By Rod Nickel
WINNIPEG, Manitoba - Canadian farmers will harvest more wheat than expected, and the biggest canola crop in three years, a report featuring the government's first official harvest estimates showed on Monday.
Canada's crop production is rebounding strongly after severe drought ravaged last year's harvest - welcome news for a world coping with stranded grain and sunflower oil stocks in Ukraine due to war.
Canada is the third-largest exporter of wheat, used for baking and for producing pasta, and the biggest exporter of canola, which is used mainly to produce vegetable oil.
Statistics Canada estimated all-wheat production at 34.6 million tonnes, 55% more than last year, and exceeding the industry's average estimate of 34 million. It would be the second-biggest Canadian wheat harvest in nine years.
StatsCan estimated production of spring wheat, the largest part of the all-wheat category, at 25.6 million tonnes, slightly above the average expectation.
The estimates look neutral to slightly bearish for spring wheat prices, and bearish for durum, said Jerry Klassen, analyst and trader at Resilient Capital.
"This is the first real indication that we’re seeing a recovery in production, both in Canada and the U.S.," Klassen said.
Statistics Canada produced the estimates using satellite images and weather data to July 31. It's likely that wheat and canola yields improved after that period, Klassen said.
Farmers will harvest 19.5 million tonnes of canola, up 42%from last year, in line with expectations.
ICE Canada November canola futures traded 1% lower, paring losses after StatsCan released the report.
(Reporting by Rod Nickel in Winnipeg; Editing by Kirsten Donovan)