The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
TIIE FEDERAL RESERVE BANK OF CHICAGO AGRICULTURAL LETTER July 7, 1950 The outbreak of military operations in Korea spurred commodity markets to sharp advances last week, greatly accelerating the gradual price rise experienced in recent months. The effects will be temporary, however, unless much larger-scale operations develop. Price strength in most markets reflects primarily the high-level demand associated with expanding industrial production. Stocks of most agricultural commodities are ample, and crop prospects are good in both the U.S. and Europe. Dairy product prices continue steady at support levels with every indication that this situation will continue through March 1951. With Federal taxes and license fees on colored margarine repealed this product will be stocked by more stores in the 32 states which permit its sale, and average consumption is expected to increase somewhat, partly at the expense of the price support program for butter. The increase in margarine consumption since 1942 resulted largely from more families using the product. With hog prices advancing more than seasonally the recent BAE report on the pig crop assumes added significance, both to farmers and consumers. The number of pigs raised from the 1950 spring crop totaled 60.1 million, three per cent more than a year earlier. Marketing of these pigs will begin in appreciable volume next month, continuing through the fall and winter. Farmers report keeping five per cent more sows for fall-farrowed ~ this year than in 1949. These pigs will reach market beginning in late winter and continuing through the spring and early summer of 1951. Total pork production for the remainder of 1950 and the first half of 1951 probably will be a little larger than in the corresponding period a year earlier, but the demand for meat appears to be strong enough to support hog prices at or above the year-ago level, at least through the remainder of the current year. The usual seasonal decline in hog prices from the summer high to year-end is about 20 per cent. Price su ort for the 1950 wheat cro is set at $1.99 per bushel, U.S. average, compared with 1.95 for the 19 9 crop. Acreage allotments have not yet been announced. Honey prices will be supported at nine cents per pound during the 1950 marketing season. Fitting machinery to small farms is a problem common to most areas. Working with 80 acre farms, 60 acres tillable, Purdue University farm economists concluded that the following arrangement was most economic: a tractor, plow, disc, harrow, wagon, and grapple fork owned by each farmer; corn planter, cultivator, rotary hoe, one-horse drill, mower, side-delivery rake, hay loader, and manure spreader jointly owned by two farmers; corn picker, corn binder, silage cutter, and grain drill jointly owned by three farmers; and combine hired on a custom basis. University of Wisconsin economists working on this problem. reached the same general conclusion except that it would be more economical for dairy farmers to buy a small field forage harvester jointly with two neighbors than to buy a hay loader, corn binder, and part interest in a stationary silage cutter. Prices received by farmers in mid-June averaged the same as a month earlier and Meat animal prices were six per cent higher than in June 1949, and crops averaged about the same as a year earlier. Poultry products prices were down 26 per cent and dairy products about three per cent from June 1949 levels. Prices paid by farmers for goods and services increased one point in June to 255 Per cent of the 1910-14 level and were three points higher than in June 1949. Only one per cent less than a year ago. https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis No. 48 Ernest T. Baughman Agricultural Economist Research Department