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rh F3/3 Federal Reserve Bank of Chicago - May 4, 1962 it LAND VALUES in the Corn Belt are stronger. Bankers in most Illinois and Iowa areas report increases in land values since last fall (see back of Letter). Furthermore, a sizable proportion of country bankers in Illinois, Indiana and Iowa (about one in five) consider the current trend in land values to be up. The rise in values is small. From October 1, 1961, to April 2, 1962, bankers reported a 3 per cent increase in Iowa and 2 per cent in Illinois. In the other states there was little change. In all states, bankers reported increases in values from last spring. The Jargest_gains_ were in Illinois . and Wisconsin, up 5 per cent, while bankers indicated a rise of 4 per cent in Iowa and 2 per cent in the other states. • The turnaround in land values last year and optimistic, expectations in the Corn Belt this spring reflect higher farm incomes during 1961 and higher Government support prices on corn, soybeans and other major crops in the Midwest. Furthermore, the pressure for additional land to enlarge existing farm units has continued and has perhaps even been intensified. Farmers who have participated in the Government's feed-- grain program have retired 20 to 40 per cent, or More, of their corn and grain sorghum acreage to qualify for payments and support prices. In many instances this has made "small" farms even smaller in terms of utilization of available labor and machinery. This together with higher support prices has provided added incentive for farmers to acquire additional land. SIGN UP IN THE FEED GRAIN PROGRAM was extended through the middle of April. Final figures show that farmers agreed to. divert 29.6 million acres of corn and grain sorghum compared with 26.7 million acres last year-a. gain_of 11. per. cent- Most of the increase came in corn where diversion rose. from 20.1 million to 23.8 million, acres while grain sorghum went from 6.5 to 6.7 million acres. With corn planting just getting under way over much of the Corn Belt, it is too early to determine the final reduction in total_ corn acres. .If favorable weather _prevails over large areas of the Corn Belt during the entire planting season, complying farmers may reduce their planned diversion and farmers outside the program may expand their corn acreage. Preliminary figures indicate sign up has been highestin areas, such as Missouri, which have had poor weather and has induced farmers to sign up as "crop insurance." • TOTAL ACREAGE RETIRED from production in 1962 will be 47.8 million acres if farmers carry through their reductions under both the feed grain and wheat programs. In addition to the corn .and grain sorghum acreage retired, wheat producers have signed to divert 15.1 million acres and barley producers have signed to divert 3.1 million acres. „inzup,115. t,021f litCr17.7t! OM:10T SEMAL Number 652 PRICES RECEIVED BY FARMERS in April dropped nearly 1 per cent from March reflecting declines for milk, hogs, eggs and chickens. Partially offsetting this were higher prices for cotton, corn and wheat. Dairy prices declined 5 per cent during the month reflecting both seasonal declines and the reduction in price supports on manufacturing milk. As a result, prices in April were 2 per cent under a year earlier and the lowest for April since 1958. Milkfat prices declined to the lowest level for the month since 1955. Dairy Prices Decline Following Reduction in Support Levels (Average price received by farmers) 1959 April 10 1961 All milk wholesale $ per cwt.) 3.91 3.96 Milkfat, in cream (cents per lb.) 59.8 59.2 March 196 April 1962 4.03 4.16 3.90 60.8 60.2 58.3 FEEDER CATTLE INSHIPMENTS in the first quarter were 18 per cent less than in 1961. All states in the Corn Belt, except Ohio, recorded decreases from last year. This reduction reflects the relatively high prices of feeder cattle and the delay in moving fed cattle out of feedlots during the winter. Feeder Cattle Shipments Down in Most Corn Belt States January-March . March 1961 1962 1962 1961 (thousand head) Ohio Indiana Illinois Michigan Minnesota Iowa South Dakota Nebraska Total 8 States 6.0 18.1 59.6 4.0 35.0 150.1 25.6 103.9 11.6 16.1 57.4 4.8 27.3 126.0 13.7 76.8 17.6 52.7 189.7 10.8 132.9 461.2 56.6 268.1 25.0 39.3 154.9 13.5 109.2 380.1 46.9 211.8 402.3 333.8 1,189.8 980.7 Research Department Per cent change in dollar value per acre of "good" farms TOP: October 1, 1961 to April 2, 1962 BOTTOM: April 1, 1961 to April 2, 1962 (based on reports of identical banks) Illinois Indiana Iowa Michigan Wisconsin October 1, 1961 to April 2, 1962 +3 —1 +2 —1 0 April 1, 1961 to April 2, 1962 +4 +2 +5 +2 +5 +1 +4 SEVENTH DISTRICT *Figures not reported due to limited number of replies. Current trend in farm land values based on opinions of country banks as reported in April 1962 Per cent of banks reporting trend is: TOP: Up CENTER: Stable BOTTOM: Down Illinois Indiana Iowa Michigan Wisconsin Up 22 20 23 15 8 Stable 74 79 69 76 84 SEVENTH DISTRICT 19 75 xvi 22 Down 78 4•0 '.... 1 9 xvtrfl. .. , 17 9 7)0 83 8 . 6