The Farm Product Price Index (FPPI) increased 5.6% in September compared with September 2014, largely resulting from higher crop and cattle prices. The year-over-year increases began in August 2014, mainly because of higher livestock prices. However, the crops index also started rising in January 2015.
The crops index rose 9.3% in September compared with September 2014, as most commodity groups posted gains on a year-over year basis. The grains (+14.7%), oilseeds (+6.0%), specialty crops (+36.9%), fruit (+4.3%) and potato (+2.2%) indexes all saw increases. Moderating the growth was a 1.4% decline in the vegetable index.
Crop prices were mainly up, despite the International Grains Council forecast for an ample world supply of grain this crop year. The depreciation of the Canadian dollar relative to the US currency has lent support to prices received by Canadian producers.
The livestock and animal products index rose 1.4% in September compared with September 2014. With the exception of a slight decline in July 2015, this index has been growing on a year-over-year basis since April 2013.
The increase in the livestock and animal products index was attributable to higher prices for cattle and calves (+13.5%), as prices for other livestock commodities fell. Tight supplies continued to contribute to higher cattle prices. US cattle slaughter was down 6% and Canadian slaughter declined 10.2% over the first three quarters of 2015 compared with the same period in 2014. Canada’s beef cow herd continued to contract. As of July 1, 2015, inventory levels were 3.4% below the July 1, 2014 levels, the lowest level since 1991.
The advance of the livestock and animal products index over the 12-month period was moderated by declines in the hogs (-12.7%), poultry (-3.7%), dairy (-2.0%) and eggs (-1.2%) indexes. The year-over-year decline in the hogs index began in February as North American supply concerns began to ease. Hog slaughter in Canada increased 2.7% in the first three quarters of 2015 compared with the same period in 2014, and was up 8.7% in the United States over the same period.
In the latest United States Department of Agriculture quarterly hog inventory report, the September 1 inventory was up 4% compared with September 1, 2014, and was the highest inventory since quarterly estimates began in 1988.
Compared with August 2015, the FPPI edged down 0.7%, as both the crops (-0.9%) and livestock and animal products (-0.4%) indexes decreased.