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May-June
1962
Postwar Growth and Distribution
of District Bank Deposits . . . . . . page 3
Seasonal Patterns of Cattle Prices . . . page 9
Current Statistics . . . . . . . . . page 15
FEDERAL RESERVE BANK
OF KANSAS UITY
Subscriptions to the MONTH LY REvmw are available to the public without charge. Additional
copies of any issue may be obtained from the
Research Department, Federal R eserve Bank of
Kansas City, Kansas City 6, Missouri. Permission
is granted to reproduce any material in this
publication.
Postwar Growth a nd Distribution
Of
District Bank Deposits
TRIKING CHANG s have occurred since the
end of World War II in the magnitude and
distribution of deposits at member banks in the
Tenth Federal Re erve District. Following the
immediate postwar contraction experienced by
banks aero th Nation, aggregat depo. its at
Dislrict member banks began a pro! nged expansion. At the close of 196 1, total deposits
neared the $9 %, billion mark, and the December average level last year was 57 per cent
higher than the comparable figure in 1947.
Although the pace of this expansion has been
quite irregular, 1955 was the only year in
which the December average deposit level was
below the year-earlier figure.
For some banks and regions within the District's boundaries, fate has been exceedingly
kind. Member banks in New Mex ico, for example, enjoyed a growth of deposits between
1947 and 1961 exceeding 180 per cent. For
other sections of the region, the road to higher
deposit levels has proved rocky. Total deposits
at Nebraska member banks on the four condition report dates of 1961 averaged less than
25 per cent higher than the level of 194 7. The
dispersion of growth rates among individual
banks has been even wider - some have witnessed deposit losses over the postwar years
while others have experienced a growth rate
va tly greater than the average for all District
members.
This review of District deposit expansion will
be concerned particularly with the pattern of
growth by class of bank ( reserve city or country) , by state, and by major metropolitan area
S
Monthly Review
•
May-June 1962
as it has unfolded during the postwar years.
Over a period as long as this, patterns of deposit growth are shaped heavily by underlying
difference in the rate of advance in population
and in income. Such influences a re visible in
Di trict bank d p , it data. The correl ation
between bank deposits and the e economic and
demographic factors is far from perfect, however, even over a comparatively protracted span
of years. This fact , too, is evident in the record
of deposit expansion among District banks.
A second feature of considerable interest in
the record of deposit increases over the postwar years is the sharp variation in annual rates
of growth. The observed variations follow quite
closely the developments at all member banks
in the United States and appear to be as ociated with d velopments of nationwide influence
in the financial markets.
THE PATTERN OF GROWTH BY YEARS
The expansion of District bank deposits since
194 7 certainly could not be characterized as a
steady upward trend. The annual percentage
change in deposit balances at all District members has varied from qiinus 1. 7 per cent in
1955 to 9.7 per cent in 1958. An attempt to
explain the instability in annual rates of deposit
expansion at District banks in terms of specific
factors influencing regional business activity
would be largely fruitless. The dominant influence has not emanated from within the District, but from forces determining the rate of
bank deposit expansion in the Nation as a
whole.
3
Postwar Growth and Distribution
ANNUAL PERCENTAGE CHANGES IN T TAL
DEPOSITS
Per Ce nt
16
12
,,l
10th District Renrve City Banks
/
I?
8
,,
;...-"\\ 10th District Country Bank s
:
I
I
/
/
,.- ,
+
0
'
All Member Ba nks, U.
/
'
4
\
I
I
I
..
''i ~\/"
\ / 'J/
..,
V
4
1948
'5 1
' 53
'55
'57
'5
'6 1
NOTE : Percenta ge changes are ba sed on dally average depos i t
levels in De ce mber . Dis tr ict rese rve ci ty and oun try f ig ures are
adj usted for re cla ssi fi catio n of banks from re se rve ci ty lo co untry
status .
This may be seen from an inspection of the
accompanying chart, which shows annual rates
of change in total deposits at District reserve
city and country members and at all member
banks in the United States. There are, to be
sure, significant differences in the percentage
growth of deposits at these banks from one year
to the next, but the broad pattern of variation
in growth rates is remarkably similar. This
general conform ance of annual rates of change
scarcely can be accidental, and it is instructive
to consider why it exists.
The rate of growth of deposits at all member
banks in the United States is governed primarily by Federal Reserve policies determining
the total reserve position of the banking system.
When bank reserves are increased rapidly - as
they were in 1950, 1951, 1954, 1958, and
1961 - the capacity of the banking system to
expand its holdings of earning assets and thereby increase its deposit liabilities is enlarged.
Conversely, constraining the growth of bank
reserves retards the rate at which bank credit
and deposits can expand.
For the most part, rapid deposit expansion
has occurred during recessions in business ac-
4
t1v1ty which called for expansionary Federal
Reserve policies. During such periods, market
interest rates have tended to fall and remain at
relatively low levels both because of rising bank
reserves and because of reduced demands for
credit. In years when open-market rates were
low or declining - such as 1954, 1958, 1960,
and 1961 - investors found bank deposits,
especially time deposits, increasingly attractive
in comparison with market investments. Thus,
bank deposits increased rapidly. When rates on
Treasury and other marketable securities rose
or remained at relatively high levels, as in
1953, in 1955 through 1957, and again in
1959, the growth rate of bank deposits was
sharply attenuated.
Annual rates of chang in District bank deposits could be expected to conform closely
with the national pattern only if depositors of
District banks, like those of banks in other
regions, reapportioned their financial assets
among bank deposits, Treasury securities, and
other types of assets when financial developments altered relative rates of return. The
general similarity between District and national
deposit growth rates shown in Chart 1 indicates
that this is indeed the case. It is notable that
the District's country member banks are not
immune from thi s influence on the growth of
their deposits ; changes in market rates of interest have a pervasive effect on deposit behavior that extends even to comparatively small
banks.
GROWTH BY TYP
O
DEPOSI
The sensitivity of investors to yield differences on competing financial assets also has
been a dominant factor in the changing structure of bank deposits between demand and time
accounts, both in the Di trict and across the
Nation. In 194 7, time deposits accounted for
about 11 ½ per cent of total District member
bank deposits ; by the close of 1961 this fraction had increased to 23 ½ per cent. The more
rapid advance of time deposits dates from
of District Bank Deposits
Table 1
DISTRIBUTION OF TOTAL DEPOSITS AMONG
D
ND
D TIME
CCOUNTS
All Tenth District Member Banks
Selected Dates
Year
Demand Deposits
1947
1951
1954
1957
1961
5,157
5,955
6,390
6,162
6,991
670
778
1,067
1,297
2,143
15.5
17.4
16.1
175.4
Time Deposits
(In millions of dollars)
Ratio of Time
to
Total Depos its
(Per Cent)
11.5
11.6
14.3
17.4
23.5
Per cent increase
1947-51
1951-61
I
NOTE : Data are ba sed on daily average deposit levels In December .
around J 95 I- the year in which Federal Res rv poli i s wer reori nted fr m " p gging"
interest rat on Treasury securitie to operating as a stabilizing force on economic activity.
Since then, interest rates have trended upward
on virtually every class of financial asset except
demand deposits, on which banks are not allowed to pay interest, and the relative attractiveness of holding money balances has steadily
decreased. Effective rates paid by banks on
time deposits, meanwhile, have risen, reflecting
both the interest of banks themselves in maintaining their competitive position in the markets
for savings and the actions of the supervisory
authorities in lifting maximum legal rates.
As shown in Table 1, the resulting effect on
the structure of District bank deposits between
demand and time accounts has been substantial.
Demand deposits advanced 17 per cent in the
decade ended in 1961 while time deposits increased 175 per cent.
y
Table 2
HANGE
ASS OF
A K
The generally similar pattern of annual rates
of deposit growth at the District's reserve city
and country members revealed in the chart
tends to conceal longer-run trends in the
growth rates of the two classes of banks. As
noted earlier, it is over relatively longer periods
that economic and demographic factors begin
Monthly Review
to weigh more heavily as determinants of bank
deposit growth.
A close inspection of the chart discloses that
country member banks in the District have
en joyed a somewhat more rapid rate of expansion than District reserve city banks since about
1952. The data in Table 2 show this even more
clearly. From 1952 through 1961, District
country members increased their total deposit
liabilities by 38 per cent, a gain almost twice
as large as that occurring at reserve city banks.
These differences in growth rates since 1952
are not, of course, attributable to developments
in agriculture. That industry has experienced
generally adverse conditions for more than a
decad , and banks heavily depend nt - either
directly or indirectly - up n farming as a primary ource of deposits have felt the impact.
At a sample of 105 small rural banks in the
District, for example, individual and business
deposits during the 11 years ended in 1961 increased about 25 per cent, which is less than
half the growth in those balances at all Tenth
District members.
The more favorable deposit experience of
country members can be ascribed, in part, to
the continuing movement of the population to
the suburbs in major metropolitan areas. Member banks established in the suburbs since the
end of World War II are a1l in the country bank
classification. An additional factor promoting
country bank deposits has been the rapid increase in population and income in such cities
as Albuquerque, Colorado Springs, and Bartles-
May June 1962
IN DEPOSIT
Y C A S OF BANK
All Tenth District Member Banks
l
Reserve City Banks
Period
1947-52
1952-61
1947-61
J
I
Country Banks
T DemandT Tim e
Total [
IDeposits Deposits Deposits
Demand
Time
Total
Depos its Deposits Deposits
(Per Cent Increase)
(Per Cent Increase)
l
l l
269
38
21
117
162
1
25
21
51
15
16
34
l l
39
170
275
18
38
63
NOTE : Data are ba sed on daily average deposit levels i n December,
adjusted for reclassification of banks from reserve city to count ry
status.
5
Postwar Growth and Distribution
Table 3
PERCENTAGE INCREASE IN TOTAL DEPOSITS,
SIX METROPOLITAN AREAS
June 30, 19S2 to June 15, 1960
Metropol itan Area
All Commercial
Banks
Reserve City
Banks
Country
Member and
Nonmember
Banks
55.1
31.5
24.0
19.2
14.0
12.3
34.4
22.5
10.5
5.8
5.6
- 2.2
150.5
90.6
77.8
65.3
57.8
148.7
Denver
Tulsa
Oklahoma City
Kansas City, Mo.-Kans.
Omaha-Cou ncil Bluffs
Wichita
NOTE: Data are adjusted for reclassification of banks from reserve
city to country status .
ville, to name a few, in which mem_ber bank
are in the country bank classification for purposes of calculating reserve requirements.
DEPOSITS IN MAJOR DISTRICT CITIES
Further insight into the disparate growth
rates of country and reserve city member bank
deposits since 1952 can be gained by observing
the performance of deposits at banks in the District's six major metropolitan areas, where the
bulk of District reserve city bank deposits are
lodged. To assess the influence of suburbanization and other factors on deposits of reserve
city banks in these cities, it is useful to include
data for nonmember as well as member banks
in the metropolitan area totals. This is the
basis on which Table 3 was constructed. It
shows the percentage increase in total deposits
between June 30, 1952, and June 15, 1960, at
all commercial banks in the metropolitan areas
of Kansas City, Mo.-Kans., Tulsa, Oklahoma
City, Denver, Wichita, and Omaha-Council
Bluffs. June 15, 1960, is the latest condition
report date for which bank data for these metropolitan areas have been tabulated. The table
also indicates the percentage increase in total
deposits between these two dates for reserve
city banks in the six cities and for country
member and nonmember banks.
In all six metropolitan areas, deposit growth
rates at reserve city banks since 1952 have been
far below the pace of expansion at country
6
member and nonmember banks. The redistribution of banking resources away from downtown banks and in favor of suburban banks has
been quite substantial. But it is evident from
the data in Table 3 that differences among the
six cities in deposit growth rates at reserve
city banks cannot be explained by differences in
the rate at which deposit balances have shifted
from downtown to outlying banks, since the
cities showing the lowest gains in reserve city
bank deposits also display low growth rates for
all commercial banks. Instead, they are explained by differences in the growth of total
deposits at all banks in the various metropolitan areas.
Denver enjoyed a striking expansion in deposit totals from 1952 to 1960; the 55 per cent
gain shown in the table compares with an increase of 32 per cent in total deposits at all
commercial banks in the United States during
the same period. The Tulsa and Oklahoma
City metropolitan areas, meanwhile, experienced a growth in banking resources roughly in
line with the national rate of gain. The increase at Tulsa was somewhat larger than at
Oklahoma City between June 1952 and June
1960, but that relationship would be reversed if
slightly different date were employed for measurement purposes.
In the Kansas City, Wichita, and Omaha
metropolitan areas, depo it expansion has been
quite moderate since 1952. This is evident
from the figures in Table 3, and reference to
other data indicates that this is not an erratic
result which depends upon the specific dates
used for computing growth rates shown in that
table. In Kansas City and Wichita, an explanation for the tempered growth rate of bank deposits may lie in the effect that altered defense
program have had on the metropolitan economies. Both cities were important centers for
production of military hardgoods during the
Korean conflict, and subsequently they have experienced major readjustments in their regional
economies as a consequence of changing mili-
of District Bank Deposits
tary procurement programs. The cutback at
Kansas City came very shortly after the end of
the Korean war. More recently - since 1957
-Wichita's employment statistics have recorded a sharp decline due principally to the reduction in output of a major producer of military
aircraft. These readjustments have left an indelible imprint on the financial statistics of both
cities.
The relatively slow rate of expansion in deposits at Omaha, on the other hand, cannot
readily be explained by reference to such factors. Omaha's economy has been influenced
much less by changes in military procurement
progra ms, and the rate of gain in non agricultural employment in the Omaha metropolitan
area since 1952 has k pt pace with the nation al
trend. One contributing factor to the moderated growth rate of deposits was the decline in
time deposits at reserve city banks in Omaha
from 1953 through 1958, which apparently reflects the relatively low rates of interest paid on
time accounts in that city during those years. Another factor is the rather high proportion of
demand balances consisting of interbank accounts at city banks in Omaha. Both there and
elsewhere in the District, correspondent balances have shown less growth than other types
of demand deposits ince 1952. But in addition, demand balances of individuals and
businesses have displayed a comparatively slow
growth rate at Omaha banks since 1952, a fact
for which no obvious explanation is apparent
in gene.ral statistics relating to banking and to
the performance of the Omaha economy.
DISTRICT SHARE OF ALL MEMBER
BANI< DEPOSITS
It seems evident, then, that the unequal rates
of deposit expansion at District reserve city and
country member banks since 1952 are related
importantly to factors affecting total banking
resources in three of the major metropolitan
areas of the Tenth District. It is also interesting to note that since 1952 the District's share
Monthly Review •
May-June 1962
Table 4
DISTRIBUTION O
T T L BANK DEPOSITS
TES
All Tenth District Member Banks, 1947-61
Millions of Dollars
Per Cent
of
1947
Total
Colorado
Kansas
Nebraska
New Mexico*
Oklahoma*
Wyoming
Missouri *
District Total
r
968 16.9
997 17.4
964 16.9
126
2.2
11,269 22.2
178
3.1
1,215 j 21.3
5,717 100.0
I
Per
Cent Percentage
Increase,
of
Total 1947-61
1961
1,733 19.6 79.0
1,516 17.1 52.1
1,197 13.5 24.2
4.0 184.1
358
2,183 24.6 72.0
357
4.0 100.6
1,538 17.3 26.6
8,882 100.0 55.4
I
I
* Tenth Distri ct portion only.
NOTE : Annual data are ba se d on an average of all cal l report
figures for the year .
of all memb r bank deposits in the United
States has declined.
In 1947, member bank deposits in the Tenth
District comprised 4.84 per cent of the total for
all member banks in the United States, based
on daily average deposit levels in December.
In subsequent years, the share rose, reaching a
level of 4.91 per cent in December 1952. Then
a decline set in which reduced the District's
proportion of total member bank deposits to
4.61 per cent by December 1961. Stated in
terms of percentage points, this decline in the
District's share of total member bank deposits
may seem unimpressively small, but in absolute
terms it represents about $600 million in bank
deposits.
IS RIBUTI N OF B
DEPOSITS BY
ATES
One might presume from the data in Table
3-which shows bank deposits in Denver expanding at a rapid pace-that the state of Colorado must have experienced a substantial expansion in banking resources over the postwar period . This is indeed the case, as indicated
in Table 4. However, the table also shows that
the percentage increase in member bank deposits from 194 7 to 1961 was almost as large
in Oklahoma as in Colorado, and that the
sharpest percentage increases were recorded in
New Mexico and Wyoming. Kansas experi7
Postwar Growth and Distribution of District Bank Deposits
Table 5
INCREASES IN MEMBER BANK DEPOSITS,
POPULATION, AND PERSONAL INCOME
Six District States, 1947-61
Member Bank Total Personal
Per Cap i ta
Deposits
Income
Personal
(Millions of
(Millions of
Population
Income
Dollars)
Dollars)
(Thousands) (Dollars)
Oklahoma
Colorado
Kansas
Nebraska
New Mexico
Wyoming
914
765
519
233
232
179
2,268
2,707
2,345
1,511
1,215
418
227
545
343
165
401
82
864
1,111
868
913
833
876
NOTE : Bank deposit data are for all Tenth District member banks,
with increases computed from an average of all call report figures
for the year. Population and personal income figures are for
the entire state. Population statisti cs are Census Bureau data;
personal i ncome stat istics are from the U. S. Department of Com merce.
enced what might be termed a moderate growth
rate of member bank deposits, while Nebraska
and the western portion of Mis ouri included
in the Tenth District witnessed a significantly
slower rate of expansion.
Changes in the distribution of deposits by
states shown in Table 4 understandably have
been influenced importantly by comparative
rates of expansion in population and economic
activity levels. Table 5 is designed to bring
out these influences. It displays increases between 1947 and 1961 in Tenth District member
bank deposits, population, and personal income
in the six states for which all or a major portion
of the state is included in the District.
These figures indicate that 194 7-61 gains in
deposits among the six states were, in a broad
sense, a reflection of growth in total personal
income. States experiencing the largest increases in total personal income generally were
those in which bank deposits rose the most. The
association between changes in population and
bank deposits, and between changes in per
capita income and bank deposits, is much
weaker. This is not surprising, of course. One
would not expect increments to bank deposits
in the various states to mirror population gains
unless per capita income was increasing at
nearly the same rate in every state. Similarly,
bank deposit growth could not be expected to
8
parallel gains in per capita income unless population increases were nearly equivalent among
the states.
The figures also indicate, however, that the
association between bank deposit growth and
total personal income is far from perfect. The
largest absolute increment in deposits was in
Oklahoma, even though the rise in total personal income in that state was well below that
of Colorado, and slightly less than in Kansas.
The increase in bank deposits in Nebraska, on
the other hand, was unusually small, given the
increase in total personal income. Thus, the
rise in total personal income in Nebraska was
3 ½ times that of Wyoming, but deposits in
Nebraska ro e just 30 per cent more than in
Wyoming.
CONCLUDING REMARKS
This imperfect association between deposit
gains and growth in personal income among District states from 1947 to 1961 demonstrates a
point that is worth emphasizing. Our regional
banking community is but a portion of a nationwide network that permits rapid transfers of
funds from one end of the country to the
other for reasons that may have little to do with
the economic health of the region. A large
portion of the transfers are purely financial in
nature- that is, they result from switches by
individuals or businesses from bank deposits to
fixed-income securities to equities and back
again in search of financial assets that provide
the highest expected yield. As interest rates on
fixed-income securities have risen over the postwar years, transfers of this kind have become
more volatile and, as noted earlier, they play
a vital role in explaining annual rates of change
in District bank deposits. The District is no
longer a region in which bank deposit behavior
depends mainly on the fortunes of agriculture.
It is a part of a developed complex of financial
institutions in a highly industrialized economy,
and its deposit performance must be evaluated
in these terms.
Seasonal Patterns of Cattle Prices
IN
MAKING decisions about future operations,
cattle producers may respond to any of a number of factors - including current and past
prices. To make the best possible decisions,
producers need to interpret correctly a va t
quantity of information , including prices of
differ nt kinds and grad s of cattle, prices in
different markets and at different times, and
prices of alternative resources and products.
Faced with these decisions, cattle producers
need to distinguish clearly among the several
movements which may occur simultaneously
in each price series. It has been found useful
to distinguish and isolate trends, cycles, seasonal variations, and irregular fluctuations.
Trends usually are not troublesome in decision
making because they extend over long periods
of time, while irregular fluctuations are largely
irrelevant to decision making because they frequently are unpredictable. Cyclical and seasonal variations would be of less concern if
their timing and amplitudes were constant, but
they are not entirely regular and this necessitates some concern over their variability. Since
cyclical changes in cattle prices and inventories
were discussed in the April 1961 Monthly Review, this article is chiefly concerned with seasonal variations.
CATTLE PRICE MOVEMENTS
Cattle prices respond to many stimuli such
as the periodic buildup and liquidation of cattle
inventories, changes in consumer tastes and
incomes, population growth, variations in prices
of other products, and seasonal fluct;1ations in
breeding rates and feed costs. The movements
Monthly Review • May-June 1962
which occurred in monthly average prices of all
cattle slaughtered under Federal inspection
from 19 51 through 1960 are shown in Chart
1. Although many of the variations were
smoothed out of the original price series by the
averaging proce s, clearly detectable movements of various types remain . The cyclical and
seasonal movements were separated by a stati stica l process using weighted moving averages
and are shown in the chart.
Historically, the dominant component of
cattle price movements in terms of magnitude
of fluctuation has been the cycle. The adjusted
price series line in Chart 1 shows the magnitude of the cyclical movement. The major influence on the price cycle appears to be the
beef production cycle which is caused by the
periodic buildups and liquidations in cattle inventorie . Producers who can successfully predict these cyclical changes may be able to adjust their operations to a countercyclical basis
to some advantage.
The other major component of the cattle
price movement is the seasonal index shown in
Chart 1. Note that the seasonal index is above
100 when the original price series is above the
adjusted price series, and below 100 when the
opposite relationship exists. The seasonal variations in prices are closely but negatively related to the seasonal changes in beef production, which are in tum related to the seasonality
of climatic variations, feed production, and reproduction.
The remaining element in the price movements i the irregular fluctuation. This element
is random in timing and amplitude and may be
9
Seasonal Patterns
Chart 1
ORIGINAL, ADJUSTED, AND SEAS NAL CHANGES IN AVERAGE PRICES
OF ALL CATTLE SLAUGHTERED UNDER. FEDERAL INSPECTION
United States
Doi I ors
Index
160
35
30
140
Price Series
1
~
Adjusted Price Series
25
120
20
100
15
80
0
195 I
'52
'53
'54
'55
'56
'57
'58
'59
'60
SOURCE AND METHOD: The original data for the charts which appear in this article were obtained from U. S. Department of Agriculture
publ ications. The price movements were computed by the use of the Shiskln method for seasonal analysis .
due to any of a number of causes. The statistical procedures used in these analyses largely
eliminate the irregular component from the adjusted price series and the seasonal indexes.
SEASONAL VARIATIONS IN SLAUGHTER
(" A T E PRICES
In recent years, there has been some concern
over changes in the patterns of seasonal fluctuations, especially those of steer prices. Questions have been raised concerning the magnitudes and causes of these changes and whether
they are temporary or permanent. While it is
not possible to give positive answers to all of
these questions, analyses of some of the factors
involved should be useful for planning purposes.
The seasonal index for all cattle slaughtered
under Federal inspection has changed little
since 1925. Chart 2 shows seasonal patterns for
selected recent years. The only notable change
10
was the shift in the seasonal high from May to
April. Otherwise, the pattern for 1960 was
very similar to 1950 and 1955. This uniformity
is somewhat deceptive in that it does not refl ect offsetting shift in component series. The
influence of any particular kind, grade, or market tends to be minimized by the process of
averaging in the all-cattle figures.
In contrast to the general movement, the
seasonal patterns of slaughter steer prices have
been reversed in recent years. Chicago choice
slaughter steer prices appear to be fairly representative of these changes and the extent of
the reversal of their seasonal variation is shown
in Chart 3. The seasonal highs occurred during the fall months from 1945 up to 1957. The
pattern hifted in 1957, and since then the
seasonal highs have occurred during the spring.
The seasonal pattern for prime slaughter
steers in the Chicago market has changed also.
In this case, the seasonal highs shifted from
of Cattle Prices
Chart 2
Chart 3
SEASONAL INDEXES OF AVERAGE PRICES OF
ALL CATTLE SLAUGHTERED UNDER
FEDERAL INSPECTION
SEASONAL INDEXES OF AVERAGE PRICES
OF CHOICE SLAUGHTER STEERS
Chicago
United States
Index
120 , - - - - - - - - - - - -- - -- - - - - ,
lndu
120 , - - - - - - - - - - - - - - - - - - - - - - - ,
II 0
90
90
0 ..____.___....,___._ __,__ _.____,__
Jon. Feb. Mor. Apr. Moy June July
__.___..___.___...,___,
Aug. Sept. Oct Nov. Dtc.
0 ..____.___....,___._
__,__..,____,__
Jon. Feb. Mor. Apr. May June July
_.___..___.___...,___,
Aug. Sept. Oct. Nov. Dec.
Chart 4
Chart 5
SEASONAL INDEXES OF AVERAGE PRICES
OF COMMERCIAL COWS
SEASONAL INDEXES OF BEEF PRODUCED
UNDER FEDERAL INSPECTION
Chicago
United States
Index
120 ~ - - - - - -- - - - - - - - - - - - - - - ,
II 0
II0
90
90
0 .___..___......_____._ __.___...,____.,_
Jon. Feb. Mor. Ap r. Moy June July
_,__.,_____..___...,____J
Aug . Sept. Oct Nov. Dec.
Monthly Review • May-June 1962
0 ..___.___....____.,_ __,__ _.____,__
Jan. Feb. Mor. Apr. Moy June July
__.___.._-::-'---:----'----::--'
Aug. Sept. Oct. Nov. Dtc.
11
Seasonal Patterns
late fall to early winter about 1951, then to
early spring about 1956. In addition, the magnitude of seasonal variation for prime steers
has increased and it has been almost double
that of choice steers at Chicago in recent years.
However, prices of other grades of steers apparently have more closely followed the pattern of choice steer prices. The seasonal index
for the average prices of all steers at Chicago
is similar to that for choice grade, both in
timing and in magnitude. The seasonal indexes
for the average prices of all grades of steers
in the Omaha and Sioux City markets closely
parallel the Chicago index. This implies a general shift in the seasonal pattern of steer prices.
It is somewhat surprising that th change in
steer prices had so little effect on the average
prices for all cattle slaughtered under Federal
inspection. The most obvious explanation
would be a comparable countershift among
other kinds of slaughter cattle. However, information on cow prices shows no such
change. The seasonal indexes for commercial
cow prices in the Chicago market, depicted in
Chart 4, indicate very little change from 1955
to 1960, although there was a moderate shift
from 1950 to 1955. The pattern for utility
cows is quite similar except that the 1950 and
1960 indexes are much closer. Unfortunately,
a comparable series on heifer prices was not
available for this analysis. Available data suggest that a counterseasonal shift in heifer
prices accounts for the lack of change in average prices of all cattle in the face of the change
in steer prices.
SEASONAL VARIATIONS IN BEEF OUTPUT
AND CONSUMPTION
Changes in cattle prices are closely related
to changes in beef production and consumption. Since beef is quite perishable and
cold storage costs are high relative to beef
prices, changes in consumption tend to follow
closely changes in production. Thus, increases
in the rate of production tend to depress beef
12
Chart 6
SEASONAL
I
BEfF
ES OF CIVILIAN
ONSUMPTION
United States
Index
120 ~ - - - - - - - - - --
-------,
II0
o .____,__
Jon. Feb
.____,__._____.__.____._--=-..__-:->----:-:-~-::-'
Mor. Apr. Moy
June July
Aug . Sept. Oct. Nov. Dec.
prices, which stimulates consumption and prevents excessive cold storage holdings. Beef price
reductions are reflected back to cattle producers with a fairly short lag.
Statistical analysis of data on beef production for the period 1955-60 indicates that there
was little change in seasonal variation during
this period. However, there was considerable
change from 1950 to 1955, especially for the
month of June and, to a lesser extent, December. By lagging the all-cattle price series one
month, a comparison of Charts 2 and 5 shows
that the index tends to move in the opposite
direction and at the same magnitude as the beef
production index. The primary exception to
this is the June to July dip in production which
is not reflected in cattle prices. An apparent
explanation of this is the similar dip in beef
consumption. As indicated in Chart 6, consumption usually rises from early spring to
June, declines in July, then rises again to early
fall. The summer dip in consumption may be
due to the ending of the school term, vacations,
and other changes in living habits occasioned
by the onset of hot weather and it may be only
coincident with the dip in beef production occurring at the same time. Whatever the cause
of Cattle Prices
Chart 7
Chart 8
SEAS NAL IND
UMBERS OF
CHOICE _LAUGHTER STEERS SOLD
OUT OF IRST HANDS
SEASONAi.. INDEXES OF AVERAGE PRICES
OF STOCKE AND FEEDER STEERS
Chicago
Kansas City
Index
120 ~ - - - - - - - - - - - - - - - - ~
Index
140 . . - - - - - - - - - - · - - - - - - - - ~
II 0
120
90
80
0 ~ ~ - ~ ~---'---''--~-..___,_____.____.__~
Jon. Feb. Mor Apr M oy June July Aug Sept Oct. Nov. Dec.
Feb
Mor
Apr
Moy June July
Aug
Sept Oc t
Nov Dec
NOTE : Uni Is of scale have been doubled relative to previous chart s.
for this coincidence, it seems to have little
effect on the seasonal pattern of cattle prices.
Beef production and consumption figures
are not available by grades and kinds. However, numbers of slaughter cattle sold are available in certain categories and these provide a
rough indicator of production by grades and
kinds. hart 7 shows sea onal indexes of numbers of choice slaughter steers sold out of first
hands in the Chicago market. The magnitude
of these seasonal variations is considerably
greater than those of beef production and consumption. The most significant change in this
seasonal pattern is not the timing of highs and
lows but the shift in sales from spring to fall.
In terms of purely seasonal changes, the proportion sold in the first half of the year declined from 5 5. 8 per cent in 1946 to 45 .7 per
cent in 1960. While the change wa more
marked earlier in the period, it continued
throughout the entire period. The comparable
decline for all slaughter teer sales at Chicago
was from 55.5 per cent in 1946 to 48.7 per
cent in 1960, but there was no appreciable
change after 1952.
Monthly Review • May- une 1962
omparison of the seasonal indexes for total
beef production and sales of slaughter steers
in Chicago suggests that sales of other kinds
of cattle have shifted in a different manner.
Beef production has shifted somewhat from late
fall to late spring and early summer, while Chicago slaughter steer sales have tended to shift
from spring to fall. These counteractions provide some explanation for the different seasonal price behavior for steers and other kinds
of slaughter cattle.
Changes in timing of cattle sales probably
are due largely to recent changes in cattle feeding operations. The development of the yearround feedlot enterprise would tend to reduce
seasonal variations in sales of fed cattle. If the
trend continues toward year-round specialized
feedlots and away from seasonally operated
farm feedlots, the shift in seasonality of sales
may continue. Thus, the continuation of the
new seasonal pattern of steer prices may depend in large part on the degree of success of
year-round feedlot ope rations.
SEASO AL VARIATIONS IN FEEDER
ATTLE PRICES
The close relationsh ip between slaughter and
feeder cattle markets suggests that their sea-
13
Seasonal Patterns of Cattle Prices
sonal patterns would be closely related . The
seasonal indexes of stocker and feeder steer
prices in Kansas City are shown in Chart 8.
Despite the changes which have occurred in
slaughter steer prices in other Midwestern markets, there has been no appreciable change in
the seasonality of Kansas City stocker and
feeder steer prices. This suggests that the
change in seasonality of slaughter steer sales
has resulted largely from changes in the length
of time steers are fed and in feeding methods .
Feeder steer calf prices at Kansas City have
continued to follow the same seasonal pattern
as stocker and feeder steers. The 1960 index
was sli ghtly higher in th sp rin g and lowe r in
the fall than the 1950 a nd 1955 indexes, but
the timing of the easona1 patte rn remained
about the same. This also suggests that a
change has occurred in the length of the feeding period.
CONCLUDING REMARKS
One of the more notable aspects of the shift
in the seasonal pattern of slaughter steer prices
is that it was the only one of the seasonal price
indexes analyzed here which did not peak in
14
the spring before 1957, but since that year it
also has peaked in the spring. A second notable aspect is that this change has had no apparent effect on any of the other available price
indexes. While this might suggest to some that
the shift is of minor consequence or short
duration, the magnitude of the shift and its
stability since the shift suggest that it is a
significant and possibly a durable change.
There appear to be no obvious factors in operation to reverse the shift.
In planning steer feeding operations, it would
appear to be advisable to take the changed
seasonal price pattern into consideration. Howeve r, it sho uld be kept in mind that actual
prices oft n do not move up and down with
the seasonal index. The seasonal influence is
likely to be overcome by the cyclical influence
during the increasing and decreasing phases of
the cycle. The decision maker needs to consider both factors in planning his operations.
It should be recognized also that irregular factors often dominate the price movement and,
while these are largely unpredictable, they can
be allowed for in calculating the risks of alternative courses of action.
BANKING IN THE TENTH DISTRICT
I
Loans
Reserve
Country
City
Member
Member
Banks J Banks
I
District
and
States
I
Deposits
1
Reserve
City
I Member
I
I
Banks
Country
Member
Banks
I
r
Loans
Reserve
City
Member
Banks
I
1
Reserve
City
Member
Banks
Country
Member
Banks
I
I
Deposits
Country
Member
Banks
April 1962 Percentage Change From
March 1962 Percentage Change From
Mar. Apr. Mar. Apr. Mar. Apr. Mar. Apr.
Feb. Mar. Feb. I Mar. Feb. Mar. Feb. Mar.
1962J1961 1962 1961 196211961 196211961 1962 1961 196211961 1962 11961 1962 1961
1
Tenth F. R. Dist.
Colorado
Kansas
Missouri*
Nebraska
+2 +8
+2 +8
+8 + 11
+1 +5
3 +9
New Mexico*
+2 +10
+7 +17
- 1 I +5
+ 3 +6
+3 1 +9
......
+3 + 14
+ 8 - 1 +10
** +2 I+ 13
>l<>t<
Oklahoma*
- 1
Wyoming
**
* Tenth
t
District portion only .
Less than 0.5 per cent.
** No
+1
+8 +1
+9 +2
+8 + 1
tt + 9
+9
+1 + 10
t +10 1 +2 +13 +2 +10 - 1 +11 - 1 + 14 +3 +13
+ 1 I +9 - 2 +6 +2
+9
t +5
tI +6
t +8
+2
- 1
**
**
+s
+ 6 +1 + 9 + 2
+ 7 + 2 +10 - 1 + 4
**
**
"'* I
31 +s
+8
t +9 + 3 + 101
**
**
t + 1 **
1
+2
+5 - 3
+8 - 1
+ 1 + 10 **
+ 5 + 2 + 10
+ 8 + 1 + 10
** + 1 + 6
t
+ 2 + 13 +*3* 1 + 9 + 1 + 10
+ 1 1+ 14
** - 1 + 9
reserve cities in this state .
PRICE INDEXES, UNITED STATES
r
-r
Index
Consumer Price Index (1957-59= 100). .............
Wholesale Price Index (1957-59= 100) ........... ...
Prices Received by Farmers (1910-14 = 100) ....
Prices Paid by Farmers (1910-14 = 100). ....... ....
Apr.
1962
l
Mar.
Feb.
1962
1962
j
104.8
100.7 r
243
305
105.2 1 105.0
100.7
100.4
242
306
244
305
t
Apr.
Mar.
1961
1961
103.9
100.5
239
302
103.9
101.0
243
302
r Revised .
TENTH DISTRICT BUSINESS INDICATORS
f
District
Value of
Department
Store Sales
Value of
Check
Payments
and Principal
Percentage change from previous year
Metropolitan
Areas
Apr.
1962
Tenth Federal Reserve District.. ..... .
Denver...... ..................... ............. .
Wichita ....................................... .
Kansas City................................ .
Omaha .........................................
Oklahoma City...................... ...... .
Tulsa ...........................................
+13
+14
+14
+13
+16
+16
+8
f
l
!
Mar.
Four
Mont hs
Apr.
Mar.
Four
Months
1962
1962
1962*
1962*
1962
+4
+4
+13
+3
- 1
+10
+7
+9
+11
+11
+7
+8
+12
+9
+8
+8
+4
+11
+14
+5
+1
+1
+2
+3
+s
- 3
+4
+1
+3
+3
+2
+5
+1
+s
+1
l
j
* Duri ng April and March, changes from a year ago reflect in part the fact that Easter this year fell on April 22, whil e la st
year it was three weeks earlier on April 2.
Monthly Review
•
May-June 1962
15
@FedFRASER