AWB, in its first forecasts for 2010-11, said its benchmark wheat pools would return AUD250 (US$219) a tonne to farmers in the east of the country, AUD8 (US$7) a tonne higher than expected for the current marketing year.

 

For farmers in the west of Australia, the southern hemisphere's biggest wheat exporting country, returns would reach AUD244 (US$214) a tonne, an improvement of AUD4 (US$3.5) a tonne on the forecast for the 2009-10 pool.

 

AWB said the forecasts reflected expectations for the Australian dollar, which has fallen by more than 7% against the US dollar over the last five weeks as global economic growth concerns, fuelled by the Europe's debt crisis, have revived investors' appetite for a currency deemed a safe haven.

 

"The good news for Australian growers is the longer term outlook is for the Australian dollar to settle back a little, which will assist grower returns," Mitch Morison, the AWB general manager commodities, said.

 

A weaker Australian dollar boosts export hopes by making assets denominated it more affordable to buyers in other currencies.

 

However, the grain handler sought little help for prices for crop supply and demand fundamentals, which looked set to remain weak.

 

"The world has had two years of record, or near record, wheat production and while the world crop is being forecast slightly lower this year, it's not by much," Morison said. "We are looking at three consecutive years of strong production."

 

The comments came as the UN Food and Agriculture Organisation forecast a drop of 1.1% to 675 million tones in world wheat production this year, higher EU sowings offsetting a fall in North American plantings.