UPDATE 1-Canada boosts canola acres estimate, lowers wheat

* Canola planting estimate up 3 pct from last estimate

* All-wheat acreage estimate down 2.9 pct

* Long-term trend from wheat to canola seen

(Adds Ag Canada comment)

By Rod Nickel

WINNIPEG, Manitoba, March 11 (Reuters) - Canadian farmers will plant a record-high acreage of canola this spring, reflecting a longer-term farmer shift to the oilseed and away from wheat, Canada's agriculture department said on Thursday.

Agriculture Canada raised its 2010 canola plantings estimate 3 percent from its last outlook on Jan. 28 to 6.8 million hectares (16.8 million acres).

Demand for canola has increased and companies are responding by opening two new canola crushing plants in Saskatchewan -- one owned by James Richardson International and the other by Louis Dreyfus and Mitsui & Co (8031.T).

Canada is the world's largest exporter of spring wheat, durum and canola.

Big global supplies this year of wheat and durum have weighed down prices, causing farmers to look to other crops. But a longer-term shift to canola from wheat is also underway, said Fred Oleson, chief of Agriculture Canada's market analysis division.

It's more likely for large supplies to weigh down prices of wheat than canola because of the larger number of countries that grow wheat, Oleson said. Demand for cooking oil, the main use of canola, is also on the upswing, he said.

"It all depends on prices and the relative prospects of canola look good (compared) to wheat," he said.

Canada's all-wheat acreage has generally declined over the past decade other than the occasional bump higher, while canola plantings have consistently grown.

Canola has also proven resilient to adverse weather.

"The crop has come through for (farmers) year after year," said Ken Ball, futures and options broker at Union Securities in Winnipeg. "I expect canola acres to be very, very large."

Assuming normal conditions, Ag Canada expects farmers to reap a canola harvest of 11.6 million tonnes, down 1.9 percent from last year but still the third-biggest canola crop on record. Yields were above average in parts of the Prairies last year.

Ag Canada reinforced its earlier predictions of smaller wheat plantings, lowering its all-wheat estimate 2.9 percent to 9.35 million hectares (23.1 million acres). That would normally result in a slightly-below average harvest of 24 million tonnes.

The agriculture department expects smaller durum plantings of 1.71 million hectares (4.2 million acres), down 6.6 percent from its last estimate and off 25 percent from 2009's planted area.

Agriculture Canada forecasts barley plantings of 3.4 million hectares (8.4 million acres), unchanged from its previous estimate and down 3 percent from last year's area.

Ag Canada expects farmers to seed 1.775 million hectares (4.4 million acres) of oats, down 5.3 percent from its last estimate but up 17.5 percent from 2009's plantings. (Reporting by Rod Nickel; Editing by Lisa Shumaker)