Farm Product Price Index, December 2014
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The Farm Product Price Index (FPPI) increased 9.9% in December compared with December 2013, mainly as a result of higher cattle and hog prices. On a year-over-year basis, the index has been increasing at a growing rate since August 2014, as gains in the overall livestock and animal products index have exceeded the decline in the crops index.
The livestock and animal products index rose 21.6% in December compared with December 2013. This index has been advancing on a year-over-year basis since April 2013, posting double-digit increases since March 2014. Every livestock component was up from December 2013, except the supply-managed sectors of eggs (-0.8%) and dairy (-0.1%).
The main contributors to the year-over-year increase in this commodity group continued to be cattle and calves (+54.2%) and hogs (+12.9%). In both cases, lower inventories and lower production contributed to higher prices. In 2014, the number of cattle and hogs slaughtered in federally inspected facilities in the United States and Canada declined from 2013 levels. Slaughter cattle fell 6.2% to its lowest level since 1963, while slaughter hogs were down 5.5%, the lowest level since 2006.
The crops index was down 0.8% in December compared with December 2013, mainly as a result of lower oilseed prices (-9.7%). This was the smallest year-over-year decrease since the downward trend in crop prices began in August 2013, most of which had been double-digit declines. To a lesser extent, the horticulture crops fruits (-3.7%) and vegetables (-1.4%) also contributed to the decrease.
Moderating the decrease in the crops index were increases in grains (+2.5%), the first increase since July 2013, specialty crops (+11.3%) and potatoes (+9.6%). Despite starting the 2014 crop year with abundant on-farm stocks in Canada, some grains such as durum, barley and corn found price support from lower Canadian production, and in some cases, limited supplies of higher quality grains.
Compared with November, the FPPI was up 1.1%, marking the third consecutive monthly increase. Higher grain prices (+3.9%) were the main contributor to the increase, as the livestock and animal products index declined 2.7%, mainly as a result of lower hog prices (-2.7%).
Note to readers
The growth rate of the total Farm Product Price Index (FPPI) is derived from a weighted average of the component indices using a different set of weights in consecutive months; it is not a weighted average of the growth rates of its crop and livestock components. Given this, the growth rate of the composite FPPI can lie outside the growth rate of these components
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