AWB's talks with a global commodities player over the next stage of its corporate transformation are still on, chairman Peter Polson said, as he raised the grain hander's 2010 profits forecast.

Mr Polson, said that discussions "with an international commodities company� are progressing" over the sale of a stake in AWB's Australian Commodities Management division, and of 100% the group's Geneva business

The comments, in a speech prepared for the AWB annual meeting, follow reports in the Australian press that a deal with US-based Gavilon Group had fallen through.

Gavilon was reported to have walked away over the price of the deal, which would have given it a 60% stake in AWB's Australian Commodities Management division.

'Standalone' alternative 

Nonetheless, Mr Polson acknowledged that failure for the talks was a possibility.

"I should point put that we will only enter into an agreement if it is strategically and financially enhancing," he said.

"If a suitable arrangement cannot be developed, we are confident that our commodities businesses can continue to perform and grow on a standalone basis."

The deal was flagged in September as a key part of a transformation which has seen the group raise capital, sell its Landmark financial services division and quit Brazil in the face of its first annual loss in at least a decade.

AWB chief executive Gordon Davis said then that the proposed tie-up "would enhance the competitive position" of the division in a deregulated Australian grain handling sector.

Profit hopes 

Mr Polson also lifted AWB's forecast for pre-tax profits in the 2010 financial year to Aus$115m-140m without giving a reason.

The raise, from Aus$95m-115m, comes the day after rival GrainCorp warned on profits, citing weaker-than-expected grain harvests in parts of eastern Australia, which continue to be affected by drought.

AWB shares closed up 1.9% at Aus$1.10 in Sydney.