Modest Decrease in Ag Commodities Returns in July

OTTAWA - Sep 26/07 - SNS -- Canadian farmers experienced a modest decrease in prices received for the commodities in July, though they remain above year earlier levels and are holding a modest premium to those which prevailed in 1997, according to the latest data from Statistics Canada.

As a result, the Farm Product Price Index (FPPI) finished the month at a preliminary 104.9 points, down from a revised June index of 105.6, but above 96.8 last year. The base year for the index is 1997, which was given a value of 100.

The overall crops index was slightly lower in July compared with June, as prices for all commodities except oilseeds, vegetables and potatoes slipped. Despite dipping 1.6% in July, the grains index remained at the third highest level since August 2004, as concerns continued over tight world stocks and weather-reducing yields of new crop production in many major producing countries. These concerns also buoyed oilseed prices, which were up 1.8% over June.

Prices for crops were up 17.3% in July compared with July 2006, continuing the upward trend in year-over-year price changes that began in September 2006. Farmers received higher prices for grains, oilseeds, special crops and fruit.

Overall, prices for livestock and animal products were 1.9% above the year-earlier level. Following five consecutive declines, the livestock and animal products index has increased in the last six consecutive months. Stronger supply-managed commodity (poultry, eggs and milk) prices supported July's increase.

Prices for livestock and animal products were down slightly in July from the revised June index, as lower prices for hogs, cattle and calves, and milk more than offset higher poultry and egg prices.

Hog prices were down in July, marking the fourth decrease in the last five months. Hog producers have been plagued by rapidly rising feed grain prices and a strong Canadian dollar.

After making gains in the first four months of 2007, cattle and calf prices continued to slip, down slightly (-0.5%) in July. Canada's cattle herd declined for the second consecutive year as exports of live cattle continued to grow and producers were faced with rising feed grain costs.

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