OTTAWA: After four consecutive year-over-year increases, the Farm Product Price Index (FPPI) decreased 3.4% in March compared with the same month one year earlier. Lower prices for most crop commodities outweighed higher prices for most livestock and animal products.
Rebounds in crop production drive decrease in the crops index
The year-over-year decrease in the crops index (-10.8%) drove the decline in the FPPI in March. Production in the 2021/2022 crop year was largely affected by the drought across the Western provinces, which resulted in tightened supplies and increased commodity prices. Rebounded production in the 2022/2023 crop year increased supply, which put downward pressure on most principal crop prices.
In March 2023, the grains index (-11.5%) declined year over year despite a robust global demand for grains. The oats (-45.1%), durum wheat (-31.5%) and non-durum wheat (-6.5%) indexes declined mainly as a result of increased domestic supply, which put downward pressure on prices. In addition, successful crop production resulted in more diversified grains available for feed use. Modest increases in the rye (+5.2%), corn (+3.2%) and barley (+0.5%) indexes moderated the declines in the grains index.
The oilseeds index was down 14.2% in March compared with one year earlier. This decrease can be attributed to the lower prices for canola (-15.8%) and flaxseed (-43.1%) due to increased domestic supply for both commodities. While global demand for canola remained strong, demand for flaxseed decreased, further pushing flaxseed prices down. The soybean index, up 6.5%, mitigated the decline in the oilseeds index. Adverse weather conditions in Argentina created uncertainty in the global soybean supply and supported soybean prices.
The specialty crops index declined 20.4% in March, compared with the same month one year earlier. Increased production in the 2022/2023 crop year put downward pressure on prices for most specialty crop commodities, which fell from the record highs reached in the first quarter of 2022.
A smaller cattle herd drives the increase in the livestock and animal products index
The livestock and animal products index rose 9.6% in March 2023 compared with March 2022, posting its fifth consecutive year-over-year increase. Higher prices for cattle and calves and supply-managed products outweighed the decrease in hog prices and led to the increase in the livestock and animal products index.
The cattle and calves index increased 27.6% in March 2023 compared with the same month the previous year. The value of total cattle exported for immediate slaughter (steers, heifers, cows and bulls combined) increased 21.1% in the first quarter of 2023 compared with the same quarter the previous year, while the quantity exported edged down 0.7%.
Meanwhile, the hogs index decreased 13.0% in March 2023 compared with March 2022, marking the end of three consecutive year-over-year gains in March. The price decrease was influenced by reduced demand and uncertainty in Quebec’s hog market.
All supply-managed commodities indexes posted increases in March 2023 compared with one year earlier, including the poultry (+14.9%), eggs (+5.7%) and dairy (+5.1%) indexes.