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Canola Crop Seen Up If Water Holds Back

Canada’s farmers will likely harvest more canola this year to cash in on high prices, but flooding is possible in Saskatchewan and will be a key factor, the head of the main canola industry group said Jan. 18.

Canola, soybean and rapeseed prices are trading around two-to three-year highs, giving farmers ample reason to seed canola, though cereals have spiked too, said JoAnne Buth, president of the Canola Council of Canada.

“Clearly in Canada it will be up,” she said in an interview. “Generally, growers are going to respond and there will be increased production.”

Much of Saskatchewan was pockmarked with potholes of rain before winter and heavy snowfall has since added to flood potential. But Buth notes that early predictions about growing conditions have missed the mark in past years.

“I just think it’s too early to tell” how flooding will affect seeding, Buth said.

The flood risk to planting comes as Canadian crushers are on pace to smash the high annual volume record due to recent expansions. Bunge Ltd. is also adding processing capacity by 2012.

Oilseed prices have risen on strong global demand and weather problems affecting crops, but they may not be as vulnerable as wheat to further spikes based on any new crop concerns that could emerge, Buth said.

Production of palm oil, a key source of vegetable oil, increases steadily year over year, keeping oilseed supplies in line with growing demand, she said.

Depending on flooding, industry estimates range from 17 million to 19 million seeded acres of canola in Canada this year, Buth said, which may top the spring wheat area for the first time as Canada’s most-seeded crop.

Chinese restr ictions on Canadian and Australian canola with blackleg remain in focus, with China’s provision for shipping to some ports due to expire in the next crop year.

Canada will seek an extension to those provisions or an outright removal of barriers, Buth said, but added she cannot predict what will happen.

“It’s a longer-term and more complex problem than we initially believed,” Buth said. China is concerned about its rapeseed crops becoming infected with a blackleg species it doesn’t already have that could reduce yields.

Shipments of canola seed to China fell by nearly two-thirds to about 236,000 tonnes during the first quarter of the 2010-11 marketing year, but China now rivals the U.S. as Canada’s top export market for canola oil.

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“It’salonger-termandmorecomplexproblemthanweinitiallybelieved.”

– JOANNE BUTH

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