakhstan and floods in Canada.

In the last few weeks, those factors, along with the onset of wildfires in Russia, have caused market prices to shoot up at a speed not seen since early 2008.

The acceleration in food price inflation which was seen in 2008 led to demonstrations in developing countries, but analysts argue that the high level of stocks this year will prevent significant rises in food prices this time.

"Stocks are close to 50% higher today [than early 2008]," said Barclays Capital analyst Sudakshina Unnikrishnan. "You had a completely different scenario then."

Whether the rises on the commodity markets feed through to products on supermarket shelves could depend on whether the current high prices persist.

"Exactly what happens to food inflation depends largely on how long wheat prices remain high," said Neil Saunders, consulting director of Verdict Research.

On that issue, Barclays Capital said it depended on whether other Black Sea producer-exporters also put export restrictions in place.

"Even then though, it must be highlighted that export sources can move to the US, EU, Australia to fill the vacuum created by the Russian ban," Barclays Capital said.

Kazakhstan is currently considering a request from Russia to curb its exports, too. The customs union partners will discuss the matter at a meeting later this month.

Exports cease

Meanwhile, reports suggest suppliers of Russian wheat to Asia are close to cancelling their contracts after Moscow banned the export of grain until December.

Trading companies are considering declaring "force majeure" - a clause that allows parties to walk away from contracts by citing circumstances beyond their control.

As wildfires continue to rage across the country, Russian railways said it would stop exporting grain from Saturday, in accordance with the export ban which is set to continue until December.

However, Deputy Prime Minister Igor Shuvalov suggested Russia could reassess the ban after the harvests in the autumn.

Russia is the world's third largest wheat exporter. Its biggest customers include Egypt, Turkey and Syria.