August 22, 2011


Canadian wheat, canola grow modestly



The presence of summer heat aided Canadian late-seeded crops to grow quickly, thus, causing the harvest prospects of wheat and canola to grow modestly, according to a Reuters poll.


Statistics Canada's first estimates of 2011/12 crop production, due on Wednesday (Aug 24), look to be larger than the trade was predicting last month, the poll of 20 traders and analysts showed.


The trade expects, on average, all-wheat production to come in at 23.5 million tonnes, the biggest crop in two years and about 200,000 tonnes more than it was expecting in a Reuters poll last month.


Canola production looks to reach a record 13.6 million tonnes, up 15% from last year, according to the average trade estimate.


The oat harvest will total 2.9 million tonnes according to the poll, making a recovery of nearly one-third from last year's crop, which was the smallest in 19 years.


Hot, dry summer weather accelerated crop growth after a slow start, and in Alberta, the second-biggest wheat- and canola-growing province, government officials expect higher than normal yields.


"In June, we had very good moisture and then above average temperatures in July, so we almost had perfect conditions for wheat growing across Western Canada," said the manager for the Winnipeg office of Swiss grain trader GAP SA Grains and Produits.


But the poll shows that the grain trade still harbours doubts about the size of crops, bumping up production estimates on average by only a few hundred thousand tonnes from last month.


Estimates for all-wheat production ranged widely by more than three million tonnes and canola's low and high estimates were nearly two million tonnes apart.


Spring flooding and cool weather left millions of unplanted acres and forced farmers to seed many fields late, leaving crops at risk of damage if they are still immature when autumn frost strikes.


The July heatwave, while beneficial to speeding up plant growth, will also likely reduce the yield potential of wheat and canola, said a market analyst.


"Heat in July damaged these crops," he said. "And we have been through a fairly sustained dry spell in Manitoba and eastern Saskatchewan. The canola crop overall is definitely taking a little step back."


It is also unclear to what extent farmers had to abandon fields that they managed to plant despite swampy spring conditions.


Canada is the world's biggest exporter of spring wheat, durum, canola and oats.


Canadian harvests of spring wheat and durum, used in baking and pasta respectively, are especially critical to world supplies this year. Concerns about low US yields and harvest rain delays drove up Minneapolis spring wheat futures <0#MWE:> at times this week and spring flooding in the northern US Plains also limited durum plantings.


The trade is closely eyeing the quality of this year's wheat crop, after last year's harvest produced lower quality than usual and left the Canadian Wheat Board scrambling to satisfy its premium-wheat contract with Japan.


Harsh weather has also curtailed rapeseed crops in Germany, Poland and Ukraine, putting more focus on Canada's canola production.

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