Canada's canola farmers face a double whammy of a delayed harvest and disease problems which threaten domestic consumption besides exports to China and the US.

Delays caused by wet weather mean a "significant amount" of Canada's 2009-10 canola harvest may not be completed until the spring, Washington said, expanding on a cut to 10.2m tonnes earlier this week in its forecast for the crop.

"The detrimental impact on yields lowers the production estimate by 500,000 tonnes," the US Department of Agriculture said.

Yet Canada's canola inventories look like ending the marketing year higher than had been thought, thanks to threats to consumption posed by blackleg, an endemic fungal disease, and the discovery of salmonella in canola meal.

Chinese stockpiling 

"If the import restrictions are not altered many shipments of [canola] to China could be cancelled," the USDA said.

Chinese crushers may instead turn to the stocks of 1.19m tonnes the country built up, from near nothing, in the year to the end of September.

'Serious challenges'

Salmonella poses a threat to demand both domestically and the US, which accounted for 95% of Canada's canola meal exports last year.

"Canada's domestic use of canola also faces serious challenges," the USDA said.

"A steadily strengthening Canadian dollar and continued concerns over salmonella in canola meal have put downward pressure on crushing margins."

Canada's canola crush is running 8% behind in 2009-10 despite larger capacity, Canadian trade data shows.