Analysis – August 2011

Prices farmers received for their commodities in August rose 7.7% from August 2010, as overall livestock and animal products prices and crops prices continued to advance. It was the thirteenth consecutive year-over-year increase in August, but at a slower rate and the first single digit increase since December 2010.

In the 12 months to August, both the livestock and animal product index (+12.5%) and the total crops index (+3.4%) recorded increases.

Compared with August 2010, advances were recorded in all livestock commodities, ranging from 3.3% for dairy to 19.4% for poultry.

The cattle and calves index (+16.0%) and the hogs index (+13.7%) are the largest contributors to the livestock and animal products index. Except for a dip in May 2011 of the hog index (-0.5%), both of these commodities have continued their double digit growth since August 2010. Lower inventories of cattle and hogs in North America and higher feed grain costs have contributed to higher livestock and animal product prices.

Oilseed prices (+24.6%) continue to be the largest contributor to the advance in crop prices, followed by specialty crops (+22.3%) and grains (+6.5%). The year-over-year increase in the crops index was moderated by lower prices for fruit (-7.7%) and vegetables (-3.8%).

On a monthly basis, following no changes in July, the August index rose 0.7%. An increase in livestock and animal products index was partially offset by a drop in the crops index.