Wheat buyers have become "very conscious" of threats posed by lower plantings and poor conditions to global supplies next year, AWB has said, as it raised hopes for farmers' returns from the grain.

While "burdensome" global wheat inventories are keeping a lid on prices for now, the market "is starting to look ahead to when these stocks are drawn down", Australia's former wheat export monopoly said.

Many analysts believe Canadian and US plantings will fall this year, while newly-sown winter wheat in much of Russia and Ukraine has been dogged by drought.

"The world wheat market is beginning to look forward to the 2010 crop and is very conscious of risks to world production," Mitch Morison, AWB's general manager commodities, said.

Lower plantings 

The comments come amid a rally of 24% in Chicago wheat prices over the last two months, which has been largely attributed to buying by investors seeking a hedge against inflation, as well as a wave of short-covering by funds.

However, some analysts have also highlighted a reduction in US plantings prompted by both a slump in prices between June and early September, when many crop decisions are made, and a knock-on impact from America's late corn and soybean harvests.

The delays have tied up some land earmarked for wheat sowings.

Plantings of the soft red winter wheat favoured in many Midwest states, such as Illinois, may fall by as much as 2m acres, or more than 20%, initial estimates from within the Archer Daniels Midland empire show.

And rather than being replaced by spring wheat, this area is in the main likely to go to corn and soybeans, Kevin Kjorsvik, analyst at ADM-owned Benson Quinn Commodities, told Agrimoney.com.

Optimism returns 

AWB cited the growing fears over wheat for a decision to raise its estimate for its 2009-10 wheat pools by up to Aus$14 a tonne, reversing many of the cuts made three weeks ago.

It also noted a softening in the Australian dollar, following a strong rebound fostered by growing demand for its rich commodity reserves and an early move to raise interest rates.