Last week leading wheat company AWB raised Australia's wheat crop expectations by announcing forecasts of a record 25 million tonnes, upping previous estimates by around 10 per cent.

As was the case in Europe last year, the Australian wheat crop was severely impacted by drought in 2003, slashing total output by around 10 million tonnes. Traditionally Australia is the world's second largest wheat producer, next to the United States.

Increasingly Australia is being seen as a competitive supplier of wheat to the all-important Asian market, which is heavily reliant on imports. Traditionally that market has been served by US wheat companies, but now competitive pricing, due in part to cheaper freight costs, is winning many Asian food companies over to the Australian market.

"This has given a chance to Australia to price their offers morecompetitively," said one Australian trader in an interview with Reuters. "They are having a lot to offer andthere is no dearth of buyers here. Only those buyers who are keen onforward shipments are going to the United States."

Across Asia, Australian wheat companies are reporting strong trade, and in many markets, such as Malaysia and Thailand, suppliers are struggling to meet demands. However, in China, buyers have remained faithful to existing US suppliers, making it harder to crack that market.