(Bloomberg) -- Canada’s wheat production will rise more than expected this year, adding to a global glut of the grain, while canola output will probably decrease, according to a government report.
Wheat output will gain 11 percent to 30.5 million metric tons, Statistics Canada said Tuesday in Ottawa. That would be only the second time in 25 years that production exceeds 30 million, said the agency, which based its outlook on interviews with about 13,100 farmers from July 21 to Aug. 4. The average estimate of analysts in a Bloomberg survey before the release of the data was for 30.2 million.
Canola production will drop to 17 million tons from 17.2 million in 2015, the agency said. The average estimate was for 17.7 million.
“We’ve got oodles and oodles of wheat in North America,” said Ken Ball, a senior commodity futures adviser at PI Financial. “The big issue in wheat is going to be quality.”
Heavy rains during the harvest caused crop damage across the prairies and will affect wheat quality as well as how much canola can be collected, Ball said. The canola crop will be too small to meet demand if China continues to accept shipments this year, and prices will probably rise “aggressively” if the trade issue was resolved, he said. China is considering stricter standards on Canadian canola-seed imports as of Sept. 1.
Canola futures for November settlement rose 0.4 percent to close at C$472.20 ($365.76) a ton on ICE Futures Canada in Winnipeg, after touching C$474.70, the highest price since July 15. The oilseed declined 3.3 percent this year through Monday on signs of increasing production.
Warm, spring temperatures allowed farmers in many parts of Western Canada to plant early. Parts of southern Manitoba, Alberta and Saskatchewan received more than three times the normal level of rainfall since April, according to Agriculture and Agri-Food Canada, a government agency.
Yields are estimated to be above the five- and 10-year averages for most crops in Saskatchewan, the country’s largest grower of wheat and canola, the province’s agriculture ministry said in an Aug. 18 report.
Spring-wheat output will rise 1.4 percent to 20.2 million tons, the government data showed. Durum production will jump 26 percent to 6.8 million.
Lentil production is expected to rise 36 percent to a record 3.2 million tons. However, significant amounts of rain fell in much of Saskatchewan during the survey period, which may hurt yields, the government said.
“This year in Manitoba and Saskatchewan we did not have enough heat units and we had way too much moisture and it’s being reflected in yields and crop production,” Wayne Palmer, a senior market analyst with Agri-Trend Marketing in Winnipeg, Manitoba, said on a conference call Tuesday.