NATIONAL Australia Bank has lifted its forecast for this year's wheat crop to 22.4 million.
That's a rise of 400,000 tonnes on last month's projections and more than last season's 21.7 million tonne crop.
But the threat of a major locust plague remains a concern.
A recent rally in prices comes at a good time for Australian growers, particularly on the east coast, where good rain has improved the crop outlook significantly, the bank said in a monthly rural commodities report.
But this will likely be partially offset in Western Australia, where continued dry conditions have worsened the crop outlook, it said.
"There still exists a significant downside risk with regards to rainfall (particularly in Western Australia) and how the locust situation plays out in the east," the bank said.
