Canola down Friday morning on bearish USDA report

Oilseed prices are under pressure on Friday after the United States Department of Agriculture reported that crops in the U.S. were not quite as bad as expected and stocks by the end of the year will be a little more than expected.

The mid morning market reaction is that canola and soybean futures are down.  After an initial dip, wheat and corn are now trading a little higher as traders apparently stick with their assumption that U.S. wheat exports will soon pick up as Black Sea sources wind down. Also, despite a small increase in world corn supply, the situation remains very tight.

January canola at 10:33 a.m. CST is trading at $593.40, down $6.80 or 1.13 percent.

USDA pegged the corn crop at 10.725 billion bushels, up 19 million bu. from last month, with a yield increase of 0.3 bu. to 122.3 bu. per acre. The trade had expected 10.647 billion bu.

USDA estimated the soybean crop at 2.971 billion bu. The trade had expected 2.892 billion bu.

USDA increased its forecast for soybean crushing and exports but not enough to prevent an increase in soybean ending stocks to 140 million bu., up from 130 million in the October report. The trade expected 131 million.

There were no changes to U.S. wheat production but USDA lowered its forecast of exports to 1.1 billion bu., down from 1.15 billion in the October report. That is a surprise because Black Sea region exports are expected to wind down soon and the trade expected more wheat business would come to the U.S.

USDA lowered its estimate of global wheat production by 1.62 million tonnes to 651.43 million tonnes. It cut its forecast of Australian production to 21 million tonnes, a reduction of two million.

However it also lowered its expectation of global consumption and the result was an increase in its forecast for ending stocks, which climbed to 174.18 million tonnes, up 1.18 million tonnes.

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