EU fails to raise wheat export subsidy levels

The European Commission failed to raise the level of wheat export subsidies on Thursday, granting a 10 euro per tonne refund on only 2,000 tonnes - far below the level expected by EU exporters. But on the other hand it opened tenders to export almost 800,000 tonnes of wheat and 500,000 tonnes of barley from intervention stores, a move set to ease the build-up in stocks.
The low subsidy award comes after several weeks of steady increases in EU refunds since they were revived last month. The EU began with a low level of four euros, then raised it by two euros every week, granting an 10-euro subsidy last week.
Exporters, which bid to export a total of 821,500 tonnes at refunds ranging from 10 to 20 euros, had said they needed a significant raise in the refund level to compensate for a rise of the euro against the dollar and higher freight prices.
Talk of the low award prompted the May contract on Euronext milling wheat futures to fall another 0.75 euro a tonne in the last minute of trade, before closing down 1.25 euro at 106.50 euros a tonne.
French grains office ONIC had said this week that the Commission should be granting subsidies high enough to allow at least 400,000 tonnes of wheat a week be exported, or the bloc's silos would "crumble under stocks."
But the EU's intervention storage's have continued to rise. The latest data showed there was 5.56 million tonnes of wheat in store, out of a total of 10.52 million tonnes of grain.
A large part of the total is stored in central European countries, mainly Hungary, which is facing an increasing problem due to insufficient capacity to store the grain on its own soil.
As a result the EU on Thursday opened several tenders to export wheat and barley from intervention storage's. The tenders had been announced previously but the timing and scope of the tenders had yet to be fixed.
The EU decided to open tenders to export 320,000 tonnes of Hungarian wheat, 300,000 tonnes of Czech wheat, 93,084 tonnes of Polish wheat, 80,663 tonnes of Austrian wheat as well as more than half a million tonnes of German intervention barley, EU grain lobby Coceral said.
The tenders are due to start on March 31 and end on June 23, it added.