Some traders see wheat scraping along the bottom of the market, while others see prices rising toward A$150.00 a tonne. But brokers and analysts are in a cautious mood. "We've maybe stabilised, maybe we're starting to test the bottoms. But its hard to get bullish," said Guy Allen of grains handling and trading group GrainCorp. The Australian market was stretched last week between the bearish effect of the Australian dollar's rise to about $0.5900, and bullish support from Chicago wheat's recovery.

But Australian wheat is in a Catch-22, partly of its own making. Falls in Chicago wheat pressedAustralian prices down, but rises in Chicago failed to inspire local price gains, Sally Bucknell of New England Agricultural Traders pointed out.

"I think its basically (because) we've got a pretty good crop in," she said. Latest crop estimates will be released on Tuesday when the Australian Bureau of Agricultural and Resource Economics (Abare) releases its updated Australian Crop Report forecasts.

Abare's Chief commodity analyst Terry Sheales gave an unofficial glimpse of Abare's thinking last week when he told an industry conference that wheat production could be as high as 24 million tonnes. If achieved, this would set a new record. Australia's existing record wheat crop is the 23.7 million tonnes produced in 1996/97, while its second biggest crop is the 22 million tonnes of 1983/84. Abare's existing dated forecast is for 19.3 million tonnes, issued before good rainfall gave the growing season a good start. Production last year amounted to 18.6 million tonnes.

Allen said he was not putting money ona new record, but believed the crop would be one of Australia's top three. But with big world production tonnages and slack demand as the world economic crisis bites wheat even harder than other hard-hit commodities, the tide continues to run against grains.

Developments in Indonesia, one of Australia's biggest markets for wheat, taking 2.4 million tonnes in 1996/97, remain high on the crisis calendar. AWB Ltd, the re-named Australian Wheat Board, told Reuters on Friday that Indonesia's lifting of subsidies on wheat flour would have some impact on Australian sales.

The extent of the effect would depend on how much prices rose and what happens with demand, AWB said. "It will have some impact but we're expecting it to be minimal," a spokesman said.

AWB's view contrasts with that of the United States Department of Agriculture, which projects Indonesia's 1998/99 wheat imports to fall to a total of 3.5 million tonnes from the four million tonnes imported in 1997/98.

The Indonesian government's floursubsidy, which will be phased out over three months beginning October 1 as a result of negotiations with the International Monetary Fund, has lowered the price of flour by 40 per cent.

The end of Indonesia's import system through revocation of state agency Bulog's monopoly, would affect only the channels through which AWB did its Indonesian business, he said.

At the end of the day wheat has still got to get in there."