Canola prices rise as disease cuts Canadian hopes

Canola prices bucked softness in crop markets after Canada pegged its harvest at 15.4m tonnes, well below market estimates, and crystallising concerns of damage from disease and insect pests.

Canola futures for November delivery closed up 0.6% at Can$633.20 a tonne in Winnipeg even as prices of fellow oilseed soybeans eased in Chicago.

The rise followed an estimate by Statistics Canada of the Canadian harvest which, while representing a record crop, was 1m tonnes below market estimates, and 900,000 tonnes below the forecast from the US Department of Agriculture, whose data set global benchmarks.

Indeed, it implied a third successive season of lower Canadian canola yields, to a five-year low of some 1.8 tonnes per hectare, and falling short of levels reached in 2010 and 2011 when farmers struggled with unusually wet conditions.

'Reports of combine fires'

However, farmers in Canada's Prairies agricultural heartland have been reporting increased incidence of canola diseases such as sclerotinia, a fungus, and aster yellows, which is spread by insect pests.

Farm officials in Manitoba reported this week that, for the province's crops overall, "hot temperatures during flowering and grain filling stages of crop development, moisture stress, and diseases such as root rots, sclerotinia, blackleg and aster yellows, are the main factors impacting yield and quality in 2012".

In Saskatchewan, farm officials have reported damage also from army worms, a moth larva, and flea beetles, with dryness also a setback in some areas, as further south in the US.

"There have been reports of combine fires in the field due to the extreme lack of moisture in some areas," they said. has previously heard of concerns over Canada's ability to keep raising canola output, given a reliance of higher acres on farmers skipping crop rotations typically regarded as best practice, in lowering disease risks.

Export potential

The data place a question mark over Canada's ability to fill a gap in international canola demand caused by prospects of a disappointing harvest in the European Union, the top producer, with output expected to fall in third-ranked China too.

The USDA currently pegs Canada's exports of the rapeseed variant in 2012-13 at 8.70m tonnes, in line with those the previous season, with Canada's farm ministry pegging shipments at 8.75m tonnes.

In Europe, Paris rapeseed futures for November edged 0.7% higher to E522.75 a tonne.

Wheat recovery

The StatsCan report also estimated Canada's wheat production at 27.0m tonnes - in line with trade forecasts and the USDA estimate, and, bar the 28.5m tonnes harvest four years ago, the biggest crop in 15 years.

And barley production was seen recovering by 24% to 9.5m tonnes, lifted by expectations of a record yield, of 65.1 bushels per acre, and an increase in plantings from last year, when wet weather forced farmer to leave millions of acres unsown
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