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The side of Matt McLean, Reid Hilton, Andrew Green, Kazuma Kobori and Mike Toeke went down 1-4 to Manawatu-Wanganui at the Hastings Golf Club on Thursday. It was their first defeat of the tournament.
Only Kobori was able was able to get a win - one up against Tyler Hodge.
The result means the team must now win both of their final two round-robin matches on Friday to have any chance of qualifying for the semi-finals.
After holding a one up lead after nine holes, Toeke ended up going down two and one to Regan McConaghty.
It was a similar story for Green, who was all square through nine holes against Trent Munn before losing one down.
Hilton suffered his first defeat of the week going down to Liam Finlayson three and two. Meanwhile, McLean trailed throughout his two and one loss to Tyler Wood - who recorded eight birdies in an outstanding round.
"The guys all played really well. It says a lot about the level of golf being played this week," said Canterbury team manager Mike Taylor.
Canterbury started their campaign on Tuesday with a 3-2 win over Bay of Plenty before recording two 2.5-2.5 halves yesterday against North Harbour and hosts Hawkes Bay.
On Friday Canterbury will play Taranaki, which are winless in four matches, and defending champions Northland, which will also need a strong day to make a push for the playoffs.
To make the semi-finals Canterbury will need to win both matches convincingly and hope Manawatu-Wanganui drop a game against Northland or Tasman.
"We're in a good space and will go out there and give ourselves every chance," said McLean, who is the Canterbury No 1.
"Taranaki and Northland both have some really good players so we will need to be at our best. All of the guys have been playing some good golf."