FALL/WINTER
INFLATION REPORT
At the End of the Summer Food Prices Were Slightly Higher Than Last Year As the summer came to an end, Canadians saw slightly higher food prices then last year. As of August, consumer prices for food were .9% higher than they were in August of the previous year and food purchased from stores was .3% higher. Meat and fresh fruit prices also both grew as in August meat prices were 1.1% higher than the previous year and fresh fruit was 5.6% higher. Prices for food purchased from restaurants was also 2.6% higher in August then the previous year.
+ .9%
.3%
From October 2016 to October 2017 it was projected that food inflation would stand at 1.20% in 12 months time. In the long-term, Canada Food Inflation is projected to trend around 3.40% in 2020.
1.1%
2.6%
At the end of November the Canadian Dollar had strengthened slightly as oil prices experienced gains.
The Canadian dollar has remained stable for the last few months and strengthened slightly in November as U.S. oil gains experienced a two-year high over the Thanksgiving holiday. At the end of November the foreign exchange rate for the loonie was .79 U.S. cents which is the highest it has been since 2015. The future looks good as long as oil continues to push higher towards the end of 2017.
Sources: Reuters.com, Statistics Canada, Trading Economics 1 FALL/WINTER INFLATION REPORT
Pork
Beef Canadian Cattle Herd Still Expected to Decline in 2018
Lower Pork Prices Expected From More Fresh Supply
As the year comes to an end, we will see the Canadian cattle herd continuing to decline. Although herd rebuilding is a main focus for farmers in 2018, many experts do not anticipate a fully expanded herd until 2019. Live cattle exports to the U.S. are also forecast to rise as the cost of feed is increasing making exporting a desirable option. U.S. and Asian markets for Canadian beef remain strong, and will help.
Canadian and U.S. domestic demand for pork has remained high this year which has contributed to higher prices in the market. For most of the summer, Foodbuy’s key supplier of raw bacon, Olymel was increasing prices as a result of this demand. However, the future looks good for pork prices. November was the first month we saw a stabilization in prices from Olymel and we expect even more relief in December. As the hog and pork market continues to expand in 2018, we expect to see prices stabilize even more next year.
Chicken Chicken Prices Rise Supply Remains Tight
as
Chicken prices are on the rise this winter due to tight supply and other market factors. The big push to cage-free eggs in the U.S. has caused a lot of market disruption worldwide. As U.S. farmers are increasingly chaning their housing and farming rituals to accomodate more cage-free product, we are discovering that consumers are not demanding as many cage-free eggs that are available, thus creating too much supply while there is diminishing supply for cage eggs. As we move into 2018, farmers in the U.S. and Canada will have to learn to play to the market to better meet consumer demands. 2 FALL/WINTER INFLATION REPORT
Dairy Demand For Dairy Increases As Do Prices This summer total butterfat usage increased by 4.5% on a 12 month year-over-year basis and prices reflected the change. The chart below shows the changes in demand, quota and production as of May 2017.
The NAFTA Trade Agreement is causing uncertainty about the future of Canadian Supply Management and could contribute to some changes in the market. Read the latest update from CBC News here.
Eggs Egg Prices Will Remain Stable into 2018 Egg prices in Canada have remained somewhat stable over the past year with prices even declining at various points of the year. The forecast remains the same for 2018. Jumbo Regular White Eggs are averaging approximately $3.75 per dozen while Large Free Run/Free Range Specialty Eggs, White, Brown are averaging approximately $5.26 per dozen. On a year over year basis, eggs were down by approximately 5% to 6% as of June 2017. 3 WINTER/FALL INFLATION REPORT
Egg prices decline close to 5% to 6% since last year.
Oranges
Biofuel Canadian Oil Prices Will Remain Flat Into 2018
Global Orange Shortage Due To Hurricane Irma
By the end of 2018, oil prices will average approximately $55 per barrel which is slightly lower than expected at the beginning of the year.
Hurricane Irma battered the Florida coast in September and completely destroyed many of the state’s citrus growing regions. As a result, countries around the world have seen a drastic spike in orange juice prices and orange product prices.
In a market where gasoline is becoming less scarce and prices remain low, oil companies are in having to change their strategies to be more competitive. A major contribution to the oversupply of oil is the U.S.’s increasing involvement in the shale, oil and gas market leading to more supply available for consumers. Despite this oversupply, things look brighter for the Canadian oil business as Alberta government forecasts oilsands output will rise from 2.5 million bpd in the 2016-17 fiscal year to 3.3 million bpd in 2019-20.
This devastation will not only affect prices, but could have a more severe impact on the entire orange juice industry. With farmers experiencing 70% to 100% crop loss, it may take a few years to get back to where the market was before this storm hit. While experts hope that supply from Brazil and Mexico can fill some of the gaps, it may be a while before Canadians see prices back to normal.
Canola Oil Canola Crop Increases and Prices Stay At A Premium In October the Canadian government announced new Canola production estimates which show the year end values of canola crop at 19.7 million tons up substantially from what was originally predicted in August. Duties on biodiesal imports from Argentina and Indonesia are expected to have a positive impact on soybean oil which contributed and world canola supplies are expected to remain tight which will contribute to keeping prices at a premium throughout 2018.
3Q17 INFLATION REPORT SOURCES: Agriculture and AgriFood Canada - AgriNews - Canadian Poultry - CBC News Farm and Ranch Guide - Statistics Canada - The Globe and Mail - Reuters.com - Trading Economics - USDA GAIN Report - Yahoo Finance 4 3Q17 INFLATION REPORT