Grain traders are bracing for huge moves in grain prices thanks to a "data dump" of crop reports later on Thursday, making it one of the most important days of the 2012 trading calendar.

The US Department of Agriculture, widely regarded as the world's foremost farming authority, will release three key reports - on global crop supply and demand, US grain inventories and domestic winter wheat sowings.

The slew of statistics - termed a "data dump" by Commonwealth Bank of Australia - has a history of causing huge moves in crop prices, with Chicago corn futures soaring the daily maximum allowed by the exchange last year and in 2007 and 2008, and ending limit down in 2009 and 2010.

The data were set to prove "huge" and "market moving", Don Roose, president of broker US Commodities, said.

'Prices look very volatile'

The prospect of large moves this time may only have been increased by the wide range of market forecasts for the data, indicating that investors are little agreed on what to expect.

The USDA's grain inventory report, for instance, is expected to show domestic corn stocks down some 660m bushels year on year, as of the start of December, sapped by a 2011 harvest expected to suffer another downgrade, besides by resilient demand from ethanol plants.

"However, there is a 500m-bushel range of estimates for that number," Mr Roggensack noted.

Looking ahead to domestic inventories as of the end of the 2011-12 season, arguably the most important number of all, analysts have a 433m-bushel spread of estimates around an average estimate of 749m bushels – representing a range of +/- 30% or so.

Argentina factor

Besides the picture of a poor US harvest to factor in, and US ethanol production shown on Wednesday remaining historically high despite the ditching of tax perks on December 31, the potential for surprise has also been increased by South America's drought.

Argentine corn was in its sensitive pollination period last month, when high temperatures struck, while soybean crops are still seen as having time to recover should rain arrive.

"Corn production losses in Argentina are now as high as 8m tonnes out of a 29m-tonne crop," Mr Roose said.

"A 28% drop in production is huge," although, again, analysts are sharply divided in their estimates with broker PFGBest estimating the Argentine corn crop at 27.5m tonnes.

Factored in?

And investors also have to consider how much of the crop losses and drop in US inventories that investors have already factored in.

At Macquarie, Alex Bos said that there was already a "lot of bullish anticipation" factored into prices, which could, without clearly bullish data, "struggle to retain gains made over the last few weeks".

Indeed, it may be wheat to which investors might focus their attention, given that the grain is "a little undervalued" relative to corn, and growing ideas of the degree to which that price difference is prompting livestock farmers to switch grains.

'Good chance of some surprise'

Furthermore, there is scope for the winter wheat sowings figure to come in below the three-year high that traders expect, given poor sowing conditions in many areas, but notably in Ohio, the biggest soft red winter wheat state, where a relatively late corn harvest and wet weather hampered seedings.

Jerry Gidel, at North America Risk Management Services, echoed the concerns about Ohio, flagging the potential for wheat farmers to have switched to corn, which is offering better returns.

"With concerns about low yields last year from following corn with corn in planting plans, farmers might have been looking to plant corn on ground rotated out of other crops," he said.

However, he added that, prices may yet not prove as volatile as investors have predicted.

"The problem is that everyone is prepared for a report which will be a disaster somehow. Probably, that means prices will not do anything."