WINNIPEG, Manitoba (Reuters) - Canadian farmers harvested slightly less grain than earlier projected because hot, dry weather slashed yields in the south and wet conditions hurt crops in the north, Statistics Canada said on Thursday.
The report leaves Canada with 587,000 tonnes less wheat than earlier predicted -- a difference that analysts would ignore in a normal year, but a margin that was expected to cause jitters this year because of shrinking world supplies.
“It emphasizes how tight wheat stocks are in the world,” said Bruce Burnett, director of weather and crop surveillance at the Canadian Wheat Board, one of the world’s largest wheat exporters.
World wheat prices rallied to historic highs earlier this year with stocks approaching 30-year lows amid production snags around the globe.
Canada’s wheat crop was 20.6 percent smaller than last year, contributing to the wheat rally.
Statscan said farmers harvested 20.054 million tonnes of wheat, down 3 percent from its October 4 estimate of 20.641 million tonnes and at the low end of trade predictions.
Minneapolis wheat futures were higher after the report, despite early weakness in other wheat markets, with March up 10-1/4 U.S. cents to U.S. $9.65.
But the biggest surprise in the report came from a steep cut in barley yields in Saskatchewan and Alberta which dropped national production to 10.984 million tonnes, 7 percent below earlier estimates of 11.822 million tonnes.
Trade estimates ahead of the report had ranged from 11.4 million to 12.1 million tonnes.
The smaller crop size had traders wondering how tight barley supplies could become in Canada, given that some had already forecast record-small ending stocks before the new harvest begins in August.
Agriculture Canada last month forecast only 1.3 million tonnes of barley would remain on July 31.
“We are going to unthinkable levels, so somewhere the demand has to be rationed,” an analyst said.
Imports of cheaper U.S. corn likely will continue, traders said, and some questioned whether the Canadian Wheat Board could achieve its forecasted exports of 3 million tonnes.
But one trader said the Statscan survey failed to reflect supplies accurately. “We’re discounting it,” he said.
Thinly traded barley futures at the Winnipeg Commodity Exchange were higher on Thursday, with March up $1.20 at
Statscan dropped oats to 4.696 million tonnes, down 6 percent from 5.009 million tonnes on October 4, and at the low end of trade projections ahead of the report.
The oats crop is still 22 percent larger than last year’s production, Statscan said.
Statscan said farmers harvested a record number of canola acres, but yields were below average, which traders said would underpin canola futures.
Statscan pegged canola at 8.751 million tonnes, slightly below its previous estimate of 8.864 million tonnes and average trade projections of 8.9 million.
* Statistics Canada report
Reporting by Roberta Rampton; editing by Matthew Lewis