AUSTRALIAN wheat is likely to be the cheapest in the world well into 2013, according to a report by Rabobank.

Large stocks continue to be an overbearing factor influencing prices, which stand about $US20 a tonne ($A19 a tonne) lower than US grain.

"Australian wheat values continue to be heavily discounted against other origins, which reflects the burdensome stock levels locally and the finite export capacity," Rabobank said in its Australian Crops Update report.

"It is likely that over at least the next 12 months, Australian wheat will continue to be the cheapest in the world."

Large carry-over stocks from the 2010-11 season followed by this past harvest's big crop and potentially another bumper crop this year are weighing heavily on the local industry, particularly with the world's wheat storages bursting at the seams.

The Rabobank report shows Australian wheat on a par with Russian and Argentinian prices last December.

But the price of Australian wheat has not kept pace with its competitors.

Argentinian wheat sits at prices similar to US grain, while the price of Russian wheat is about $US40 a tonne ($A38 a tonne) higher than Australian grain.

"Russian wheat values have risen sharply, to the point that it has effectively priced itself out of the market," the bank said.

"We expect this is a short-term aberration and that prices will fall in the coming months, which could mean that the short rally that we have experienced in Australia may well be short-lived."

Rabobank said reports of winterkill in the Eurasian region were "exaggerated" with a high stocks-to-use ratio expected to continue into 2012-13.

Grey skies also hover over Australian barley.

Rabobank said Australian barley prices would be driven by Chicago Board of Trade corn prices and a large northern hemisphere barley crop.

"Should this crop (northern hemisphere barley) exceed expectations, it is reasonable to expect a fall in barley values from current levels," the crop report said.

The bright light is canola, with the bank predicting prices will remain firm due to tighter stocks.

It said the winterkill in Europe was more likely to impact on canola yields than cereals.

Rabobank said it expected Australian growers to produce another large canola crop in 2012-13.

It is tipping national production of 2.58 million tonnes.