WINNIPEG (June 27 2003) : Buoyed by last-minute rains before seeding andmemories of surging canola prices last fall, Canadian farmers boostedplantings of the oilseed by 21 percent, a report showed on Thursday,catching grain traders off guard.

Farmers planted 11.642 million acres of canola this spring, StatisticsCanada said on Thursday after surveying 29,000 producers between May 26and June 5.

That was well above the range of 10.75 million to 11.35 million acres thatanalysts polled by Reuters expected ahead of the report.

With promising conditions across the main Prairie growing region, traderssaid production will likely top 7 million tonnes, something farmers havedone only three times in the past decade.

"If ever there was a time to have a big crop, I guess this is it, but Ithink it will be a bit of a struggle to get rid of it," a senior graintrader said. "We'll have to price ourselves better in the market."

At the Winnipeg Commodity Exchange, November canola futures Hwere tradingat C$342.00 ($253.33) per tonne at 10:00 am CDT (1500 GMT), down C$3.10from Wednesday.

Recent buying related to canola oil sales to China and seed sales to Japanand Pakistan has kept futures prices firm, a source on the floor toldReuters.

"You'll probably see some pretty good demand in here that is just going toprevent this from really washing out," the trader said.

Export competitors in Australia and Europe won't have large crops, anothertrader said. Canada will be able to sell its large crop if it can attractinterest from China, a major vegetable oil consumer, the trader said.

But right now, canola is C$60 to C$70 per tonne more expensive than USsoyabeans.

"Their attention is not going to be diverted off of (soya) beans whencanola is at that big a premium," the trader said.