One of Europe's bitterest rivals as a wheat exporter appears to be more upbeat about the region's prospects than its own analysts, forecasting that the region can make up for custom lost to cheap Black Sea grain.

National Australia Bank has highlighted "substantial competition" from European Union exports as one of the main reasons for Australia's wheat farmers to curb hopes for prices.

Europe, while unseated in some of its traditional North African markets by cheap Russian and Ukrainian grain, is likely to find fresh demand in Asia, a region in which Australian farmers have a traditionally held sway.

"The EU will be major exporters and have demonstrated that they will be price competitive this year," NAB's global head of institutional commodity sales, Mick Pitts, said.

The strength of the Australian dollar, which hit a 14-month high against the US dollar this month, has helped make Australia's wheat imports the most expensive for importers, at more than Aus$230 a tonne for New South Wales grain.

Official data 

NAB's comments contrast with a gloomier a mood from within the EU over exports, with Rabobank, the Dutch bank, forecasting exports down 31% to 17m tonnes in 2009-10.

On Thursday, a report from Toepfer International highlighted that Europe had exported "noticeably less wheat" over the last month.

"The strong euro continues to hinder exports," the German analysis group said - also noting the threat posed by a number Australian harvest.

Official data showed EU exports at 5.7m tonnes so far this year, as measured by export licences, compared with 7.6m tonnes at the same time last year.

Forecast raised 

NAB also in its report raised its forecast for Australia's 2009-10 wheat crop by 500,000 tonnes to 23m tonnes, citing "average to above average rainfall throughout much of the wheat belt".

Comments from a survey of NAB offices had shown rain providing a "significant boost" to prospects, with some respondents reporting that conditions were "the best for many years".

The revision leaves NAB more optimistic than Abare, Australia's farm bureau, which has forecast a 22.7m-tonne crop, but in line with an Australian Crop Forecasters estimate published last week.