The European Union on Thursday raised its subsidy on wheat exports to six euros a tonne, but the volume awarded, at under 150,000 tonnes, fell short of exporters' hopes. The EU had disappointed exporters for two weeks in a row by granting refunds at four euros a tonne for relatively small tonnages. However, with export licences still being used for existing business, there were few hopes the refund would rise sharply this third time around.

French wheat futures closed unchanged ahead of the award.

Traders said market activity had been hampered by a decision from the European Commission to stop French grains office ONIC from publishing details of bids earlier in the day.

The latest award takes the subsidies awarded so far under the two million-tonne tender to 470,000 tonnes in three weeks.

Analysts have said subsidies above 10 euros were needed if European wheat was to compete against Argentine grain for the key markets in north Africa.

ONIC has called on the Commission to raise the refund level in order to permit at 350,000 tonnes of wheat to be exported with subsidies every week.

The French wheat growers association AGPB and farm union FNSEA on Thursday called on the Commission to be more dynamic to avoid repercussions on next season's harvest.

"Having taken several months to put refunds on wheat in place, the Commission has fixed them at such a level at its first two awards, that barely half the 350,000 tonnes needed to be exported each week until the end of the season can benefit from them," the groups said in a joint statement.

"This management, which is leading to immeasurably higher and more costly stocks, risks weighing heavily on the sale of the 2005 harvests," it said. But in the meantime, EU intervention stocks are continuing to rise - the latest figures show the wheat total at 4.6 million tonnes out of a total grain figure of 9.02 million.

Copyright Reuters, 2005