THE GRAIN trade is mulling what traders describe as the “ultra-cautious” approach to export refunds of market managers in Brussels.

Shippers were hoping tenders refunds of at least €10/t (£7) would be accepted by the commission, bridging the gap between EU supplies and Argentinean grain into the key markets of North Africa.

But at the last two adjudications, Brussels set the bar at just €4/t (£2.80).

This was enough to enough to cover 134,000t of the 667,300t of wheat tendered by EU exporters last week (Fri, Feb 4) and 184,000t yesterday (Thurs, Feb 10).

Klaus Schumacher, head economist at Toepfer International in Germany, said that was not unexpected.

“It‘s always the same game. There are a few traders out there who have already sold wheat without refund, so they bid low to make sure they get their licences.

“The commission knows it needs €10/t to generate new business, but it will never go there in one step, as this would give it problems with the European Court of Auditors.”

Pressure has also been put on shippers to use their export refunds immediately through the introduction of a “negative corrective”.

The corrective cancels out the usual €0.46/t which holders could claim each month until the grain is shipped.

Trade reaction to the developments was negative, with the MATIF futures market in France dropping €1-1.5/t, despite the weaker euro. London futures also drifted lower.

Looking further ahead, merchants expect the EU market to continue to bump along at the intervention level.

So far, public grain stocks have grown from 3.6m tonnes at the start of the season to 5.7m tonnes last week, with a further 5.7m tonnes “under offer”.