Sept. 12 (Bloomberg) -- Wheat prices rose to a record, passing $9 a bushel in Asian trading, on concerns that declining global output will further shrink inventories at a 26-year low.

Reserves of the grain in Canada, the world's second-largest wheat exporter, plunged 29 percent at the end of July from a year earlier, Statistics Canada said yesterday. The U.S. may cut its forecast for the crop in Australia to 18 million tons, from 23 million metric tons in a report today.

Wheat prices have more than doubled in the past year, raising costs at companies such as Premier Foods Plc, the U.K.'s biggest maker of cakes, Nissin Food Products of Japan and Sara Lee Corp. The grain is used as livestock feed and to make cakes, noodles and bread, with one bushel enough to make 73 loaves.

``It is feeding through to the consumer, it's gone up high enough to do that,'' said Tobin Gorey, commodity strategist with Commonwealth Bank of Australia Ltd. in Sydney. ``The market is in a real frenzy. The news flow continues to be negative.''

Wheat for December delivery rose as much as 10.5 cents, or 1.2 percent, to $9.01 a bushel in after-hours electronic trading on the Chicago Board of Trade. The contract was at $8.97 a bushel at 11:45 a.m. in Sydney. Prices have surged 80 percent this year.

Australian farmers face an unprecedented rural crisis within a month unless spring rains arrive, the Melbourne-based Age reported today, citing Agriculture Minister Peter McGauran.

Rabobank Group has said the Australian crop could be as low as 15 million tons.

``We expect the U.S. government to issue a report that will show lower global inventories and lower production in Australia than its estimates a month ago,'' Takaki Shigemoto, an analyst at Okachi & Co. in Tokyo, said today. ``We are waiting to see how much the U.S. government will reduce its estimates.''

The U.S. is the world's largest wheat exporter.

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.netJae Hur in Singapore at jhur1@bloomberg.net;

Last Updated: September 11, 2007 21:47 EDT