Canadian wheat, canola harvests expand, rebound from dry conditions

By Rod Nickel

WINNIPEG, Manitoba - Canadian farmers will harvest more wheat and canola than was expected several months ago, as crops rallied from dry conditions that threatened yields, a government report showed on Monday.

Statistics Canada's crop estimates tend to increase in the annual December report, but the agency's raised estimate for all-wheat production surpassed industry expectations.

Global wheat ending stocks have fallen four years in a row, with Canada's drought and heavy rain in Australia tightening this year's supplies, offset somewhat by a big Russian harvest.

Canada is the world's fourth-largest wheat exporter and the biggest canola exporter.

Statistics Canada estimated all-wheat production at 32 million metric tons, the second-lowest in six years, but an increase from its September estimate of 29.8 million. The new estimate exceeded the average industry expectation of 31.1 million tons in a Reuters poll.

"It's a pretty big jump from the fall report. Yields came off quite a bit better than expected," said Brian Voth, president of farmer advisory IntelliFarm. Timely late-summer rains may have revived some crops, he said.

Farmers harvested 24.8 million tons of spring wheat, the wheat milled for baking flour, up from StatsCan's previous estimate of 22.6 million and the average trade estimate of 24 million.

Growers produced 4 million tons of durum, the hard wheat used to make pasta, the second-smallest harvest in 13 years amid tight global supplies and a slight reduction from StatsCan's previous estimate.

The StatsCan report is based on a farmer survey.

Farmers produced 18.3 million tons of canola, up from 17.4 million in the previous report but down 2% from last year. StatsCan's estimate matched the average trade guess.

ICE Canada January canola futures eased slightly, little changed from before the report.

(Reporting by Rod Nickel in Winnipeg; Editing by Kirsten Donovan)