Australia's wheat trade prospects are benefiting from concerns over both quality and quantity of crops elsewhere, AWB said, as official data revealed a jump in the country's exports.

The grain handler revealed "very strong interest" for Australian wheat, both to make up for volumes lost through weaker crops in the European Union and the former Soviet Union and to supply "higher quality needs".

"The market is aware that weather damage in northern Europe has reduced the supply of higher quality milling wheat in that region," Mitch Morison, AWB's general manager commodities, said.

Exports from the drought-hit Black Sea states would prove "very limited".

Ukraine exports 

The comments came as UkrAgroConsult cut by 3.1m tonnes to 16.7m tonnes its forecast for Ukraine's grain exports in 2010-11, with the estimate for wheat cut by 1.1m tonnes to just under 6m tonnes.

The Kiev-based consultancy blamed weaker hopes for Ukraine's crop which, for total grains, it has pegged at 40.4m tonnes, down some 12% year on year.

However, within the European Union, crop hopes have improved in recent days, with both French and German governments issuing relatively upbeat harvest forecasts, and the quality of the UK crop also being viewed with greater optimism by traders.

Indeed, weaker expectations of levels of downgrade of food wheat to feed quality have allowed London feed wheat - until Tuesday - to close its discount to Paris milling wheat.

London's November lot retreated 1.4% from Monday's two-year closing high to finish at £162.80 a tonne, amid a wave of profit-taking on grains markets, with Paris's November lot ending 0.9% lower at E229.15 a tonne.

'Great start' 

Mr Morison said that the promising prospects for the Australian crop, for which early harvesting has just started in central Queensland, was allowing physical wheat prices to outperform the strong international market.

Production prospects had been further improved by recent rains, said AWB, whose stronghold is in eastern Australia, rather than Western Australia, where dry weather is still a concern.

"It's a great start to the spring growth period," Mr Morison said.

Separately, Australia's official crop bureau, Abare, reported a 52% jump, year on year, to 1.59m tonnes in the country's wheat exports in July, when the concerns over Russia's drought began to bite in earnest.