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Federal Reserve Bank of Chicago November 25, 1960
THE ANNUAL OUTLOOK CONFERENCE of the
U. S. Department of Agriculture was held last week. In
general, there were few changes in the agricultural
picture from earlier expectations. Some of the highlights
of the conference were as follows:
The national economy leveled off during 1960 after
advancing from the recession of 1957-58. While some
easing has been noted in recent months, there is a rough
balance between expansionary and contractionary forces
which will continue into 1961. As the year progresses,
however, an uptrend in economic activity is expected.
Consumer disposable income has continued to in_ crease despite some declines in-employment- and-hours
worked per week. In 1960 consumer demand for farm
products has been strong, reflecting the higher income
levels. Even with an expected leveling of income for
the first part of 1961 consumer demand is expected to be
well maintained.
Farm income in 1960 has shown an upward trend in
contrast to the downward trend of last year and may
possibly exceed that of 1959. A year ago the expectation
was for a continuation of the decline in farm income
from 1958, though at a slower rate. The upward change
has been due in part to another year of record-breaking
crop production, a rapid downturn in hog production and
consequent improvement in prices and incomes, and a
leveling of farm production expenses. Cash receipts
from farm marketings in the first three quarters of 1960
have been at an annual rate of $33.5 billion, slightly
above last year's $33.3 billion total. Realized net farm
income in the first nine months has been at an annual
rate of $11.4 billion, about the same as last year, but
income in the fourth quarter is expected to substantially
exceed the depressed level of a year ago.

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Hog prices—this fall have- been more than $4 per
hundredweight higher than last fall and promise to remain
above year-earlier through the first part of 1961. However, hog production is apparently responding quickly to
the favorable hog-corn ratio and abundant feed supplies.
Corn Belt farmers are planning a 4 per cent larger pig
crop in December, January and February than in the
same period a year earlier. This decline of only one
year marks the quickest turnabout in hog production on
record. Hog prices next year will probably average close
to 1960 but may fall below current prices in the closing
months of 1961.
Cattle and calf prices are expected to decline next
year by about the same amount as this year, with greater
downward pressure at the end of the year. Lower grades
of slaughter animals will show the greatest price weakness.

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Slaughter of cattle and calves in 1961 will be about
10 per cent larger than 1960 and will push total red meat

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Number 585
production to a new high. Even with larger slaughter of
cows and calves, the inventory of cattle numbers is
expected to continue upward, though at a slower rate.
The USDA estimates cattle numbers may have to be
revised _downward_ as _completed tabulation from the
Census of Agriculture become available. It was noted
that this would not change the immediate outlook for
cattle, but might mean a somewhat more moderate increase in slaughter and smaller decline in prices than
previously anticipated as the present cattle cycle progresses.
Feed grain production reached a new high this year
as exceptionally late frosts permitted most of the late
corn and grain sorghum fields to mature. With a record
carry-over and a lower support price on corn, feed grain
prices are expected to average a little lower than in the
past year.
Soybean prices are expected to show more than the
usual seasonal rise this year as prospective supply and
demand appear to be in close balance. Production is
estimated to be 4 per cent above last year and only 3 per
cent below the record two years ago. However, expanding exports and high consumption of soybean meal for
livestock feeding have cut carry-over stocks sharply. In
view of this decline in stocks, the U. S. Department of
Agriculture has suggested the need for an expansion in
soybean acreage and production in the coming year. A
favorable price relationship next spring between soybeans and the corn support price will likely encourage an
expansion in soybean acreage.
Dairy prices will be above the year-earlier levels
through March 1961 and will likely continue above during
the remainder of the year, though the Government support
price to be announced before next April will be an important determinant. Farm cash receipts from sales of
dairy products are likely to increase slightly next year
to another record. However, total costs for producing
milk have been rising and may keep net incomes of
dairymen from reaching a new record high. Production
in 1961 will likely increase more than in 1960 as the
favorable milk-feed price ratio will encourage further
increases in production per cow, and lower beef prices
will likely slow the decline in the number of dairy cattle
on farms.
Research Department

FARM BUSINESS CONDITIONS
October 1960, with comparisons
1959

1960
ITEMS

_

PRICES:
Received by farmers (1947 - 49 =100)
Paid by farmers (1947 - 49 =100)
Parity price ratio (1910 - 14 =100)
Wholesale, all commodities (1947- 9=100)
Paid by consumers (1947 - 49 =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 )
Soybeans, No. 1 yellow, Chicago (dol. per bu.)
Hogs, barrows and gilts, Chicago (dol. per cwt.)
Beef steers, choice grade, Chicago (dol. per cwt.)
Milk, wholesale, U.S.(dol. per cwt.)
Butterfat, local markets, U.S.(dol. per lb.)
Chickens, local markets, U.S.(dol. per lb.)
Eggs, local markets, U.S.(dol. per doz.)
Milk cows, U.S.(dol. per head)

October

September

October

89
119
81
119
......
1.97
1.10
.65
2.12
17.60
24.94
4.59
.60
.15
.43
215

87
119
8o
119
127
1.93
1.17
.66
2.15
16.67
24.80
4.42
.60
.15
.39
218

87
118
79
119
126
1.96
1.15
.74
2.14
13.07
27.19
14-.57
.6o
.14
.32
228

43.75
91.48

a._
90.85

42.00
89.06

PRODUCTION:
Industrial, physical volume (1947 - 49 =100)
Farm marketings, physical volume (1947 - 49 =100) ....

162
190

162
157

155
171

INCOME PAYMENTS:
Total personal income, U.S.(annual rate, bil. of dol.) ...
Cash farm income, U.S. '(annual rate, bil. of dol.)

410
_a.

409
33

384
31

6.3
61.2

6.6
61.2

6.1
60.7

104.4
1014,7

100.9
104.0

105.2
103.9

135.7
133.3

135.3
133.0

129.9
125.6

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

EMPLOYMENT:
Farm (millions)
Nonagricultural (millions)
FINANCIAL (District member banks):
Demand deposits:
Agricultural banks (1955 monthly average =100)
Nonagricultural banks (1955 monthly average =100)..
Time deposits:
Agricultural banks (1955 monthly average =100)
Nonagricultural banks (1955 monthly average =100)....
1 Based on estimated monthly income.

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

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