Crops market relatively calm, says agriculture economist
Thursday, June 9, 2016
by SUSAN MANN
Falling cattle prices was the main contributor to the almost one per cent decline in March in the index of prices farmers received for their commodities, compared to a year ago, Statistics Canada says.
The 7.5 per cent drop in the livestock and animal products index in March, compared to the same month a year earlier, was the sixth consecutive year-over-year decline, the statistics agency says in its report released Monday. Prior to the decreases, the index had been mostly increasing year-over-year since April 2013.
Rising cattle and hog prices were the reason for those increases. On the cattle side, cattle and calf prices began increasing in early 2013 because of tight supplies in North America. However, the pressure on prices to continue rising is dissipating as Canadian cattle inventories increased three per cent as of Jan. 1 compared to a year ago.
March’s livestock and animal products index decline was mainly caused by lower cattle and calf prices, down 16.6 per cent compared to March 2015, along with decreases in supply-managed commodity prices – eggs, down 4.2 per cent, dairy products, down 3.7 per cent and poultry, down 2.4 per cent.
In a contrary move, the hog index rose 10.2 per cent in March compared to March 2015 and moderated the decline in the livestock and animal products index. Strong demand helped support prices, and exports of hogs in the first quarter of 2016 were at their highest level since 2009, Statistics Canada says.
Agricultural economist Alfons Weersink, professor in the University of Guelph’s food, agriculture and resource economics department, says the red meat prices are “just the typical cyclical thing. Beef prices were up and then they went down.”
The red meat sector is used to the cyclical price swings, he adds.
On the crops side, the index rose 6.5 per cent in March compared to March 2015, with all crops having year-over-year gains, Statistics Canada says. However, the largest increase, 45.5 per cent, was due to specialty crops, with prices starting to go up in November 2014 mainly due to higher lentil and pea prices. Demand for those products, mostly from India, continues to be strong as Indian farmers are facing their second consecutive drought.
Other crops’ indexes were also up, including:
- Grains, up three per cent.
- Oilseeds up 2.4 per cent.
- Fruits, up 7.2 per cent.
- Vegetables, up 3.1 per cent.
- Potatoes, up 2.4 per cent.
Weersink says the crops market is relatively calm. “We haven’t had any big changes in the markets for the grains and oilseeds. They’ve been relatively flat and if prices go up this summer it’s going to be because of some weather scares.”
The 0.8 per cent decline in March in the farm product price index compared to March 2015 was the second year-over-year decline in the index in four months, Statistics Canada says. Prior to those declines, there were increases in the index that started in August 2014.
In addition to the March index being down compared to a year ago, it is also down 0.7 per cent compared to February 2016 as both the crops plus the livestock and animal products indexes declined slightly. BF