The European Commission maintained its wheat export subsidy at four euros a tonne on Thursday, well below the level analysts say is necessary to kick start sluggish exports to a well supplied world market. In its second export subsidy award after a gap of 18 months the Commission's refund allowed 185,000 tonnes to be exported. News of the low award caused French wheat futures to dip in late trade and supported prices in Chicago, traders said.
Analysts say subsidies above 10 euros are needed for French wheat to compete with Argentine grain, which holds a $15 price advantage in key north African markets even though it faces higher freight costs.
French grains office ONIC this week called on the Commission to raise the wheat refund level immediately, saying time was running out this season.
But traders have been submitting low bids for the tender with the intention of winning export licences for business already concluded. ONIC said it could be three weeks before this spot business has been completed.
"If the (EU) Commission takes three weeks to reach the necessary level, we'll have lost out. We must have the refunds now," ONIC President Christian Lapointe said.
"The buyers are out there."
ONIC said EU wheat exports needed to be much higher to keep export targets in sight and avoid massive stock problems.
"Wheat awards must be accelerated to 350,000 tonnes a week or we'll see European silos weighed down with stocks," it said.
The latest EU figures show intervention stocks still on the rise, with wheat offers now totalling 4.43 million tonnes, up more than 230,000 tonnes this week.
Analysts expected the total to rise further as EU exports, even with larger refunds, would still meet tough competition on world markets given the ample supplies.
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