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THE FEDERAL RESERVE BANK OF cmCAGO AGRICULTURAL LETTER January 20, 1950 "With the likelihood of continued high rates of employment and consuner income, prices of agricultural commodities are expected to stay close to present levels in the early months of 1950." This is the conclusion of the BAE in a recent review of demand and ~rice conditions. A price break similar to that experienced in the preceding two year s is not indicated. A survey of current supply and demand data leads us to take the following view of probable price trends over the next few months. Prices of Good, Choice, and Prime cattle are likely to decline gradually, beginning in February, while Medium and Common grades may show price strength through the spring months. There was a record high number of cattle on feed in the Corn Belt January 1, five per cent more than a year ago, but they averaged lighter in weight and had been on feed a shorter time. Hog prices are expected to rise seasonally to mid-March due to the rising schedule of support prices and early marketing of the 1949 spring pig crop. Average prices for 1950, however, are likely to be below 1949. Little change is indicated in supply or price of lambs. The number on feed January 1 was seven per cent less th.all last year and the smallest since 1922. Dairy product prices may weaken a little as milk production increases seasonally. Government price supports are at about the same levels as in 1949 but will not vary seasonally th is year. Milk production per cow continues to set new records and total production in 1950 probably will exceed 1949 output. ~ probably will continue at about current prices. Support purchases would limit any further price decline in the Midwest. Some re.rm managers a.re urging their clients to raise all the chicks their laying houses will accommodate this fall on the assumption that current low egg prices will cause many farmers to reduce poultry operations. Corn prices have advanced 15 to 20 cents per bushel since September and may continue to rise toward loan rates this spring and summer. There a.re large supplies on farms but much of it is under CCC loan. Oat prices probably will follow corn. Increased production of butter, lard, and cottonseed oil will limit any price rise that may develop for soybeans except that an active demand is expected at planting time for seed purposes, if acreage allotments a.re not established. Wheat prices probably will continue near loan levels unless adverse weather conditions develop in important producing areas. Dry edible beans produced in 1950 will be eligible for price support at levels calculated to average $6.30 per cwt on a thresher-run basis for farmers who plant within acreage allotments, to be announced later. There will be no price support program for dry peas. Pro ams to reduce Connnodit Credit Cor oration holdi s of sur lus farm roducts were announced this week. Potatoes are offered free at point of storage mostly in the Northeast, particularly Maine) to schools, the Bureau of Indian Affairs, and public and private welfare agencies. An export program was announced also , for potatoes and 10 other commoditiescorn, barley, oats, dried eggs, dried milk, flaxseed, raw linseed oil, dry edible beans, shelled peanuts, and Mexican canned meat. In general, these products are offered to private exporters for export at less than cost to the CCC but, except for potatoes and dried eggs, not below domestic market prices. Exporters must agree to move the products promptly and to countries not using ECA dollars to make payment. 24 No.for FRASER Digitized https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis Ernest T. Baughman Agricultural Economist Research Department FARM BUSINESS CONDI T I ON S DECEMBER 1949, WITH COMPARIS~S 1949 I T EM S .PRICES: Received by farmers .... . ... .. . . .. . . . . . . . . . . . . . . .. ...... Paid by farmers .. ........ .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . Parity price ratio . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Wholesale, all commodities . . . . ... . . . . . . . . . . . . . . . . . . . ... Paid by consumers - "cost of living" ..... , . . . . . . . . . . . . . . Wheat, No. 2 hard winter, Chicago . .. .. . .... .. . . ....... . . Corn , No. 3 yellow, Chicago . . ... . .... . .. . . . .. . ......... Oats, No. 3 white, Chic ago . . . . . . . . . . . . . . . . . . . . . . . . . ... Soybeans. No . 2 yellow, Chicago .... .. ... .. ......... . .... Hogs, barrows and gilts, Chica~o . .. . ... . . . . . . . . . . . . . . . . Beef steers, good grade, Chicago .. . . . . . . . . . . . . . . . . . . . . . Milk , wholesale , l i. S. . ......... .. ... . . . . . . . . . . . . . . . . . . Butterfat , local markets, U. S . . . . . . . . . . . . . . . . . . . . . . . . . Chickens, local markets, U. S . . .. . ......... . .......... Eggs, local markets, U. S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Milk cows, U. S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Farm labor, U. S . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Factory labor, U. (1935-39=100) . . . . ... . .. . (1935-39,slOO) . . . . . . . . . . . (1910-14..100) . . . . ...... . (1935-39:100) .......... . (1935-39,dOO) ... .. . . . . . . (dol.per bu.) .. . .. . .. . . . (dol.per bu.) ..... . . ... . (dol. per bu.) ...... . .. . . (dol.per bu.) .......... . (dol. per cwt.) .. . ...... .. (dol.p·e r cwt.) . . ........ . (dol. per cwt.) . . ........ . (dol.per lb.) ...... . .. .. (dol.per lb.) .......... . (dot.per doz.) ......... .. (dol. per head) .......... . (dol.per 111eeli: ........ . . . without hoard) S . .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (dol.earned per we.c k) . ..... . PROWCTION: Industrial, physical volume ....... . . . . . . . . . . . . . . . . . . . . . (1935-39-100) Farm marketings, physical volume .... . . . . . . . . . . . . . . . . . . . (1935-39:100) 1948 1940 DEC. DEC. DEC. NQV. 219 187 98 187 170a 2.31c 1. 30 .76 2.31 15.38 29.91 4.23 .63 .22 .41 182 30.75b 222 186 100 189 168b 2.07 1.16 .76 2.19 16.04 29.35 4.25 .63 .23 .48 180 54.45a 55.26b 55.60. 26.93. 171a 166 166b 173 195• 157 136. 121 210a 26a 208b 26b 217• a2• 31• 9• -- 250 192 109 201 172a 2.38 1. 42 .87 2.62 21. 34 27.82 4. 79 .66 .31 .53 194 30.25b I 97 98 80 98 101 a . 90 .62 .38 .95 6.27 11. 86 2 . 07 .35 . 13 . 27 63 -- INCDNE P.AYMENTS : Total personal i ncome, U. S.l .......................... (Annual rate, bil.of dol.J. Cash farm income, U. S. ••• . . . . . . . . . . . . . . . . . . . . . . . . . . . . (Annual rate, bil.of dol.). EMPI.DYMENT: Farm . . .. . ...... . .......... . .......... . . . . . . . . . . . . . . . . .. (millions) Non-agricultural ... .. . .. . ... . . . . . . . . . . . . . . . . . . . . . . . ... . (millions) 9.0 51. 6 7.1 52.1 37.3 dol.) 48.3 47 . 6 47. 8 -- dol.) dol. ) dol.) 24.9 13.9 257 24.9 13.8 257 25.6 15.6 253 FINANCIAL: Demand deposits, weekly reporting member bahks• ...... . . (bil.of 2 Loans, weekly reporting member banks, a l l leading cities : Total• . . . . . . .. ... . . ... . ... .. ..... . . ... . .. . ... . ..... . (bil. of Commercial , i ndustria l , and agricultural• . . . .. . . ..... (bil.of U. S. Government total g ros s di rect debt•• .... . .... . .. (bil.of aNovember. bOctober. cEstimated. *Last Wednesday of the month. **End of month. ***Based on estimated monthly income. 1Revis ed se ries, not comparable to data published prior to December 1948. 2Revi s ed series, data not comparable to former seri es on "Weekly Reporti ng Member Banks in 10 1 Cities." Compiled from official sour ces by t he Re search Depart ment,· Federal Rese r ve Bank of Oi.icago. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis -- 7.1 51. 7 --45 l I
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