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. Itwas 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 690 francs valued commonFrench wheat at $96-97, were bowled over by the EU's change of tack, which not only undercut US prices but released a hefty 219,500 tonnes onto the world market. "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 newmarket price.

The modifications correspond to a mixture of low and 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 is mostly 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.