Prospects for UK wheat prices have become so poor that the premium buyers usually pay for forward purchases may disappear, Glencore analyst Hugh Schryver had warned.

It was "very difficult to be anything but bearish" about UK prices given the rich supplies of the grain, both globally and domestically, Mr Schryver said.

Buyers had become so unwilling to pay up that they were "not prepared to bid any more" for later months.

"There is a real risk of returning to the markets of four or more years ago where the spot price for September becomes the spot price for November, March and even May," he said in a weekly market report.

Contango factor 

Typically, the wheat market is is so-called contango, where contracts for forward months attract higher prices than those for near-term lots. This takes account of storage costs, as well as some risk premium.

However, the gap between London's nearest and second-nearest feed wheat contracts was, at £1.75 a tonne on Monday morning, half that of the start of the year.

The UK harvest has, like many others in Northern Europe, proved better than expected this year, with some fields in Herefordshire, where Agrimoney.com is based, reporting yields of 5.5 tonnes per hectare.

English and Welsh farmers have also held over 1.1m tonnes of wheat from last year in anticipation of higher prices, official data showed last week, leading Mr Schryver to estimate the country has 2.5m tonnes of the grain to export.

'Silos full to bursting'

He added that competition for export markets had become "intense" in feed wheat, thanks to the good regional harvest and the level of French and German milling wheat likely to be downgraded because of low protein levels.

"Spain's dockside silos are already full to bursting with old crop stocks and new crop Black Sea shipments, so demand is already muted," he said.

"There is some spot demand to Ireland but Danish wheat has already fulfilled some of this at prices some £3-4 [a tonne] below current market values in the UK."