The decline in global wheat prices has prompted AWB to return to slicing its estimate for farmers' returns from its wheat pools, with the Australian grains handler reversing upward revisions made only last week.

Australia's former wheat export monopoly, which normally operates on a two-week pool update cycle, said it was revising down by Aus$8-9 a tonne forecasts for 2009-10 returns made only last Tuesday.

Benchmark wheat was now expected to return Aus$250 a tonne in western Australia and Aus$255 a tonne in the east, where the focus of Australia's industrial centres tends to give domestic demand a lift, and adds some premium to prices.

'Back to fundamentals' 

The revision follows the correction in wheat markets – which traders blame in part on a reversal in global economic confidence which has sent funds into retreat – which cut Chicago prices by 10% last week, and continued in early trade on Monday.

"There is ample wheat available in the world to meet buyers' needs after a very large northern hemisphere harvest and with the Australian harvest gathering pace, the supply is increasing," he said.

"Unfortunately world demand is down this year, after many northern hemisphere countries that normally import wheat produced good crops of their own, thus reducing their import requirements."

AWB in its initial 2009-10 estimate, in June, forecast returns of Aus$310-320 a tonne.