Frost, rains hit Australia wheat crop, drag on quality
In contrast, the cash market in Australia has been holding firm.
"Trade is pretty short, so they are aggressively trying to buy wheat to fill their export commitments," said one Melbourne-based commodities analyst.
"Cash prices are $10 a tonne higher than what you are seeing on Australian futures for comparative grades and ports."
West coast milling wheat is trading at its highest since Nov. 6, while eastern Australia wheat is hovering around its lowest in a month, but is off its October trough.
Australian standard wheat is being offered around $280 a tonne, free on board, prime wheat at $300 a tonne and prime hard wheat at $330 a tonne - all varieties largely unchanged in the last couple of weeks.
And it is not just wheat quality that has been hurt by the weather, production volumes could also fall below previous estimates.
Analysts and traders said the country's wheat output would likely be around 24 million tonnes, down 5 percent from the 25.3 million tonnes forecast in a Reuters poll last month. In 2012/13, Australia produced 22.1 million tonnes of wheat.
"Our current estimate is 24.7 million tonnes," said Nathan Cattle, senior commodity analyst at Australian Crop Forecaster.
"Our November estimate is down about 200,000 tonnes from the October forecast. A lot of areas are still going to have a good year but now the headers are going through the crop, production isn't going to be as good as they had previous hoped," he said. Headers refers to the combine harvesters used to gather crops.
Commonwealth Bank of Australia predicts Australian wheat output at 23.6 million tonnes.
There are forecasts of scattered showers from Queensland to South Australia which will cause harvest delays over the coming week.