The U.S. Department of Agriculture report Nov. 9 was mildly supportive to oilseed and corn prices and bearish for wheat, but market reaction was muted.
USDA pegged 2007-08 U.S. soy ending stocks at 210 million bushels, below an average of analysts’ estimates for 211 million and below the USDA forecast in October for 215 million.
That helped lift soybean prices slightly, but a bigger factor in oilseed prices recently has been the rally in crude oil prices and the strong demand for vegetable oil.
Canola prices rallied with soybeans and soy oil after the report.
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Reflective of strong veg oil demand and the increased capacity of the Canadian canola crushing industry is the 12 percent increase in the amount of canola crushed domestically so far this crop year.
USDA cut its estimate of the U.S. corn crop to 13.168 billion bushels, down from 13.318 billion in October and below the average trade estimate of 13.273 billion.
But Chicago corn futures had climbed earlier in the week in anticipation of a low estimate. In a classic case of buy the rumour and sell the fact, corn prices dipped after the USDA report.
USDA raised its estimate of U.S. 2007-08 wheat ending stocks by five million bushels, to 312 million, while traders had expected a cut because of the strong pace of wheat exports.
It also raised its estimate of world wheat production and ending stocks.
After a dry start to the growing season, Argentina has enjoyed good moisture and the wheat crop estimate was increased by a million tonnes, to 15.5 million. There has been some frost in southern Argentina recently and that might hurt the quality of the crop.
USDA also increased its China estimate by one million tonnes to 106 million.
It cut its Australian wheat estimate by 500,000 tonnes to 13 million tonnes, but that is still higher than the latest Australian government estimate of 12.1 million tonnes.
World wheat ending stocks were seen at 109.8 million tonnes, up from the October estimate of 107 million.
Wheat prices are generally trending lower. Offsetting the downward pressure somewhat is dryness in the southwestern part of the U.S. winter wheat area, but the situation is far from serious yet for the recently planted crop.
