UPDATE 2-Canada raises canola, wheat harvest estimates on favorable weather

(Adds details on other crops, analyst's comment)
By Rod Nickel and Simon Doyle
WINNIPEG, Manitoba/OTTAWA, Oct 2 (Reuters) - Canada on
Friday raised its estimates for the canola and wheat harvests
after recent favorable weather helped offset damage from earlier
hail and dry conditions.
August rains and mild September weather boosted yields in
Western Canada, the country's main crop-growing region.
Statistics Canada pegged the 2015/2016 all-wheat crop at
26.06 million tonnes, higher than its Aug. 21 estimate of 24.6
million tonnes and above the average trade expectation of 25.1
million in a Reuters poll.
Still, the harvest would be 11 percent lower than a year
ago, and the smallest in four years.
The canola crop looked set to reach 14.3 million tonnes, 1
million tonnes higher than Statscan's previous estimate, and
just below the average trade guess of 14.5 million tonnes.
Output would be 13 percent lower than in 2014, the smallest in
three years but still the fourth-largest ever.
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The canola estimate didn't surprise, but many in the trade
expect the real size of the harvest is about 15 million tonnes,
said Wayne Palmer, analyst at AgriTrend Marketing.
"I've been taught through the years that big crops get
bigger," he said.
ICE Canada November canola futures RSX5 dipped after the
report. Minneapolis December wheat futures 1MWEZ5 eased.
An increase of 1.1 million tonnes in spring wheat production
from the earlier forecast to 19.05 million tonnes boosted the
estimate for all-wheat, a category that also includes winter and
durum wheat.
After unusually high crop yields in the last two years,
yields returned closer to normal, said Bruce Burnett, weather
and crop specialist at grain marketer G3 Canada Limited,
speaking on a Minneapolis Grain Exchange conference call.
Production of durum, used to produce pasta, is estimated to
drop 9 percent to 4.74 million tonnes as expected. The crop,
grown in southern Alberta and Saskatchewan, was one of the most
harmed by dry conditions, Burnett said.
Statistics Canada's report was based on a farmer survey. On
Sept. 17, Statscan issued higher production estimates in a
report that factored in satellite data. ID:nL1N11N10M
Canada is one of the world's largest wheat exporters and the
biggest shipper of canola.
Oat production looked 10.5 percent larger than a year ago at
3.29 million tonnes, but smaller than the average trade estimate
of 3.4 million. Barley output was 7 percent larger than a year
ago at 7.6 million tonnes, and higher than the 7.3 million
expected.
Statscan will issue final estimates Dec. 4.