The bear attack on grains markets has unfinished business with UK feed wheat, a leading merchant has said, highlighting its narrower discount to higher-grade supplies.

David Sheppard, managing director of UK-based Gleadell, warned that London wheat may have further to fall after its £5-a-tonne tumble over the last week.

"There was no reason it didn't go further down last time, when it reached the season low," Mr Sheppard told Agrimoney.com.

London's spot wheat contract hit £91 a tonne in early September year, its lowest since December 2008.

"There is so much of everything around," he said.

Sterling effort 

For London wheat, pressure from last week's tumble in Chicago prices, following poorly-recieved US crops data, has been compounded by a strengthening pound.

Sterling hit a one-month high of $1.6380 against the dollar on Monday, and a four-month top of E1.13 against the euro, helped by robust house market data.

A firmer pound is viewed as poor news for sterling-denominated exports, such as crops, making them less competitive on export markets.

Value for money 

The currency move has helped narrow to £2 a tonne, from around £6 a tonne earlier in the season, London feed wheat's discount to French milling wheat, free on board.

"The question for a buyer is why buy feed wheat when you can get something better quality for nearly the same price," Mr Sheppard said.

At the UK arm of commodities giant Glencore, Hugh Schryver said: "By the time you take the extra freight cost from the UK to Spain compared with loading in French Mediterranean ports, our feed wheat is now no cheaper than French milling wheat.

"This means that there is very little scope for low-grade milling wheat premiums in the UK."

Farm sales

Mr Schryver added that the price drops had bought farm sales of wheat "almost to a halt, especially for January and February where prices have slipped back into the £90s [a tonne] in the main production areas".

Nonetheless, Agrimoney.com has heard of some pockets of firmer prices, with one merchant citing concerns over meeting demand from Herefordshire's poultry sector.