However, gains on US futures exchanges, which led to the Australian physical price rise, have been eroded this week.

After hitting a three-month high of over US640c/bu earlier in the month, there have been some sharp corrections in March '09 futures, coming back to just over US570c/bu this week.

For canola, there has been a steady rebound from the lows below $500/t, as the market comes to realise the true Australian supply and demand situation, with crop coming in from late harvesting areas in the Esperance zone in WA and Victoria’s Western District.

With reports of frost and rain damage influencing yield and quality, the market has been pushed up around $40/t on the previous lows.

It has not all been good news in terms of farmgate prices, barley producers have had to contend with a plummeting malt barley price.

From a price of $330/t, port, on Christmas Eve with ABB, malt one prices have dipped to $265/t, as the impact of the large amounts of malt no retention, from barley with malt qualities but slightly higher screenings, has created enough supply to meet demand.

ProFarmer managing director Richard Koch said the volatility through the first couple of weeks of 2009 was a sign of things to come.

"I reckon this week’s trading was a snapshot of what to expect for most of the first half of 2009," Mr Koch said.

"Markets gained ground when they were allowed to focus on new crop fundamentals, but were eventually overwhelmed by negative news on the economic and demand front."

He said that the trade was struggling to assess the impact of conflicting pieces of information from the US Department of Agriculture.

One on hand the USDA has highlighted building stocks and reduced demand, but on the flipside of this equation there is also likely to be a big drop in US winter wheat plantings, which are projected to fall by 9pc, which is a positive thing for wheat prices.

Mr Koch said strong domestic demand, combined with a fall in the Aussie dollar this week, back from recent highs above US70c, was enough to stop the Australian wheat market from losing the gains of the previous three weeks thus far.