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Farm Product Price Index, March 2017

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Released: 2017-06-06

The Farm Product Price Index (FPPI) was down 2.3% in March compared with the same month a year earlier, primarily due to lower grain, specialty crop and cattle prices. The index continued its year-over-year decline, which began in December 2015, but has been falling at a slower rate since January 2017.

Chart 1  Chart 1: The 12-month change in the Farm Product Price Index
The 12-month change in the Farm Product Price Index

The crops index was 3.0% lower in March compared with the same month a year earlier. The decline was largely attributable to lower prices for grains and specialty crops. The grains index was down 6.9%, continuing the downward trend that began in July 2016 as higher world production increased global grain stocks.

Specialty crop prices were down from the highs reached last year when Canadian lentil production rose to meet demand from India, which had faced two consecutive droughts.

The year-over-year decline in the crops index was moderated primarily by higher oilseed prices. The oilseeds index was up 8.2% over the same month last year, the largest increase since October 2016 when it began the year-over-year growth. Although Canada has harvested near record canola crops for the past two years, strong demand for exports and from the domestic crush industry has left March 31, 2017, canola stocks at their lowest for that period since 2014.

The livestock and animal products index was down 2.5% compared with March 2016, mainly due to lower cattle and calf prices. This was the smallest decrease since the livestock and animal products index started the year-over-year decline in October 2015. Herd expansion in North America, led mainly by the United States, has bolstered cattle supplies.

Moderating the decline in the livestock and animal products index were year-over-year increases in hog prices and, to a lesser extent, dairy and egg prices. The hog index rose 8.5% in March compared with the same month a year earlier, the third consecutive year-over-year increase, after declining since August 2016. Despite higher North American supplies, strong export demand for pork has led to increased slaughter in both the United States and Canada in the first quarter compared with the same quarter a year earlier.

The March FPPI was up 1.3% from a month earlier, after increasing 1.0% in February. The livestock and animal products index (+2.4%) and the crops index (+0.3%) both contributed to the gain.


  Note to readers

The growth rate of the total Farm Product Price Index (FPPI) is derived from a weighted average of the component indices using a different set of weights in consecutive months; it is not a weighted average of the growth rates of its crop and livestock components. Given this, the growth rate of the composite FPPI can lie outside the growth rate of these components.

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