The Australian Wheat Board (AWB) said it now expected domestic wheat production of 23-25 million tonnes in the year to June 2006, up from their previous estimate of 21-23 million tonnes.

The national grain asset manager and marketer said improved growing conditions had lifted the annual wheat production above the national five year production average of 20.85 million tonnes.

"Continuing good rainfall across the states of New South Wales, Victoria and South Australia during early spring has led to favorable development of late sown crops and cool temperatures have aided crop development in those regions," AWB managing director Andrew Lindberg said.

"In addition, recent rains have been critical in boosting yield potential as crops are flowering or in grain filling stages," he said.

Lindberg said Western Australia, the main wheat growing state, also remained on track to produce a large crop despite recent localized frost and hail damage.

On the other hand, the northeastern state of Queensland experienced difficulties with late rainfall which may cause some harvest quality issues, he said, adding that this was not expected to impact on the national tonnage amount.

Australia, one of the world's main grain exporters, had its biggest wheat harvest -- 25.2 million tonnes -- in 2003.