Bids to Canadian Farmers Eased in November

OTTAWA - Jan 23/-8 - SNS -- Prices received by Canadian farmers slipped from October to November, but remain well above year earlier levels for field crops and lower for cattle and hogs.

Statistics Canada reports the Farm Product Price Index (FPPI) stood at 103.2 in November (1997=100), down from a revised October index of 106.0, as declines were recorded in both the crops index and the livestock and animal products index.

Prices for crops were up 15.9% in November compared with November 2006, according to the FPPI, as only fruits and potatoes recorded decreases. Prices for grains, oilseeds and specialty crops continued their double-digit increase, a trend which began in November 2006.

Overall, prices for livestock and animal products were 6.9% below their November 2006 level as cattle, calf and hog prices continued to slide. This was the sixth consecutive year-to-year decline for these major commodities. Meanwhile, prices for supply-managed commodities continued their upward trend, moderating the decrease. Higher feed grain costs were a factor in the increases, ranging from 4.9% for eggs to 14.0% for poultry.

The overall index for livestock and animal products decreased in November from the revised October index, as all prices except poultry (+0.1%) and eggs (unchanged) were lower. The cattle and calf index (87.0) fell for the seventh consecutive month to its lowest level since the fall of 2004. Falling prices pushed the hog index to its lowest level since December 1998.

Cattle and hog prices continued to be pressured by high feed grain prices and the rising value of the Canadian dollar. The value of the Canadian dollar in relation to its US counterpart rose 0.8% from October to November. Compared with November 2006, the value of the Canadian dollar increased 17.5%. Cattle and hog exports to the United States have increased rapidly as the economics of finishing these animals supported this movement.

The crop index slipped 0.3% as higher oilseeds, specialty crops and fruit prices moderated the losses in the other commodities.

Overall grain prices edged down in November, while oilseed and special crop prices were up. Continued supply concerns in many of the world's exporting countries have maintained prices at this higher level. Supply concerns have also initiated export restrictions on grain this crop year by some countries. In November, Russia imposed an export tax on wheat. The market focus now turns to the southern hemisphere harvest and its impact on total world supplies.

               Canada Farm Product Price Index - Nov 2007
                             (1997 == 100)
                    Nov 2006   Oct 2007   Nov 2007     Annual    Monthly
                                                       Change     Change
FPPI                    99.5      106.0      103.2      3.72%     -2.64%
All Crops               99.0      115.0      114.7     15.86%     -0.26%
Grains                  96.6      125.8      121.3     25.57%     -3.58%
Oilseeds                79.5      101.3      105.3     32.45%      3.95%
Specialty crops         93.9      121.1      138.2     47.18%     14.12%
Fruit                  128.1      113.8      122.0     -4.76%      7.21%
Vegetables             119.9      120.6      120.3      0.33%     -0.25%
Potatoes               134.6      139.6      125.4     -6.84%    -10.17%
Livestock and products  99.2       95.8       92.4     -6.85%     -3.55%
Cattle and calves       98.6       91.3       87.0    -11.76%     -4.71%
Hogs                    69.5       56.9       49.1    -29.35%    -13.71%
Poultry                 91.3      104.0      104.1     14.02%      0.10%
Eggs                    98.0      102.8      102.8      4.90%      0.00%
Dairy                  133.8      142.1      141.9      6.05%     -0.14%
SOURCE Statistics Canada