The maize estimate was well above the range of trade expectations and 2% above the November USDA estimate. Trade's expectations appear to have been based on anticipated losses resulting from the delayed harvest and consequential winter weather related crop damage. The maize harvest was 79% harvested at the end of November compared to a five-year average of 97%.

As farmers were surveyed before the worst of the weather, this does not seem to have been as great a factor as anticipated. For example the estimate of the North Dakota crop, only 40% harvested at the end of November, was reduced by 2%, while the South Dakota crop, which was 58% harvested, was increased by 4%. Geographic location seems to have played a larger role in revisions with output from eastern corn belt states tending to be raised more than others. The reality is however, that the revisions in the estimates reflect the change in conditions during November and not during December.

The 1% upward revision of USDA's soyabean estimate was slightly above average trade expectations, but well within their range. As the soyabean harvest in major producing states is earlier than the maize harvest, there was less doubt about its outcome and lesser expectation over crop losses.

In a separate January 12 2009 news release, the USDA's National Agricultural Statistical Service (NASS) announced that it 'may release updated acreage, yield, production and stocks estimates for maize and soyabeans in the March 10 Crop Production report'.

NASS noted that the survey for January 12 estimates was made in late November and early December based on significant unharvested crops. The supposition is that the unfavourable weather which continued during completion of harvest in December may have reduced output of unharvested crops from that expected at the time of the survey.

Maize futures traded 30 c/bu ($11.81/t), down on the day of the report as the production figures exceeded trade's expectations. But it is not clear whether those expectations factored in potential December harvest losses; and indeed how effective any allowance for such may be in view of the unprecedented lateness of the harvest.

USDA's World Agricultural Outlook Board raised its projected average farm price range by 3% in its supply and demand projections which were made with knowledge of the production and stock estimates. This and the fact that NASS considered it necessary to resurvey farmers with unharvested crops are indicative of doubt about final outcomes.

It is evident that there is both uncertainty as to the size of the maize, and to a lesser extent soyabean crops and also as to the trades understanding of the recently published estimates.

David Walker (001) 780 434 7615