Oil World Says Canadian Farmers Will Cut Canola Area for Wheat

Canadian farmers are expected to reduce their planting of the oilseed canola by 10 percent this spring in favor of wheat, Oil World said.

Canola may be sown on 7.7 million hectares (19 million acres), down from a record 8.61 million hectares in the spring of 2012, the Hamburg-based industry researcher wrote.

The reasons for the expected lower plantings include disappointing canola yields last year, disease problems due to lack of crop rotation, higher wheat prices and increased soybean planting, according to Oil World.

“There is a high probablility that Canadian farmers will sharply reduce canola plantings this spring, mainly in favor of wheat,” Oil World wrote. “Wheat prices have become relatively more attractive than canola prices.”

Canola for delivery in November, after this year’s harvest, has advanced 7.7 percent in Winnipeg in the past 12 months, compared to a 15 percent increase for December-delivery wheat traded in Chicago.

“The drought in the U.S. winter-wheat areas as well as in Australia has fueled concern about next season’s global supply and contributed to the recent strength of wheat prices,” Oil World said.

Canada’s canola harvest fell to an estimated 13.9 million tons in 2012 from 14.6 million tons the previous year after dry and hot weather in July, according to Oil World. Under normal to favorable conditions, Canadian farmers might still harvest between 14.5 million and 15 million tons this year, it said.

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