Nogger's Blog

11/01/11 -- If there's one thing you can usually rely on from the USDA it's to expect the unexpected. Tomorrow's report is almost universally expected to be bullish for beans and corn, so what are the chances of a bearish surprise?

Pretty good based on last year's January report, where US 2009 corn production was surprisingly raised from 12.920 billion bushels to 13.151 billion. The trade had been expecting a cut to 12.821 billion bushels on the back of the wet harvest that left uncut corn acres still standing in Midwest fields. Carryout was subsequently pegged at 1.764 billion bushels, much higher than trade expectations of 1.587 billion.

The corn market subsequently fell limit that night with 85,000 unfulfilled sell orders on corn at one stage. Beans closed down 32 1/4 cents and CBOT wheat down 36 3/4 cents.

After that corn declined for a further five sessions in a row, with beans and wheat losing for four of those five days. By the end of the sixth trading session following last year's January report corn was 54 3/4 cents lower, with beans down 70 1/2 cents and wheat off 71 3/4 cents.

By the way, the January 2009 report was also surprisingly bearish.

This year we've got the Food and Agriculture Organisation warning that world food prices are "in danger territory" and the associated rioting (and death) on the streets of assorted countries worldwide. I just wonder if the USDA might not feel that it's their duty to attempt to stem the tide with something bearish again this year?

We'll soon know.