The European Commission has again resisted calls to revive politically sensitive subsidies on wheat exports and analysts said on Friday such a move might soon be too little, too late. Farmers in Europe have a big wheat crop but exports have been slowed by a weak dollar, high freight rates and competition from Argentine grain, currently more than $30 per tonne cheaper (FOB basis) on international markets.
French grains office ONIC had led the call for EU subsidies, saying inaction would trigger an avalanche of wheat sales into the bloc's intervention stores. The cost of buying in the wheat has been estimated at more than one billion euros.
But the Commission is aware that subsidies are likely to raise transatlantic trade tensions.
The EU has agreed to end farm export subsidies as part of a final global deal under the Doha Round negotiations at the World Trade Organisation, but in the meantime says they remain a legitimate market tool.
No decision was taken on subsidies at the EU's weekly grain meeting on Thursday, increasing the chances they will not be agreed this season at all, analysts said.
"The window of opportunity is narrowing," analyst James Dunsterville of AgriNews in Geneva said.
Analysts said even a decision this week to open up a subsidised tender would have meant that the first actual subsidies could not be awarded until mid-February, largely because of the need to draft the official regulation.
A lot of business has already been booked for March shipment, so any subsidies would only really affect exports in the last three months of the campaign to end-June.
"Every week they delay a decision just means there's one week less for any impact," Dunsterville said.
A source at Thursday's meeting said the issue was discussed and EU officials said they were monitoring the situation.
"They did not say yes, but they did not say no," he said.
The latest EU figures show wheat exports this season at 5.43 million tonnes so far, up 160,000 tonnes in the past week.
Analysts point out the total is 500,000 tonnes less than at the same timne in 2002 and 2000 - years with similar crops but also ones when the EU had 15 and not 25 members.
ONIC this week cut its estimate of EU wheat exports this season by nearly two million tonnes to 11.2 million, and said this would be trimmed further if subsidies were not revived.
It also forecast EU wheat intervention stocks rising to 10 million tonnes by end-June from 3.38 million now. ONIC officials also said that with another big wheat crop expected this year, hefty stocks would weigh on the market next season.
Traders said the slack pace of exports was likely to keep European wheat prices on the defensive. They are currently at or very near the EU's guaranteed intervention price of 101.31 euros plus a small monthly storage bonus.
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