Mr Davis knocked the scuttlebutt surrounding the loan book on its head when addressing the Victorian Farmers Federation (VFF) grains group conference in Lorne saying, reports that the company had sold the book were incorrect.

AWB issued a statement to the Australian Stock Exchange correcting an article in the Australian Financial Review which claimed the loan book had been sold.

Mr Davis also denied there had been a resumption in talks with ABB after merger talks fell through at the end of 2008.

Shares in AWB closed at $1.23 on Tuesday, consolidating gains of around 50c made in March, after the stocks closed to a record low of 75c at the start of the month.

The share bounce was initially attributed to the lowering of debt levels that would be achieved by the sale of the loan book, but Mr Davis said he was unsure what had sustained the rally once that mistake had been corrected.

Improved seasonal conditions in NSW have been thrown up as one possible driver of the rally, although dry conditions persist in southern cropping zones.

Earlier Mr Davis, speaking at an Austock conference, said farm export earnings were forecast to rise over the coming two financial years, in spite of the dire economic conditions globally.

It is expected Australian farm exports will jump 12pc this financial year to $30.6 billion and then another 4pc in 2009-10 to $32.1 billion, with this meaning a 28pc increase in average income from $63,000 last year to $80,000 this year.

However, these gains will not push into drought ravaged south-eastern Australia and will mainly be distributed in Queensland, northern NSW and Western Australia.

Mr Davis said that in spite of not having sold the loan book, debt reduction was a focus for the company, which hoped to reduce net corporate debt by $200 million by September 30.