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WINNIPEG, Manitoba (Reuters) - Canada's agriculture department slashed its production forecast for wheat, but raised its canola outlook, while warning that overall crop stocks will drop to a record low this summer.
Agriculture Canada released its grain and oilseed outlook, which is based on analysis not a farmer survey, late on Tuesday.
The department lowered its estimates of seeded area for most crops to account for a wet spring that left millions of unplanted acres. The downsized area resulted in Agriculture Canada's reduced harvest outlook versus its June 7 report.
The department forecasts larger harvests for major crops than last year, other than for wheat excluding durum. That crop category is mainly made up of spring wheat and Ag Canada expects production to reach 20 million tonnes, down less than one percent from last year.
Agriculture Canada cut its harvest estimate for all-wheat to 24 million tonnes from June's forecast of 25.5 million tonnes.
Canola production rises to a record-high 13.4 million tonnes from June's estimate of 12.7 million tonnes, as abundant moisture looks to lift yields.
Agriculture Canada's production estimates assume normal precipitation, quality and yields.
Its oat production estimate drops to 2.85 million tonnes from 3.35 million tonnes seen in June.
Ag Canada also reduced its production estimates for barley and durum and forecast crops of 8 million tonnes and 4 million tonnes respectively.
Stocks at July 31, the end of the 2010/11 crop marketing year, will be tight, making prices unusually sensitive to any production shortfalls, the department wrote.
Reporting by Rod Nickel;editing by Sofina Mirza-Reid