Canada looks set to end up as one of the winners of the rally in grain markets despite the dismal spring which left an area of the country bigger than Switzerland unseeded, FO Licht said.

The German-based analysis group cut by 4.0m tonnes to 641.2m tonnes its estimate for the world harvest, a figure towards the lower end of the range of current forecasts, reflecting in particular worse hopes for the European Union and the former Soviet Union.

The US Department of Agriculture, whose forecasts set the global benchmark, is due next week to update its 645.7m-tonne estimate.

However, the downgrade to FO Licht's world production estimate defied better hopes for Canada, whose harvest the group pegged at 22.0m tonnes, 2.0m tonnes higher than previously expected and 1.5m tonnes above USDA expectations.

Haves vs have-nots 

The upgrade placed Canada among countries "well placed" to benefit from the strong prices prompted by Russia's drought, and extremes of both dryness and wet which have held back EU crops.

"The US, Canada, and Australia… will enjoy strong sales in the 2010-11 season."

Mr Flury said that the change in price dynamics would likely prompt higher plantings of winter grains, a factor which would "directly influence" areas available for spring crops – "and their prices".

"It is a testament to strong growing global demand that the third largest wheat crop harvest is nearing an end and the largest maize crop in history will soon be harvested, but prices continue to rally," he added.