Farm product prices decreased in CanadaStaff Writer | March 1, 2017
The Farm Product Price Index (FPPI) in Canada decreased 0.7% in December compared with the same month a year earlier, primarily due to lower cattle prices.
Food in Canada The Farm Product Price Index
The livestock and animal products index fell 3.3% in December compared with the same month a year earlier.
Lower cattle and calve prices (-10.9%), which began the year-over-year downward trend in October 2015, were the main source of the decline.
Herd expansion in North America continued as cattle inventory in the United States, as of January 1, 2017, were up for the third consecutive year, replenishing supplies.
The number of head slaughtered in North America in 2016 increased for the first time since 2010.
Lower poultry and hog prices also contributed to the decline in the livestock and animal products index, but to a lesser extent.
The hog index fell 1.1% compared with the same month a year earlier, the smallest decrease since it started to fall in August 2016. Ample North American supplies continue to pressure prices, as a record number of hogs were slaughtered in North America in 2016.
Tempering the decline in the livestock and animal products index were year-over-year increases in the dairy (+1.7%) and egg (+1.0%) indexes.
The decrease in the livestock and animal product index was largely offset by a 0.7% year-over-year increase in the crops index, the third consecutive gain for this index.
Higher prices for oilseeds (+4.9%), potatoes (+16.5%) and total vegetables (+1.6%) were responsible for the increase.
Strong world demand has bolstered oilseed prices. In 2016, both canola exports (+8.6%) and domestic canola crush (+14.4%) were above their previous peaks in 2014 and 2015 respectively.
The year-over-year gain in the crops index was moderated by lower prices for specialty crops (-14.7%), grains (-5.7%) and fruits (-3.3%). Specialty crop prices were down from their peak in May 2016, attributable to two consecutive droughts in India.
Grain prices began trending down in July 2016 as forecasts began to emerge for world grain production to reach record levels for the 2016/2017 crop year.
The December FPPI was up 2.7% from a month earlier, after increasing 1.8% in November. The livestock and animal products index (+5.4%) and the crops index (+1.6%) both contributed to the gain. ■