Canada agriculture dept sees record canola area

* Canola area seen at 18.5 mln acres, up 10 pct

* All-wheat area pegged at 23 mln acres, up 9 pct

By Rod Nickel

WINNIPEG, Manitoba, Jan 28 (Reuters) - Canola and all-wheat
will closely contest Canada's spring acreage battle as farmers
look to cash in on the highest prices in more than 2-1/2 years,
Agriculture Canada's first planting forecast of 2011 shows.

Canola has consistently provided high returns to farmers,
and Canada's agriculture department sees them planting a
record-large area after flooding took millions of acres out of
production last year.
(Graphic of crop prices and area seeded:
r.reuters.com/tuj77r )

Agriculture Canada's outlooks are based on analysis, not a
farm survey, making them notable in the trade but not as
closely watched as Statistics Canada estimates.

Ag Canada forecast 18.5 million acres of canola, up 10
percent from last year and in line with a prediction this month
from grain handler Viterra Inc (VT.TO). Attractive prices and
expectations of high yields will drive the increase, Ag Canada
said.

Canola production could reach 12.9 million tonnes, based on
normal weather and yields.

All-wheat plantings will rise nearly 9 percent to about 23
million acres, due to high prices and low stocks of durum, the
forecast said.

Ag Canada sees acres of oats climbing more than one-quarter
to 3.7 million.

While the increase in oat plantings sounds large, some say
farmers will not boost acreage enough to avoid tight year-end
supplies after a tiny crop last year. [ID:nN24191900]

All-wheat production could hit 24.9 million tonnes, while
the oat harvest may reach 3.1 million tonnes, the department
said.

The high potential for flooding overhangs this year's
planting forecast.

The Red and Assiniboine rivers in Manitoba are expected to
spill their banks and a combination of saturated soil and
average snowfall in Saskatchewan looks to leave many fields
swampy for a second straight year. [ID:nN27252056]
[ID:nN24201849]

Some farm leaders said canola was the planting focus.

"The (financial) return to canola can be phenomenal
compared to other crops today," said Humphrey Banack, president
of Alberta's Wild Rose Agricultural Producers. "I'm hearing of
seed shortages right across the Prairies (and) they're talking
the biggest canola acreage in history this spring."

Greg Marshall, president of the Agricultural Producers
Association of Saskatchewan, said: "It all comes down to price
and the most returns per acre are for seeding canola. I think
that will be the best bet."

Farmers do not have to plant canola as deeply as some other
crops, making it easier to plant if conditions are wet, he
said.

Statistics Canada gives its first planting estimates on
April 26.
(Editing by Dale Hudson)