But with wheat in the cross-fire of a range of conflicting influences, directions were uncertain, grains analysts said.

A strong rise in the Australian dollar last week, on the surge by the Japanese yen against the US dollar, held the rise in Australian wheat prices to less than US gains.

Over the week, Sydney Futures Exchange wheat futures rose by about A$6.00 a tonne, taking the January 1999 contract to A$168.25 on Friday. Richard Alcorn of New England Agricultural Traders (NEAT) also put the rise in cash wheat at about A$5 a tonne, mainly on Chicago's rise.

Prospects for diminishing world supply and increased demand, with market talk of China planning to buy around three million tonnes of wheat, together with a return of some optimism to commodity markets after the Japanese government's move toward an economic revitalisation plan, all contributed to wheat's rise.

But worldmarkets are in such dissaray that local grains traders attribute much of the rise to US funds buying wheat futures to cover short positions in a market exit.

Analysts also partly attribute the surge in the Australian dollar to the stricken Long-Term Capital Management group of the US and other struggling hedge funds covering failed short-selling positions.

Uncertainty about fundamental influences in the market left Australian opinion divided last week over whether the local dollar and commodities would continue to rise or whether gains would be a short-term blip before a genuine recovery next year.

Colin Lethbridge of agricultural broker IAMA Ltd doubts grains prices will continue to rise.

Chicago wheat at about $3.00 a bushel was shown by the charts to be headed for $3.25 for the December contract.

"I just can't see it getting there," he said. "The easiest money in the street at the moment is selling next year's wheat at A$180.00 (a tonne)."

NEAT's Alcorn said there was no reason why wheat couldnot hold its higher prices given international support.

Currency gyrations further complicate the maze. Australian wheat prices are closely linked with the Australian dollar, and commodity economists had doubts last week that the Australian dollar could hold above about A$0.6150. They also doubted that commodity prices would continue to improve in the short-term.

Australia last week was also still trying to assess frost damage to the Western Australian wheat crop and was overseas trying to sell into troubled markets.

The most recent estimate by AWB Ltd on Friday put the loss at a minimum 750,000 tonnes of wheat, ranging up to one million tones.

"We now believe it will be anywhere between 750,000 and one million tonnes," AWB Western Australia regional director Greg Harvey told Reuters on Friday.

Before this, private forecaster Australian Wheat Forecasters estimated losses at 700,000 tonnes to one million tonnes.

Before the frosts Western Australia was headed toward a forecast crop of around 8.7million tonnes of wheat in 1998/99, contributing to a forecast near-record Australia-wide crop of 23.5 million tonnes of wheat.

AWB's regional manager Southeast Asia Tim Dewan was in Jakarta last week ahead of an expected return to the wheat market by Indonesia in coming months.