The estimate by the Canadian Wheat Board, Canada's main grain exporter, of a 20% slump in its shipments is pessimistic, grain handler Viterra has said, in the second fillip to the country's farm sector in one day.

An improvement in Canada's crop prospects - after a sodden spring which left, on Viterra estimates, 10m acres "either unseeded or drowned out" – questioned that the CWB's estimate of a fall to 15.1m tonnes in its exports of wheat and barley in 2010-11.

"Management believes this estimate is light given recent western Canadian production estimates and crop production problems in others parts of the world," Viterra said.

"Demand for open market grains is expected to remain strong, particularly out of the Asian Pacific region."

Frost question 

Indeed, the company forecast that Canada's production of the mains grains would come in at 44m-45m tonnes, below the 10-year average of 49m-50m tonnes, but ahead of gloomier forecasts earlier in the season.

"In order to achieve these results, the Canadian Prairies will require frost-free days in September and good harvest conditions well into October," Mayo Schmidt, the Viterra chief executive added.

However, the board earlier said that some frost had struck Alberta over the weekend, with temperatures falling to -3 Celsius, "resulting in some frost damage to immature crops".

"The forecast continues to call for cool wet weather. Warm and dry weather are urgently needed to increase the harvest pace," the CWB added, saying harvesting was 18% complete, about one week behind normal.

Bumper stocks 

Viterra's comments followed shortly after Statistics Canada revealed that the country had 7.82m tonnes of wheat in stock as of the end of July, a jump of 19.4% year on year, and significantly ahead of market expectations.

While the healthy stocks were poor news for rival exporting countries – Mr Holaday noted that the data had kept Chicago prices "on the defensive throughout the day" – the estimates represented a fillip for Canadian agriculture, showing that it has ample grain to sell into a buoyant market.

Indeed, Viterra blamed a reluctance by farmers to sell at weak prices for a fall of 1.5m tonnes, to 25.6m tonnes, in the volumes of major crops it handled in the November-to-July period.

"Industry receipts into the western Canadian elevator system decreased, as lower commodity prices up until the end of June influenced the timing of grain sales," the company said.

Silver lining

The company said it was "optimistic" over volumes heading into its 2011 financial year, which starts in November, as stronger markets encourage growers to sell.

"The recent rise in commodity prices will provide incentive to farmers to actively market their grain through the next crop year,"

Viterra would also see an upside to the poor sowing season for holding back sales of crop sprays and fertilizers during the May-to-July period, contributing to a near-halving to Can$63.5m in quarterly earnings.

"Weather permitting, it is management's expectation that many of the farmers with unseeded acreage will apply crop protection products to eliminate unwanted plant growth on fallow land," the company said, adding that this would cost growers Can$5-10 per acre.

Viterra shares closed Can$0.09 higher at Can$8.59 in Toronto.