12/03/14
From Statistics Canada’s The Daily
The Farm Product Price Index (FPPI) increased 3.0% in September compared with September 2013, mainly because of higher cattle and hog prices. This followed a 3.1% gain in August, which marked the first year-over-year increase since August 2013. In both August and September, gains in the overall livestock and animal products index exceeded the decline in the crops index.
The livestock and animal products index continued to advance, rising 19.7% in September compared with September 2013, mainly as a result of higher prices for cattle and hogs. This index has been advancing on a year-over-year basis since April 2013, posting double-digit gains since March 2014.
Compared with September 2013, the cattle and calves index was up 41.3%, and the hogs index was up 16.2%. In both cases, low inventories continued to contribute to high prices. The number of cattle slaughtered this year (January to September) in the United States and Canada was 5.8% below the same period last year. The United States and Canadian semi-annual inventory of market hogs for June 2014 declined to its lowest level since June 2006.
The 12-month advance of the livestock and animal products index continued to be moderated by declines in the supply-managed sectors of poultry (-3.5%) and eggs (-1.2%), coinciding with lower feed grain prices.
The crops index was down 10.9% in September compared with September 2013. The year-over-year drop in crop prices began in August 2013 and has continued with double-digit decreases since November 2013. In September 2014, year-over-year declines were recorded in all crop categories except vegetables, with decreases ranging from 2.0% for fruit to 15.6% for grains.
Grain and oilseed prices came under pressure in the fall of 2013 when world production recovered and Canada harvested a record breaking crop. In the fall of 2014, abundant on-farm stocks of grain in Canada, as well as a forecast for a record US corn and soybean harvest, further amplified the supply situation and continued to exert downward pressure on grain and oilseed prices. At the end of September, the International Grains Council increased its total grains production forecast for the upcoming 2014/2015 crop year to stand 0.5% below the record set in the 2013/2014 crop year.
Compared with August, the FPPI was down 3.2%, the third decline in five months. Lower crop prices (-4.5%) were the main contributor to the decline, as the livestock and animal products index edged down 0.2%.
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