The rally in London wheat gathered pace on Wednesday, driving the spot contract above �100 a tonne for the first time since January, amid concerns that the hangover from a cold winter was biting into feed supplies.

London's May lot closed up ï¿½2.35 to �101.60 a tonne, its best finish for more than three months, with forward lots also making ground.

The rise represented a jump in demand for feed after a late winter delayed for some weeks the turnout of livestock onto pasture, a leading grain trader said.

He told Agrimoney.com: "Forage is very short. You get so many cold days over winter, and it's going to have an impact. The grass is still not growing.

"The big merchants who were buying at �92 a tonne a few weeks ago for their immediate needs just forgot to put their cover in for the coming months," he added, noting a tender from Frontier on Monday for 2,500 tonnes of wheat and rising bids from users such as Cargill-owned poultry group Sun Valley.

 Prices of barley, at a 2010 high of �80 a tonne, beans and rapeseed were also being dragged into the upsurge. One farmer had travelled from Somerset to the Isle of Sheppey on the other side of England to buy straw for less than �100 a tonne.

'Purely technical'

However, merchants urged caution over relying on wheat prices sustaining their rise, which has driven prices up �8 a tonne in five weeks.

Anomalies caused by the death throes of the May contract were forcing a wave of short-covering by speculators before Friday, when investing in the lot will mean being prepared to take physical delivery, Jonathan Lane, trading manager at UK grain merchant Gleadell, said.

"It's purely a technical move. It will be a different ball game once this has worked its way through," he said, noting open interest of 127,000 contracts as of Tuesday's close.

Indeed, the price rises, and gains in sterling, were eroding the competitiveness of the grain, which has seen it replace Ukraine as the region's cheapest feed wheat source.

Meanwhile Glencore's UK grain arm pointed out the potential pressures from another bumper harvest, which Europe is set for this year.

"Crop conditions on new crop across Europe remain good, so hopes of a third record crop, following on the back of one and two, are still very much alive," the merchant said.

Export revival ahead? 

Data on Wednesday showed the UK exporting 191,000 tonnes of wheat in February, down 20,000 tonnes from the January total.

Shipments since July, the start of the 2009-10 crop year, came in at 1.41m tonnes, near-halving from the same period of the year before.

However, many analysts expect an uptick in monthly shipments to about 3-400,000 tonnes in March and April, as the impact of recent export successes feeds through.