COFCO hits out at data changes
Updated: 2011-07-09 07:59
By Niu Shuping and Sam Nelson (China Daily)
Excavators move corn in Campus, Illinois, in the United States. The US Department of Agriculture defended its data, saying it was not "in the business of trying to manipulate numbers in any way". Frank Polich / Bloomberg News
Food trader says corn revisions may cause huge losses for its enterprises
BEIJING/CHICAGO, Illinois - A major Chinese food trader has slammed the US government's dramatic revisions of its supply-demand data on corn, saying the sharp changes made it difficult for the entity to hedge risks.
The incident underscored a mounting sense of frustration over the inconsistency of US data that has contributed to exceptional volatility in the market, and which has spurred G20 leaders to push for a global data repository that would help quash speculation that has driven prices to record highs.
"I would like to question the US Department of Agriculture (USDA); in just 10 days, or less than a quarter of a year, why does your corn data differ so much?" Fei Zhonghai, chief risk control manager at China National Cereals, Oils and Foodstuffs Corporation (COFCO), told 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," he added.
"USDA data for researchers like us is an insult," said Fei.
"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."
His speech was posted on the Dalian Commodity Exchange website.
Last week's USDA data came from the National Agricultural Statistics Service (NASS).
The US Department of Agriculture defended its data, saying it was not "in the business of trying to manipulate numbers in any way".
"I can understand COFCO or anyone else being upset there are big changes in the forecast. We have to deal with those here as well. But we're reporting the numbers from whatever our statistical agency has shown, and they're what we feel are the best estimates at that point in time," USDA chief economist Joe Glauber told Reuters.
COFCO's complaints centered on the USDA's June 30 report that substantially raised its estimate of how many acres farmers in the United States planted with corn this spring, and the USDA's corn stocks estimate beating trade expectations by 370 million bushels.
On that day, US corn futures tumbled as much as 12 percent, a record decline. Prices have slumped about 19 percent since hitting an all-time high close to $8 per bushel on June 10.
"I don't like the volatility in US quarterly corn stocks data either.
"But I'll stand behind the 'home town' team at WASDE and NASS against insults from abroad," Feltes said, referring to the World Agriculture Supply and Demand Estimates.
The row over data comes on the heels of the G20 leading economies launching plans for a global grain database in an attempt to reduce volatility in food prices.
However, observers said it is unlikely to shed new light on the agricultural inventories of powerhouses such as China and India, or some import-dependent Arab countries.
(China Daily 07/09/2011 page10)