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Are Global Corn Estimates Off Kilter?

China to add to squeeze on world corn supply

China's growth means that many of its raw materials to sustain the growth must come from other parts of the world. To help gauge Chinese demand for materials, many companies and governments rely on estimates from the China National Bureau of Statistics and other sources, like U.S. Government agencies. If, however, the estimates are wrong one way or the other by a larger than expected margin, the commodity markets start to react, and cause some companies to loose business and revenue.

China's National Bureau of Statistics said that farms produced a record corn crop in 2011 of 191.8 million tonnes. But enthusiastic local officials often overstate the size of crops in China to impress central authorities and win bigger subsidies.

Beijing and the influential U.S. agriculture department may have overstated China's corn crop by as much as 14 percent, pointing to higher imports from the world's second-largest consumer of the grain that could squeeze already tightening global supplies.

This large misalignment of estimates versus reality will cause turmoil in the commodity markets and effect the local markets for feed grain and impact beef, pork, and poultry producers.


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