Winnipeg | Reuters — Canadian farmers intend to plant seven per cent fewer acres of canola this spring compared with a year earlier, even less than expected by analysts and traders, as a dispute with China hampers demand, a government report showed on Wednesday.

China and Canada are locked in a diplomatic and trade dispute that has resulted in China blocking imports of Canadian canola from two companies. ICE nearby canola futures touched a more than four-year-low on Tuesday.

Canola plantings are likely to slip by 1.5 million acres from a year ago to 21.3 million, the smallest in three years, according to a survey of farmers conducted by Statistics Canada.

The average trade estimate of analysts and traders before the report was 21.8 million acres.

ICE November canola futures, which represent the next harvest, edged higher after the report. Nearby canola futures have closed lower for six consecutive sessions.

“We’re getting close to the point where if you only grow an average (canola) crop, or less than average crop, you’re going to lose money,” said Chuck Fossay, who farms at Starbuck, Man.,

Canada is the world’s biggest shipper of canola, a cousin of rapeseed that is used largely to produce vegetable oil.

Along with price pressure from lower Chinese demand for canola, weak soybean prices have depressed canola’s value, Fossay said.

Many acres that farmers seeded last year with yellow-flowering canola will instead yield spring wheat, grown for baking. Spring wheat plantings look to be Canada’s largest in 18 years, reaching 19.4 million acres, as farmers shun both low-priced canola and durum wheat.

Minneapolis September spring wheat futures slipped one per cent.

StatsCan pegged the all-wheat area at 25.7 million acres, up four per cent and exceeding the average trade expectation of 24.8 million acres.

Planting is underway across parts of the Prairies, but farmers seed most of the crop in May.

With dry conditions in Saskatchewan and Alberta, farmers may taper back canola plantings even further, said Bruce Burnett, director of markets and weather at Glacier FarmMedia.

Some acres are likely to flip from canola to barley and oats, grains that StatsCan estimated would see planting increases.

— Reporting for Reuters by Rod Nickel in Winnipeg and Dale Smith in Ottawa.