Wheat consumers are showing "some nervousness" over the setbacks facing the crop, the latest the poor condition of US winter sowings, AWB said.

The Australian grain handler, lifting its forecast for payments to farmers selling wheat through its pools, said that it was seeing "active buying interest from a range of customers" despite recent price rises fostered by  a series of setbacks to world production prospects - even for 2011.

Separately, Iraq on Monday unveiled a tender for at least 100,000 tonnes of wheat.

Although firm prices were already encouraging farmers to plant more wheat, their ability to raise output had been dashed by the hangover from drought in the former Soviet Union, and dry conditions which have set US winter wheat off to its worst start since at least the 1990s.

"The signals are there for bigger crops from major northern hemisphere producers next season," Mich Morison, the AWB general commodities manager, said.

"Yet autumn rainfall in the US has been rather light and conditions have not been particularly positive for the dry regions around the Black Sea either.

"So there is some nervousness creeping in."

Protein question 

The comments follow reports last month that many buyers were holding off wheat buying, with AWB reporting that many considered a rise in prices last month as an "overreaction".

Official US data later expected to show that limited rains last week brought some improvement in the condition of the US winter wheat crop, of which just 47% was rated "good" or "excellent" last week.

However, concerns continue to grow over the crop in Australia, the southern hemisphere's biggest wheat producer, where the ongoing harvest had been expected by many buyers to provide some downward pressure on prices

"While there will clearly be big volumes available from eastern Australia, there is ongoing concern about protein availability and the potential for more quality reductions if rain on ripe crops continues," Mr Morison said.

At Commonwealth Bank of Australia, Luke Mathews said: "Paddocks across much of New South Wales and Victoria are saturated, with a further 25-75mm of rain falling over the weekend.

"Some adverse yield impacts are expected."

Wheat for December stood 0.7% higher at $7.22 a bushel in Chicago at 14:35 GMT. Paris wheat for November was 0.2% lower at E224.50 a tonne, with London wheat for November up 0.2% at £170.50 a tonne.