The talented youngster has caught the eye of the DFB-Pokal holders and could follow in the footsteps of Real Madrid legend Raul, who departed for Germany last summer
Canales arrived at Madrid from Racing Santander for a fee of €5 million, but has so far failed to secure a regular spot under Jose Mourinho, starting just three times for La Liga's runners-up.
AS comments that the 20-year-old, who is well behind Mesut Ozil, Kaka and Esteban Granero in the pecking order at the Bernabeu, is looking to leave in search of more first team minutes, and stated: "I want to play. It was a very unsatisfactory season."
It is rumoured that English Premier League giants Arsenal are also interested in the youngster, who is likely to move on loan or at least with a buy-back clause in favour of the capital giants.
Should a switch to the Bundesliga materialise, the attacking midfielder would become the third player to leave Real Madrid for Schalke in just a year. Christoph Metzelder and Raul moved to the Gelsenkirchen outfit last summer, and recently won the DFB-Pokal with the Royal Blues.