A setback to Australia's wheat harvest remains the last hope of improving the grain's "bearish" fundamentals, AWB has said, bracing farmers for lower returns.

The wheat market was "in slumber", with international demand slower than last year, Stuart Richardson, AWB's Australian commodity management spokesman, said.

"Flour mills around the world have generally entered the new season with greater stocks in their supply line," he said.

Buyers were also taking comfort from expectations of a good harvest in the northern hemisphere.

"It means that there is plenty of wheat available, competing for limited demand, so the fundamental market picture is bearish at this stage", Mr Richardson said.

Weather threat

The last "real unknown" was Australia's 2009-10 crop, which official estimates have pegged at nearly 22.0m tonnes, the best for four years, but to which there is some threat of drought damage if an El Nino weather pattern sets in as forecasters are expecting.

 "Analysts will be watching our spring weather closely, to see if current production estimates are fulfilled," Mr Richardson said.

GrainCorp, the rival grain handler, in a separate statement said that grain prospects were "good", with crops "having been established in ideal conditions in more areas".

AWB's statement came as Australia's former monopoly wheat exporter cut by Aus$15 a tonne, to Aus$290-300 a tonne, its forecast for returns for farmers from its benchmark wheat pool.