China's state-run food trader has criticised sharp fluctuations in US government corn crop forecasts, calling the data "an insult" and saying that the changes make it difficult to hedge risks. US corn futures tumbled almost 10 percent in one day last week after the USDA shocked the market with a forecast for a potentially record-large corn crop.
The acreage was nearly 2 percent above analysts' expectations, despite an excessively wet spring that many thought had impeded planting. "I would like to question the US Department of Agriculture, in just ten days or less than a quarter of a year, why does your corn data differ so much?" Fei Zhonghai, COFCO's chief risk control manager, said to a global derivatives forum in Dalian on Wednesday.
"One time it was as high as heaven while another time it was as low as hell." China, which is battling to control food inflation, is likely to tap the US corn market for more supplies. It has bought more than 2 million tonnes so far this year. Benchmark Chicago Board of Trade corn has fallen more than a fifth in less than a month. In June, the contract hit a record high near $8 a bushel after the USDA cut its estimate for planted corn.
"USDA data for researchers like us is an insult," Fei said. "If this is the manner of data release, companies like us are unable to hedge on the futures market, it may bring huge losses to our enterprises." The official's speech was posted on the exchange web site (www.dce.com.cn). The Chinese official is not alone in questioning US data.
"We remain skeptical of the USDA's recent planted acreage and quarterly stocks estimates and expect downward revisions to both in future reports," Wall Street bank Morgan Stanley said in a note to clients. Regardless, the agency remains a key source of information for governments and the world food industry.
"This data is drawing a lot of criticism because it has surprised many players," said Ker Chung Yang, analyst at Phillip Futures in Singapore. "But at the moment we still need to take USDA as a guide because the US is the most important supplier of agricultural products."
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