But Rabobank London's agri-commodity markets research director Luke Chandler expects Chicago Board of Trade wheat prices to bottom in the next month at about US430 cents a bushel to US440c/bu.

Speaking at a Rabobank client lunch at Bordertown on Tuesday, he forecast a modest recovery for late 2009 and early 2010 to a high side of US550c/ bushel in mid-next year as stocks in low-cost countries tighten, and demand for wheat ethanol improved.

But he also expected a major contraction in the area sown in 2010-11, particularly in the European Union, where current prices are below cost-of- production and government support schemes are being wound back.

Mr Chandler said the United States, Canada, the Black Sea region and the European Union had all enjoyed bumper crops, contributing to the 680 million tonnes of wheat produced globally in 2008-09.

World wheat stocks had risen by between 22 per cent and 24pc, with only Argentina feeling the effects of one of the worst droughts on record and seeding its lowest wheat area in a century.

Stocks were forecast to rise further in 2009-10 to the second- largest crop on record, helped by an anticipated 22.8mt harvest in Australia.

The former Soviet Union was likely to become "a more direct competitor" for Australian growers in South East Asia markets as the quantity increased and quality improved.

Wheat prices would be capped by the ability of so many regions to be able to expand wheat production.

"For a long period we have been used to wheat trading at $US1 or $US1.50/bu on an annual basis, but at the moment it is not unheard of to see 20c, 30c or 50c ranges in a day," Mr Chandler said.