The revised calculation -- which banks on a more expensive, theoretical grade of French wheat -- explains uncharacteristically generous export refund which appeared to undercut competing US wheat by around six dollars.

"We've changed the rules because we are not selling enough French wheat," an EU official told Reuters after the tender. "In staying with standard wheat we were getting now here. It was getting ridiculous," said a second source.The changes meant instead of standard Rouen prices of 690 francs per tonne, the EU used 730 francs, estimated using data from French cereals office ONIC for a higher grade of wheat.

The rejig meant refund of 31.99 euros valued the "new grade" French wheat at $103-104, level with US prices. But traders, who calculated that 31.99 euros on 690francs valued common French wheat at $96-97, were bowled over by the EU's change of tack.

"It was an amazingly big award," said one trader after the result, noting that Chicago prices fell immediately.

Analysts had expected the Commission would reject even the lowest export bids, given paper market prices around $96, a lack of demand and a glut of export licences among EU exporters.

The offical said the move followed pressure from French farm officials, concerned French wheat is falling victim to a growing demand for higher quality milling wheat.

"It was French pressure, the ministry is very worried," he told Reuters. "There is a quality problem in France .... (exporters) are losing clients (who need a specific quality)."

While the only requirements of standard French wheat are a limit on humidity and specific weight of 76 kilograms, the EU's new system blends in an 11 percent protein level and a Hagberg number of 220 to get its new market price.

The modifications correspond to a mixture of lowand high-grade milling wheat the EU estimates is more in line with US soft red winter wheat than the Rouen wheat it used before.

While wheat grown in central and south western France ismostly high grade, some silos bulge with wheat from other regions that is below the standard required for EU intervention and thus can only be exported.

But demand could be stronger, and analysts say a focus on yields in recent years may have led growers to neglect the specific quality demands of non-EU buyers.

ONIC recently urged farmers to cater for the quality needsof a growing number of private millers in key export markets whose heads are being turned by eastern European growers who can provide small cargoes of high-quality wheat.

Worried by a slide in French prices below EU-guaranteedintervention, both ONIC and wheat producers association AGPM have urged the Commission to do something to boost exports.

"The way exports are managed is the issue," ONIC PresidentChristian Lapointe said earlier this month. "We havealerted the farm ministry that ... our government has a role to play."

However, adjusting the parameters to keep theoreticalequality with the United States means the EU will end up in practice selling lower quality wheat cheaper, which could raise hackles at the U.S. Department of Agriculture (USDA) - already strongly opposed to elements of EU farm policy."We're selling it cheaper (because) it's of a lowerquality," agreed the official. "It will help but it could also risk creating a problem with the United States."