From Statistics Canada
The Farm Product Price Index (FPPI) edged down 0.3% in June compared with the same month a year earlier, as falling cattle prices were moderated by an increase in hog and crop prices. The index has declined year over year for five consecutive months, following an upward trend that started in August 2014.
The livestock and animal products index fell 7.8% in June compared with the same month a year earlier, continuing year-over-year declines that began in October 2015. Prior to these decreases, this index had been mostly increasing on a year-over-year basis since April 2013, supported by rising cattle and hog prices.
The decline in the livestock and animal products index was led by lower prices for cattle and calves (-22.7%). To a lesser extent, poultry (-2.3%) and dairy products (-0.1%) also contributed to the drop. Moderating the decrease were higher prices for hogs (+5.6%) and eggs (+0.1%).
Cattle and calf prices began rising in the spring of 2013, as a result of tight supply concerns in North America. However, the herd in both Canada and the United States expanded, relieving the upward pressure on prices. Canadian cattle inventories as of July 1, 2016, rose 1.3%, following a gain in January 2016. Similarly, US cattle inventories have increased for two years and North American slaughter in federally inspected plants was up 4.3% for the first half of 2016 compared with the first half of last year. Despite the large decrease in the cattle and calves index compared with June 2015, the value of the index in June 2016 remained well above (+37.2%) the annual average registered from 2010 to 2014.
The hogs index rose 5.6% in June compared with the same month a year earlier, continuing a growth trend that began in February 2016. Strong demand supported prices, as the number of head marketed for the first half of 2016 was the highest for that time period since 2012.
The crops index was up 6.6% in June compared with the same month a year earlier, as all crops posted year-over-year gains, except potatoes. The specialty crops index (+34.2%) continued to record the largest increase. Higher prices for chick peas, dry peas, lentils and mustard seed were the main contributors. The advance in the specialty crops index began in November 2014. Strong demand for peas and lentils has been fuelled by drought-induced shortages in India.
Also contributing to the increase in the crops index were the grains (+5.4%), oilseeds (+4.6%), fruit (+3.6%) and vegetables (+2.2%) indexes. Moderating the gain was a decline in the potato index (-1.6%).
Canadian grain and oilseed prices remained relatively strong despite ample supply and positive prospects for the North American crop. The depreciation of the Canadian dollar relative to the US dollar has supported Canadian farm-gate prices for some commodities.
The FPPI advanced 0.4% in June compared with May, a smaller rise than in the previous month (+2.3%). A slight increase in the livestock and animal products index more than offset the slight decline in the crops index.