Canadian farmers will harvest less canola and more wheat than expected, a Statistics Canada report showed on Thursday. The government estimated Canada's 2018 canola crop at 20.343 million tonnes, down from 21.3 million in 2017 and below an average of trade estimates for 20.8 million.
"It did come out lighter that expected. Canola supplies will be tightening up in the coming year, but it looks like they will remain comfortable," said Ken Ball, a commodities broker at PI Financial Corp. Statscan estimated Canada's all-wheat harvest at 31.769 million tonnes, up 6 percent from last year and above the average trade expectation of 31.4 million tonnes.
ICE canola futures drew support from the Statscan data along with a weaker Canadian dollar. The benchmark January canola contract was up $2 at $486.70 per tonne as of 11:28 a.m. CST (1728 GMT).
Analysts noted that the July 2019 canola contract has been gaining against new-crop November on spreads. July was trading at a roughly $9 premium over November, after trading at a discount as recently as November 20. "That indicates a concern over having enough supplies come the end of the (marketing) year," said Bill Craddock, an independent trader and farmer.
Poor weather stalled the 2018 canola harvest, and snow and cold temperatures in parts of the Prairies may have affected the overall quality and quantity. The wintry weather followed a hot summer in some areas, a factor that may have hurt yields, said Chuck Penner, analyst with LeftField Commodity Research.
"We are showing a stronger (cash) basis in Canada, just in the last few weeks. So think it's starting to be felt a little bit," Penner said. Statscan pegged the 2018 corn harvest at 13.885 million tonnes, but Penner said that figure might be revised in subsequent reports due to harvest delays and crop quality problems in top producer Ontario.