Russia's decision to halt wheat exports this year has resulted in sharp fluctuations in grain prices in agriculture commodities markets, stirring up fears that another food crisis may be looming.

A firefighter attempts to extinguish fire outside the town of Shatura, some 110 km southeast of Moscow, August 12, 2010. [Xinhua]

Wildfires have destroyed a fifth of wheat crops in Russia, the world's thrid largest wheat exporter, and a record drought in over a century is still threatening the country's crop harvests.

The U.S. Department of Agriculture, in a report last week on the world's demand and supply situation, slashed its wheat export forecast for the current year for Russia from 15 million tons to 3 million tons.

Past lessons show that a volatile global supply can spark another round of price speculation, which will be fueled by fears that Ukraine and Kazakhstan will follow Russia's suit to ban export of their meager grain harvests.

Wheat market volatile

The global wheat market has been volatile, with the prices for futures of September delivery shooting up 8.3 percent to a two-year high of 7.8575 U.S. dollars a bushel on Aug. 5, before falling back to slightly above 6.5 dollars this week on official reassurances about supply.

Analysts said the sharper-than-expected fall in Russia's wheat production has a major impact on the global commodities market.

"This is because not only Russia is one of the largest exporters of wheat, but also other countries may follow suit to protect their harvests," said Dong Shuangwei, an analyst at Capital Futures Co., Ltd.

Dong said he expects global food commodity prices to remain high in the near term but unlikely to reach the record level of 2008.