AWB warned of a bleak outlook for Australian wheat prices as it blamed a market "go slow" for a second cut in two weeks to estimated returns on the forthcoming crop.

Australia's former wheat export monopoly said the wheat market worldwide was suffering from a dearth of sales as buyers, awaiting for bumper supplies to foster price drops, purchased only enough for their immediate needs.

"You don't like to talk about falling prices, but that is the reality of the market at present and there is just no upward pressure," Stuart Richardson AWB's Australian Commodity Management spokesman, said

"The whole international market [is] in go slow."

Currency factor 

The outlook for Australia was particularly bleak, thanks to the recovery in its currency, which on Friday hit a 10-month high against the US dollar of US$0.8472 after the country's central bank governor, Glenn Stevens, said that inflation would not fall as far as had been thought.

"Add the strong Australian dollar to the equation and you don't have an attractive picture for Australian wheat prices in comparison to the last two seasons," Mr Richardson said.

AWB reduced by Aus$25 a tonne to Aus$265-275 a tonne the estimated return from its benchmark wheat pool in 2009-10.

The cut left farmers on course to receive Aus$45 a tonne less for their wheat than AWB initially forecast, in June, and Aus$60 a tonne less than in 2008-09.

Black Sea exports 

The comments come two days after the US Department of Agriculture raised by 2.8m tonnes, to 659.3m tonnes, its forecast for global grain production in 2009-10, pegging carryout stocks at 183.6m tonnes, up 14.1m tonnes year on year.

While hopes for Russia's crop have dimmed , Mr Richardson said that "a larger percentage of milling wheat in Ukraine this season means there is still a very large volume of Black Sea wheat for export".

He added: "Crops in the northern hemisphere have produced well, with strong numbers from the United States showing increased supply in an environment where their wheat exports are struggling for demand."