Here's Some Interesting Stuff

I recently stumbled across the UK-based website www.agrimoney.com which is well worth a look and provides loads of interesting articles about the markets absolutely free, something which I know is dear to your little hearts.

They posted a story over the weekend saying that the Chinese corn harvest this year might be 20 MMT overestimated, and I thought that's quite a lot isn't it, 20 MMT?

The story goes on to say that this might explain why the government's weekly auctions have been attracting far more interest for corn than beans. Of course the fact that the bean price equates to roughly $5/bu more than the price in Chicago might also have something to do with it, but I get their drift.

According to our mates at the USDA, China will produce 162.5 MMT of corn this season, that makes them easily the largest producer in the world after the US. Indeed that is around a third of the world's production outside of the good old US of A.

If we have a look at 09/10 ending stocks the USDA peg China at 57 MMT, that's 40% of the entire world's projected ending stocks, including the US.

The official Chinese government think tank, the China National Grain and Oils Information Centre, might have overstated the size of their domestic production by 20 MMT just three weeks ago. That would cut Chinese ending stocks by more than a third.

Didn't they see this coming? Has all this only happened in the last three weeks? They couldn't be lying surely?

The notion of putting out deliberately erroneous figures by the world's largest stock-holder shouldn't entirely surprise. This is the country after all where it was considered normal practice to add melamine to animal feed. That balloon only blew up when someone got a little too greedy and started adding it to baby milk.

Yes, if you will happily add toxic substances to baby milk for a few extra yuan, you certainly aren't going to shy away from adding the odd 20 MMT to the bottom line are you?

Which of course beggars the question, is corn the only product they are doing this with? I think the answer is no Siree.

China accounts for around 17.5% of the world's wheat crop and a third of global 2009/10 ending stocks, using the USDA's figures. It's already been stated on here a few times that it is more than a little strange that they got a record crop of circa 115 MMT this year despite a terrible drought. Did they really? Who's to say that they didn't overstate that by 20 MMT as well?

Which leads us on from super-secretive and corrupt China to simply inept and corrupt India. Where are their wheat stocks? They keep telling us that they've got enough to last a whole year, so why aren't they releasing any onto the domestic market right now, as they have been promising for weeks?

China & India combined account for 195 MMT or 30% of global wheat production, and 43% of world ending stocks for 2009/10, according to the USDA. How much of that is really there as well?