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Canadian farmers say they are likely to produce average-sized %Wheat and %Canola crops as a lack of rain impacts this year's harvest.

Canada's western prairie region has grappled for years with drought conditions and there was hope that this spring and summer would be different.

However, while some areas, such as eastern Saskatchewan, are reporting dense crops of spring wheat and canola due to good growing conditions, other areas such as southwestern Saskatchewan report dying crops due to a lack of rain again this year.

The implications of this year's crop are significant as Canada is the world's largest exporter of canola, durum wheat, and other crops such as lentils.

Countries such as China, the U.S., and Japan are among the largest buyers of Canadian canola and wheat and rely on shipments from the northern country.

Leading U.S. food companies such as %GeneralMills (NYSE: $GIS ) make their Cheerios cereal and Quaker oatmeal using Canadian oats.

Other companies that could be impacted by the situation in Canada include %KraftHeinz (NASDAQ: $KHC ) and %ArcherDanielsMidland (NYSE: $ADM ).

Statistics Canada reports that Canada's total crop output this year is likely to be about the same as in 2024, when farmers also endured a wide range of growing conditions.

That said, the outlook is worse for durum wheat and lentils, which farmers grow in some of the areas hit hardest by extreme dryness on Canada's prairies.

Farmers report that cereal grains such as wheat and durum are developing far fewer kernels per plant this year because of drought in some areas, resulting in lower yields.

As a result, Canada's durum wheat yield is expected to be less than last year's 34 bushels per acre, which was an average yield.

Smokey skies from burning wildfires across the country are also hurting the growth of some crops, as the fires impact sunlight and temperatures.

Most farmers need at least one more significant rainfall for grain kernels to fill out, say commodity analysts.