Farm Credit Canada's Senior Economist says the farmland market appears headed towards the soft landing the agency has been projecting.
J. P. Gervais says lower commodity prices triggered a smaller increase in 2014 farmland values across the country.
He says while interest rates are projected to remain low this year, profit margins of grain and oilseed producers may continue to tighten.
Gervais says those profit margins are perhaps the most important driver of farmland values.
In his mid-year update, the FCC economist says we can expect to see the demand for used farm equipment to increase.
He says strong livestock receipts will see those farmers buying new while tight profit margins for grain and oilseed producers will limit their purchases.
Gervais also says food inflation in Canada has increased faster than he had expected, driven by retail price increases for beef and pork.
However, he says pork price increases have started to slow as hog prices have declined from their 2014 highs.
