View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

DC BRANCH

260
F3/3

1

0

Federal Reserve

•

anit of Chicago - July 31, 1970

FED CATTLE PRICES are likely to trend lower during
the remainder of 1970 reflecting continued expansion in feeding. Cattle on feed in the nation's 22 major feeding states
numbered nearly 10.6 million head at midyear-2 percent more
than a year ago. Most of the increase was in the Western states,
especially Texas. The number of cattle in Texas feedlots increased 13 percent over a year ago.

f;11F- EPLO AGR
111C?
•

uulln4

tter

7 1970

Number 1076

CURREHT SERIAL RECORDS

Higher costs for both feeder animals and feeds have
By contrast, the total number of cattle on feed in the
squeezed profit margins. Feeder cattle prices in recent weeks
five Seventh District states declined 1 percent from a year ago.
averaged at or above the midyear high of 1969. Because of the
This mainly_reflected a 3 percent drop in cattle on feed in -decline
in fed cattle prices, feeder animals at $35 to $40 per
Iowa, the nation's leading cattle feeding state. Indiana also
hundredweight are costing Midwestern producers more,relative
showed a decline with the number on feed down 5 percent
to fed cattle prices a year ago.
from a year ago. Illinois showed a 2 percent increase. Michigan
and Wisconsin had increases of 14 and 4 percent, respectively.
Break-even Prices for Fed Cattle
Beef supplies have been running ahead of year-earlier
levels since April. Federally inspected beef production from
January through mid-July was about 5 percent greater than a
year earlier. Marketings of fed cattle during the second quarter
were 7 percent greater than a year ago. Reflecting these larger
supplies, prices averaged around $3 per hundredweight below
the midyear peaks of 1969. In recent weeks, however, prices
have strengthened but are still well below those of a year ago.

•

Price of feeders
(dollars per cwt.)
50 lb. yearling steers
32
33
34
35
36

Cost of gain*
(dollars per cwt.)
24
_20,
28
.212,
Selling prices-1150 lb. steers
(dollars per cwt.)
28.52
29.09
29.65
30.22
30.78

29.39
29.96
30.52
31.09
31.65

30.26
30.83
31.39
31.96
32.52

31.13 32.00
31.70 32.57
32.26 33.13
32.83 33.70
33.39 34.26

Marketings during the current quarter are expected to be
3 percent greater than a year ago but less than the previous
quarter. A further increase in marketings over the year before
450 lb. steer calves
Selling prices-1050 lb. steers
is likely in the fourth quarter. In addition, producers have
(dollars per cwt.)
been marketing animals at heavier weights. Choice steers at
37
29.57 30.71 31.86 33.00 34.14
seven major markets during the first half of 1970 averaged 29
38
30.00
31.14 32.29 33.43 34.57
pounds per head heavier than in 1969. A continuation of this
39
30.43
31.57
32.71_ 33.86 35.00
trend,- coupled with larger numbers marketed in the second-- 40
30.86 32.00 33.14 34.29 35.43
half of the year, could substantially increase beef supplies.
41
31.29 32.43 33.57 34.71 35.86
Competing pork and poultry supplies are also expected to increase during the second half. Poultry production has been ex*Includes charges for labor and overhead.
panding throughout most of 1970, but pork was in shorter
Corn prices have averaged about 3 cents per bushel above
supply during the first half of 1970 than in 1969.
year-ago levels. Protein supplements have averaged over $3 per
ton above a year ago, reflecting high soybean meal prices. ProIncreased consumer demand is apt to only partially offspective supply and demand conditions suggest feed costs will
set the rise in meat supplies in the second half of 1970. Alcontinue high through the remainder of the year.
though consumer disposable income will continue to increase
during the remainder of the year, the rate of increase is un• Profit margins are likely to continue slim through the
certain. The expiration of the income surtax as of July 1 will
remainder
of the year, even for the most efficient producers.
bolster consumer incomes. A continuation of the decline in
Average costs of gain and current feeder animal prices suggest
employment, on the other hand, would moderate future increases. Total employment (seasonally adjusted) fell in May, a selling price of over $30 per hundredweight would be necessary to recover all costs including labor and overhead. Fuand June. Consumers have been saving an increasing protures
contracts for choice steers at Chicago are currently selling
portion of their incomes, possibly reflecting a general feeling
for
around $29 per hundredweight.
of pessimism about the future. In June, the savings rate-at
about 7.6 percent of disposable income -was the highest since
1967. A protracted auto workers' strike could also adversely
Dennis B. Sharpe
affect consumer spending for meat.
Agricultural Economist

•

FARM BUSINESS CONDITIONS

•
,

1970
ITEMS

PRICES
Received by farmers, U.S.(1957-59=100)
Paid by farmers, U.S.(1957-59=100)
Parity price ratio (1910-14=100)
Wholesale, all commodities (1957-59=100)
Paid by consumers (1957-59=100)
Wheat, No. 2 red winter, Chicago (dol. per bu.)
Corn, No.2 yellow, Chicago (dol. per bu.)
Oats, No. 2 white, Chicago (dol. per bu.)
Grain Sorghum, No.2 yellow, Kansas City (dol. per cwt.) .
Soybeans, No. 1 yellow, Chicago (dol. per bu.)
Hogs, barrows and gilts, Omaha (dol. per cwt.)
Beef steers, choice grade, Chicago (dol. per cwt.) .......
Milk, wholesale, U.S.(dol. per cwt.)
Butterfat, U.S.(dol. per lb.)
Broilers, live, U.S.(dol. per lb.)
Eggs, U. S.(dol. per doz.)
Milk cows, U. S.(dol. per head)

June

'

1969
May

June

116
133
72
117.0
135.2
1.41
1.37
.71
2.03
2081
23.65
30.56
5.31
.71
.13
.31
331

117
132
73
116.8
134.6
1.48
1.32
.70
1.96
2.70
23.43
30.53
5.39
.71
.14
.30
333

116
128
75
113.2
127.6
1.28
1.31
.64
2.02
2.69
24.97
34.22
5.09
.69
.15
:31
303

--

--

--

Farm labor, U.S.(dol. per week without board)
Factory labor, U.S.(dol. earned per week)

134.40P

132.93P

PRODUCTION
Industrial, physical volume (1957-59=100)
Farm marketings, physical volume (1957-59=100)

168.6
108

169.1
101

173.7
103

798.8P
50.1

799.8
50.4

746.2
48.5

4.2
75.2

3.7
74.6

4.4
74.6

FINANCIAL (district member banks)
Demand deposits:
Agricultural banks (1957-59=100)
Nonagricultural banks(1957-59=100)

138.7
128.0

135.3
129.8

136.5
129.7

Time deposits:
Agricultural banks (1957-59=100)
Nonagricultural banks(1957-59=100)

361.2
318.3

359.1
315.4

332.0
318.0

INCOME PAYMENTS
Total personal income, U.S.(annual rate, bil. dol )
Cash farm income, U.S.1 (annual rate, bil. dol.)
,
EMPLOYMENT
Agricultural (millions)
Nonagricultural (millions)

1

Based on estimated monthly income.

130.06

,

PPreliminary

Compiled from official sources by the Research Department, Federal Reserve Bank of Chicago.

•