UPDATE 2-Better weather boosts Canada's wheat, canola crops more than expected

(Adds yield estimates, crop numbers for barley, oats and durum;
analyst comment and market reaction in paragraphs 2, 6, 9-13)
By Rod Nickel and Simon Doyle
WINNIPEG, Manitoba/OTTAWA, Dec 4 - Canada produced more
wheat and canola than expected, as dry weather gave way to
crucial rains later in summer, Statistics Canada said on Friday
in its final 2015 crop report.
After the report, traders drove down ICE Canada January
canola futures RSF6 1 percent. The market had expected
Statistics Canada to raise its estimate, but the government
agency's figure easily topped even the highest trade guess in an
earlier poll.
Statscan, using a farmer survey, estimated canola production
at 17.2 million tonnes, sharply higher than Statscan's previous
estimate for 14.3 million and the average trade guess of 15.6
million tonnes.
The harvest was 5 percent larger than last year's output and
the second-biggest ever.
"The canola number is a shock," said Lawrence Klusa, senior
market coach with AgriTrend, adding that it also points to
larger supplies at July 31, the end of the crop marketing year.
The average canola yield jumped 8 percent year over year to
38 bushels per acre, the second highest on record, despite dry
conditions in Saskatchewan and Alberta that by late July had
produced noticeably shorter than usual plants.
Canada is one of the world's largest wheat exporters and the
biggest shipper of canola, a cousin of rapeseed used largely to
produce vegetable oil.
Statscan pegged the all-wheat crop at 27.6 million tonnes,
exceeding its October estimate of 26.1 million tonnes and the
average trade expectation of 26.7 million tonnes. Production
dipped 6 percent from last year.
The average total wheat yield, which factors in spring,
winter and durum wheat, dipped 7 percent to 42.8 bushels per
acre.
Minneapolis March spring wheat futures 1MWEH6 shrugged off
the report, and rose 0.7 percent in early trading.
Statscan's estimates initially look bearish for canola and
wheat, but steady demand for both crops and smaller leftover
supplies from the previous harvest partly offset the extra
output, said Bruce Burnett, weather and crop specialist at grain
handler G3 Canada Limited.
Barley, oats and durum crops were all bigger year over year.
The barley harvest climbed 15.5 percent to 8.2 million tonnes,
exceeding the 7.6 million expected.
Oat production was up 15 percent to 3.4 million tonnes, in
line with expectations. The durum harvest of 5.4 million tonnes
was up 4 percent year over year and surpassed the average trade
estimate of 5.1 million tonnes.

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