Canada canola crop slumps; wheat estimate slips

Thu Oct 4, 2012 11:25am EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Canada's canola harvest was much smaller than farmers expected and well below last year's production, Statistics Canada said on Thursday, setting up a tug of war for supplies from the world's biggest producer and shipper of the oilseed.

All-wheat output appears slightly lower than previously forecast, StatsCan said.

Canola production will be 13.36 million metric tonnes (14.72 million tons) in 2012/13, down 2 million tonnes from the government agency's August 22 estimate of 15.4 million tonnes and below last year's harvest of 14.5 million tonnes.

The trade was anticipating a lower estimate, but the new figure was more than 1 million tonnes below the average forecast.

ICE Canada November canola futures shot up 3 percent after the report, before paring those gains.

"(The report) is very supportive for canola," said commodities broker Ken Ball of Union Securities in Winnipeg. "It is a shock in that it's a low number. We knew the crop was down; we didn't know if it would show up on this report."

Midsummer heat during canola's vulnerable flowering period, disease and a windstorm all reduced the potential of Canada's crop. The average canola yield fell to 28.2 bushels per acre, the lowest level in five years.

"A crop of that (smaller) size will require some serious demand rationing to occur," said Dave Reimann, market analyst with Cargill Ltd's grain marketing services division.   Continued...