The Demand and price situation

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Material Information

Title:
The Demand and price situation
Abbreviated Title:
Demand price situat.
Physical Description:
v. : ill. ; 27 cm.
Language:
English
Creator:
United States -- Bureau of Agricultural Economics
United States -- Agricultural Marketing Service
United States -- Dept. of Agriculture. -- Economic Research Service
Publisher:
U.S. Dept. of Agriculture, Bureau of Agricultural Economics
Place of Publication:
Washington, D.C
Frequency:
quarterly[1963-1975]
monthly[ former <1940>-1962]

Subjects

Subjects / Keywords:
Agriculture -- Economic aspects -- Periodicals -- United States   ( lcsh )
Economic conditions -- Periodicals -- United States   ( lcsh )
Genre:
statistics   ( marcgt )
federal government publication   ( marcgt )

Notes

Dates or Sequential Designation:
Began in 1937; ceased in 1975.
Numbering Peculiarities:
Began new numbering with DPS-1 (For release Jan. 24, P.M. 1955).
Issuing Body:
Issued by: Bureau of Agricultural Economics, <1940>-1953; by: Agricultural Marketing Service, Nov. 1953-Mar. 1961; by: Economic Research Service, Apr. 1961-<May 1975>
General Note:
Description based on: Apr. 1940; title from caption.
General Note:
Latest issue consulted: DPS-144 (May 1975).

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 004884312
oclc - 01768307
lccn - 63024527
issn - 0501-9133
Classification:
lcc - HD1751 .A91853
ddc - 338
System ID:
AA00012195:00005

Related Items

Preceded by:
Price situation
Succeeded by:
Farm income situation
Succeeded by:
Marketing and transportation situation
Succeeded by:
Agricultural outlook digest
Succeeded by:
Agricultural outlook (Washington, D.C. : 1975)


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DEMAND and PRICE


SITUATION

DPS-24 f JAN 16 1957 |


LI


FOR RELEASE
DEC. 21, A.M.
1956


UNITED STATES DEPARTMENT OF AGRICULTURE
AGRICULTURAL MARKETING SERVICE


L/,t zr


Approved by the Outlook and Situation Board, December 17, 1956
SUMMARY
Total farm production this year exceeded last year's record,
with large output of both crops and livestock products. However,
domestic demand remains strong, and record quantities of farm
products are moving into foreign markets. While farm product
prices have declined since mid-summer under the impact of record
production, in November they averaged 4 percent above the low level
of a year earlier.
The Annual Summary of Crop Production indicates that total crop
output this year is around the same as last year and about equal
to the 1948 record. The soybean crop is almost a fourth larger than
in 1955, and gains occurred in production of corn, commercial vege-
tables, wheat, and fruit and nuts. Crops of cotton and feed grains
other than corn are smaller due primarily to a reduction in acreage.
Larger total production of livestock and livestock products is re-
sulting from an increased volume of dairy products, poultry, and
eggs, partly offset by smaller output of meat animals, especially
hogs.

(Continued on page 3)





DECNBE 1956


ECONOMIC FACTORS AFFECTING AGRICULTURE


: Unit or : 1955 1956
Item : base : Year Nov. Aug. Sept. Oct. Nov.
: period : : : : : :


Industrial production/ /
Total............................:
All manufactures..............:
Durable goods.............:
Nondurable goods............:
Minerals......................:


1947-49=100
do.
do.
do.
do.,


Total outlay for new construc- : Million
tion _/.. ....................: dollars
Residential......................: do.

Total civilian employment / ......: Million
Nonagricultural.................: do.
Unemployment ................ .* do.

Income:
Nonagricultural payments 2/4/#..: Bil. dol.
Production-worker payrolls 3/#..: 1947-49=100
Weekly earnings of production- :
workers in manufacturing :/...: Dollars
Durable ......................: do.
Nondurable ....................: do.

Prices:
Wholesale prices, all com-
modities i/ ...................: 1947-49=100
Commodities other than farm
and food....................: do.
Farm..........................: do.
Food, processed..............: do.

Prices received by farmers 6/#..: 1910-14=100
Crops..........................: do.
Livestock and products........: do.
Prices paid, interest, taxes
and wage rates 6/.............: 1910-14=100
Items used in livirg..........: do.
Items used in production......: do.
Parity ratio....................:

Consumer price index / .........: 1947-49=100
Food*............... ..........: do.


:42,991
:16,595

:63.2
:56.5
2.7


:290.9
:152.5

: 76.52
:83.21
: 68.06



: 111

117
S 90
102

236
S 237
236

281
273
249
84


3,601 3,714 3,693 3,661 3,715
1,342 1,289 1,277 1,227 1,224

64.8 66.8 66.1 66.2 65.3
57.9 59.5 58.7 59.0 59.1
2.4 2.2 2.0 1.9 2.5


299.4 312.8 314.4 316.8
163.8 161.4 165.8 168.8


79.52
85.69
70.12


79.60
85.47
71.50


81.40
88.18
72.25


82.21
89.23
72.83


167.9

82.42
89.64
72.71


1ll 115 116 116 116


119
84
99


122 123 124 124
89 90 88 88
103 104 104 104


224 237 236 234 234
224 236 234 232 239
224 238 238 236 230


279
273
244
80


287
279
252
82


289
281
252
81


114 115 117 117 118
111 110 113 113 113


Government purchases of goods and :
services 2/ /# ................:
Federal (less Government sales).:
State and local.................:


Annual data for the years 1929, 1932 and 1939-55
The Demand and Price Situation.


appear on page 39 of the April 1956 issue of


Federal Reserve Board.
U. S. Department of Commerce.
Bureau of the Census.
Monthly totals seasonally adjusted at annual rates.
U. S. Department of Labor, Bureau of Labor Statistics.
U. S. Department of Agriculture, Agricultural Marketing Service.
Quarterly totals seasonally adjusted at annual rates.
Revised series.


139
140
155
126
122


143
145
161
130
125


145
147
164
129
128


147
148
166
131
130


Billion
dollars
do.
do.


76.8
46.7
30.1


80.2
47.2
33.0


--


- 2-





DECEMBER 1956


: CONTENTS

:Page Page

: General Economic Situation ..... 4 Feed ........................ 21
: U. S. Foreign Aid and Wheat ....................... 22
: Agricultural Exports .......... 14 Fruit ....................... 22
: Farm Income ................... 17 Commercial Vegetables ....... 23
: Livestock and Meat ............. 18 Potatoes and Sweetpotatoes .. 24
: Dairy .......................... 19 Cotton ...................... 24
: Poultry and Eggs ............... 19 Wool ........................ 26
: Oilseeds, Fats and Oils ........ 20 Tobacco ..................... 26


Continued from cover page -

Consumer income, the best general indicator of the strength of demand
for farm products, reached a record rate in October. General economic condi-
tions favor some further growth in income in the months ahead. Employment in
November totaled 65 1/4 million, a record for the month, although unemployment
also rose sharply. The Department of Labor reports that apart from seasonal
layoffs employers are planning to increase the number of workers in early
1957. Wages are likely to rise as a result of increases already scheduled and
the likelihood of further pay rises for workers covered by escalator clauses.
Business spending on plant and equipment--an important source of rising activ-
ity during the past year--is scheduled to rise to a record 38 billion dollars
in the first quarter of 1957, but the increase will be slower than the rapid
expansion of the past year. Construction spending in 1957 is also expected
to set a new record, even though homebuilding probably will show little or no
increase from present rates.

Exports of farm products during January-October 1956 were 25 percent
above the same months of 1955, and exports during calendar 1956 may equal any
previous record in both value and volume. Government assistance of these
exports is increasing. At least one-fourth of total agricultural exports are
being sold for foreign currencies.
*
Commodity Highlights

Hog prices declined sharply late in October under pressure of heavy
marketing but by mid-December had more than regained this loss. They will
probably continue substantially above last winter. Prices of upper grades of
fed cattle may decline as supplies continue to increase seasonally, but they
also should remain well above the depressed levels of last winter.


- 3 -





DECEMBER 1956


Consumption per person of fluid milk and other dairy products is about
the same as a year earlier; higher retail prices are offsetting the effects
on per capital consumption of somewhat larger consumer incomes.

Egg production is likely to continue record large the next few months
as a result of a 3 to 4 percent increase from a year ago in the rate of lay.

A strong foreign demand is again a major influence on domestic prices
for fats and oils in the current marketing year. However, a moderate increase
in foreign production is likely to prevent any significant gain in exports.

As a result of the December 11 referendum, the corn acreage allotment
program remains in effect. Acreage allotments for the 1957 commercial area
total 37.3 million acres, and the national average price support of $1.36 will
be available to producers who comply with their 1957 allotments.

With wheat prices above the effective loan rate, redemption of CCC
loans is exceeding the year-earlier rate and is expected to increase further.

Grower prices for most fresh fruits have averaged somewhat higher this
fall than last. However, in early December terminal auction prices for
California oranges averaged considerably under the relatively high prices of
a year earlier when shipments were lighter.

Prospective production of 15 fresh vegetables for winter harvest is
down 10 percent from a year earlier. With demand expected to continue strong,
prices should average moderately higher than last winter.

Potato prices are expected to remain fairly low this winter because of
heavy supplies.

The general advance in wool prices continued in early December in both
foreign and domestic markets. Increases since April for some descriptions
amount to almost 30 percent.

Mill consumption of cotton probably will increase later in the season
because of the lower level of cotton prices since August, continued high con-
sumer income, and smaller consumption of manmade fibers.

Auction prices for burley tobacco through December 14 averaged a record
63.3 cents per pound. Sharp advances over year-earlier prices occurred in the
medium and lower-grade groups.


GENERAL ECONOMIC SITUATION

Business activity continued to expand gradually during October and
November, setting new records in consumer income, factory sales and industrial
production. Output in many sectors of the economy is at maximum levels and


- 4 -





DECEMBER 1956


continued upward pressure on prices is evident, particularly among certain
industrial commodities. Wholesale prices, as measured by the Bureau of Labor
Statistics, advanced one-fourth percent in November to 115.9 (1947-49=100), the
highest since the spring of 1951. The index of consumer prices reached a rec-
ord 117.7 in October.

Retail sales continue to run somewhat above last year, but part of the
gain is due to higher prices. Sales of new autos, weak throughout most of the
year, have picked up to the highest rate since last spring. Department store
sales, up 6 percent in November from a year earlier, point to a record Christ-
mas trade.

Consumer Income and Spending

Consumers' before-tax income increased 3 billion dollars in October to
a record seasonally adjusted annual rate of 332.6 billion dollars. The gain
from October 1955 totaled 21 billion dollars, or 7 percent. Wages and salaries,
which account for more than two-thirds of total personal income, rose by a
little more than 1 1/2 billion during October. One-third of this rise occurred
in automobile payrolls. A sharp rise in farm income resulted from heavy Soil
Bank payments during October. All other categories of personal income in-
creased during the month, and were substantially above October 1955 levels.

Retail Sales
Gain in November

Retail sales (seasonally adjusted) picked up in November for a 3 per-
cent gain over October and 5 percent over November 1955. In October, the
latest month for which detailed statistics are available, retail sales totaled
more than 16 billion dollars, after seasonal adjustment. This was slightly
more than in September, but still below the record set last August. The
October increase reflected a greater volume of business done by dealers in
motor vehicles and other automotive products. Nondurable goods stores and
retailers of other durable goods reported a drop in sales during October.

Retail Sales Reflect
Rise in Volume

The gain in retail sales, compared with year-earlier levels, is largely
an increase in volume and only to a small extent attributable to higher prices.
In the first 10 months of 1956, the value of retail trade averaged 3.3 percent
above the corresponding months of 1955 (table 1). For the same period, the
BLS index of consumer prices showed an average gain of only 1.2 percent. More-
over, much of the rise in the index was due to higher prices for personal
services, so that prices of goods that enter into retail trade probably
increased less.

The growth in retail trade in the first 10 months of 1956 was moderated
by an 11.5 percent decline in sales of automotive products. Retail sales of
all other products show an average increase from January-October 1955 of


- 5 -





DECEMBER 1956


7 percent, far more than the rise in the consumer price index. Durable goods
sales other than autos gained more than 10 percent; sales of furniture and
appliances increased 6 percent, and sales by lumber, building and hardware
stores gained 3 percent. Apparel sales were up 7 percent over the first
10 months of 1955, with a 1 1/2 percent rise in average retail prices. Food
stores increased sales by 5 percent, while the retail food prices index rose
less than half a percent.


Table 1.- Retail sales and consumer prices, seasonally adjusted
monthly average, January-October 1955 and 1956


: : Percentage
Item : 1955 : 1956 : change

: Million Million
:dollars dollars Percent

Retail sales, total : 15,342 15,851 3.3
Durable goods stores/ : 5,542 5,435 -1.9
Motor vehicles and other
automotive 3,166 2,802 -11.5
Furniture and appliances 833 882 5.9
Lumber, building and hardware : 911 942 3.4
Nondurable goods stores : 9,800 10,417 6.3
Apparel 890 956 7.4
Food group : 3,616 3,804 5.2
General merchandise 1,663 1,724 3.7

Consumer price index, all items 114.5 115.9 1.2
Foods 111.2 111.5 .3
Housing 119.9 121.4 1.3
Apparel 103.5 105.2 1.6
Transportation 126.2 127.8 1.3
Medical care 127.6 132.3 3.7
Personal care 114.8 119.7 4.3


/ Includes data not shown separately.

Departments of Commerce and Labor


- 6 -






DECEMBER 1956


Market for New
Autos Firm

Demand for 1957 model automobiles is evidently measuring up to the
industry's fairly optimistic expectations. Sales early in the season were
limited by dealers' ability to get deliveries. Despite efforts to boost out-
put, factories were able to turn out only about 580,000 passenger cars in
November, or more than a fifth less than the very large output of November 1955.
The lag in production was caused partly by tooling problems among suppliers and
to a lesser extent by labor disputes. The relatively slow rate at which out-
put has been stepped up reflects also the cautious attitude of auto manufactur-
ers toward building up dealers' inventories of new cars. The number of autos
added to dealers' stocks in November is estimated to have been far below the
200,000 increase in November 1955. As dealers' supplies of new cars are
relatively low and demand strong, discounts from list price and exaggerated
trade-in allowances are reported to have become less common.

Investment Demand

The increase during 1956 in total spending on new capital assets has
reflected a sharp rise in business expenditures for new plant and equipment
which more than offset a drop in private home building. Recently completed
studies by Federal agencies of investment prospects in each of these areas
indicate that total investment outlays for equipment and new construction will
rise in coming months, though possibly at a slower rate.

Plant and Equipment Outlays
Rise More Slowly

Businessmen are scheduling plant and equipment purchases for the first
quarter of 1957 at a seasonally adjusted annual rate of just under 38 billion
dollars, according to a recent joint survey by the Commerce Department and the
Securities and Exchange Commission. This would be 16 percent above the first
quarter of 1956 and 1 1/2 percent above the rate now estimated for October-
December, though considerably less than the quarterly increases of the past
two years. Investment outlays for 1956 as a whole are estimated at 22 per-
cent above 1955.

Most of the gain expected in the first quarter of next year is in public
utility industries (table 2). Manufacturing firms, which have been the prin-
cipal source of increased outlays over the past year, plan little further
expansion for early 1957. A small increase in nondurable manufacturing
is expected to about offset a small decline in plant and equipment outlays
by durable goods producers. Outlays by railroads are scheduled to increase,
but those of other transportation and mining industries will diminish.


- 7 -





Table 2.- Expenditures on new plant and equipment by U. S. business,1955-57


: 1956 : Percentage
:(Seasonally adjusted :1957 increase
: 1956 :annual rates) :Jan.- : st quarter
Industry :1955 : : : Mar. 1956 to 1st
S: : l/ : quarter 1957
: : Jan.- : Apr.- : July- : Oct.- :
: : Mar. : June : Sept. : Dec.

:Bil. Bil. Bil. Bil. Bil. Bil. Bil.
:dol. dol. dol. dol. dol. dol. dol. Pet.

Manufacturing :11.44 14.93 13.45 14.65 15.78 16.41 16.46 22.4
Durable goods
industries : 5.44 7.57 6.57 7.38 8.20 8.39 8.18 24.5
Nondurable goods
industries : 6.00 7.36 6.88 7.27 7.58 8.02 8.28 20.3

Mining .96 1.23 1.13 1.28 1.26 1.28 1.22 8.0

Railroads .92 1.26 1.25 1.22 1.20 1.34 1.54 23.2

Transportation, other
than rail : 1.60 1.75 1.65 1.63 1.79 1.94 1.86 12.7

Public utilities : 4.31 4.82 4.56 4.61 5.08 4.87 5.40 18.4

Communication, commer-
cial, and other : 9.47 10.92 10.78 11.10 10.76 11.49 11.48 6.5

Total :28.70 34.92 32.82 34.49 35.87 37.33 37.96 15.7


1/ Estimated


Securities and Exchange Commission.






DECEMBER 1956


The same survey indicates that spending for plant and equipment in the
current quarter is likely to fall short of the rate originally planned. Prob-
lems in obtaining deliveries on such items as machinery and structural steel
are apparently holding October-December outlays to about 37 1/3 billion dol-
lars, or 2/3 billion less than had been scheduled. Many industries that
supply capital goods apparently are stretched to the limits of their productive
capacity, and order backlogs have grown steadily. For example, unfilled orders
for machine tools are substantially larger in October than a year earlier
despite an expansion of almost 50 percent in the rate of shipments. And
structural steel remains in tight supply notwithstanding three months of
more-than-capacity output.

However, the small rise in outlays planned for January-March suggests
that there may be some tapering off in demand for new investment goods. After
several years of heavy spending many industries probably are reaching the point
where further investment is less imperative. Moreover, difficulties in ob-
taining financing in the tight money market of the past year may now be
showing up in a slower rise in capital outlays.

Record Construction Outlays
in Prospect for 1957

The Departments of Commerce and Labor, in a joint survey of prospects in
the construction industry, estimate that outlays for new construction in 1956
will total about 44.1 billion dollars, 3 percent above 1955. A further gain
of about 5 percent, to 46.4 billion dollars is in prospect for 1957. Construc-
tion of new industrial and public utility plants is expected to contribute
substantially to the rise. Larger outlays are also in prospect for construc-
tion of new churches, private schools, hospitals, and social and recreational
buildings. Public construction is forecast up 12 percent in 1957, largely
because of stepped up spending for roads and schools.

The decline in the rate of private housing starts the past year and a
half may level out in 1957, according to the Commerce-Labor appraisal. This
would result in about one million new starts next year, slightly less than
this year's total of approximately 1.1 million units. Starts in October and
November have been at a seasonally adjusted annual rate of about 1,050,000
units. Building costs are expected to continue to rise, though at a slower
rate than in 1956. Further increases are anticipated for additions and
alterations to older homes and for construction of motels and other nonhouse-
keeping residential units. However, the Commerce-Labor forecast does not
expect these factors to be sufficient to offset the decline in expenditures
for new dwelling units, so that outlays for private residential building in
1957 may be a little smaller than in 1956.


- 9 -






DECEMBER 1956


- 10 -


F.A Raises Mtaximum
Interest Rate on Mortgages

The Commerce-Labor estimates of residential construction are based on
the assumption that mortgage funds will continue relatively scarce, especially
for long-term no-downpayment loans. On December hI, after this survey was
completed, the Federal Housing Administration increased the ceiling rate on
loans for 1-4 unit family dwellings from h 1/2 percent to 5 percent. While
higher interest rates may make Government-backed mortgages more attractive to
lenders, the supply of such credit is likely to continue relatively short.

Construction Declines Less
Than Seasonally in November

The value of new construction in November was 8 percent below October,
but was the highest November on record. After adjustment for the usual sea-
sonal decline at that time of year, outlays were at an annual rate of 4h.6
billion dollars, 3 percent more than a year earlier. Public construction,
especially of highways, showed less than the normal drop, while that for
private homebuilding was a little more than usual. Expenditures for new
dwelling units in the first 11 months of this year totaled 10 percent less
than a year earlier. However, other forms of construction, including addi-
tions and alterations to existing housing, private nonresidential and public
construction, are up considerably from the first 11 months of 195$.

Output and Employment

November Industrial Output
Tops Previous Record

Widespread gains in industrial production increased the Federal Reserve
Board's seasonally adjusted index 1 point in November to a record lh7 percent
of the 19h7-h9 average. Output gains occurred in plants making automobiles,
industrial machinery and aircraft, and in shipyards. Petroleum output rose
to the highest rate since last April as production was stepped up to meet
European needs. Curtailed production of television sets and furniture con-
tributed to a decline in the index of consumer durable output.

Factory Sales Reach
New Peak in October

Manufacturers' shipments increased 0.6 billion dollars in October,
after seasonal adjustment, to a record monthly total of 28.2 billion, about 6
percent above a year earlier. Higher prices were an important factor in the
rise. All durable-goods industries except the lumber-furniture group con-
tributed to the rise, with shipments of motor vehicles and metals showing
particularly strong increases. Sales of processed foods and beverages eased
during October, after seasonal adjustment, partly offsetting moderate advances
in sales by manufacturers of other nondurable goods.




DECEMBER 1956


Table 3.- Index of industrial production by major industrial
groups, 1953-1955 and for October and November 1955 and 1956
adjusted for seasonal variation
(1947-49-o10)


S1955 1956
Group : 1953 : 1954 : 1955 : Oct. : Nov. : Oct. : Nov.

Industrial Production :134 125 139 143 143 146 147

Total manufactures: :136 127 141 145 145 147 148
Durable : 13 137 155 161 161 164 366
Primary metals :132 108 1 l0 18 l9 147 149
Fabricated metal products :136 123 134 142 139 142 141
Machinery : 160 142 155 164 162 177 176
Transportation equipment : 189 175 203 208 212 201 213
Lumber and products :118 115 127 130 124 122 120
Nondurable :118 116 126 129 130 130 131
Textiles and apparel :107 100 109 112 113 111 112
Paper and printing :125 125 137 141 1.1 144 14I
Chemical and petroleum
products : 142 142 159 162 164 167 168
Foods, beverages, and
tobacco :107 106 109 111 111 112 112

Minerals 116 111 122 123 125 129 130

Federal Reserve Board.

New orders also came in more rapidly in October, after seasonal adjust-
ments, but the gain was mostly in the nondurable goods sector. A small rise
in the rate of incoming orders for durable goods resulted from substantial
increases for metals while orders received by aircraft companies eased from
the high rate of recent months. A decline during October in unfilled orders
was attributable to a reduced backlog in the transportation equipment
industry.

Steel Mill Activity
Exceeds Capacity

Production of steel continues to set new records and there are no signs
of an early slackening in activity. As of mid-December, the Nation's steel
mills had operated at more than 100 percent of rated capacity for 14 con-
secutive weeks and had turned out a greater tonnage of ingots than in any


- 11 -





DECEMBER 1956


similar period on record. Efforts have been made to concentrate output in
those lines where demand has been particularly heavy--plates, structural
shapes, and pipe. However, the backlog of orders for these items continues
large, and sufficient business is reported on hand to assure a high rate of
operation well into 1957.


Employment Down in November;
Unemployment Increases

The number of jobholders declined 900,000 from October to a mid-Novem-
ber total of 65.3 million. This was still a record for the month, exceeding
November 1955 by 1/2 million. The decrease was almost entirely seasonal, re-
flecting the wind-up of harvesting in many farm areas and the winter lull in
construction activity. Increased employment was reported in auto manufactur-
ing, as new models came into production. Employment in retail establishments
also increased with expanding Christmas trade. A sharp rise in unemployment
in November was caused by seasonal layoffs in farming and construction and by
an influx of holiday job seekers into the labor market.

The November decline in farm employment, estimated by the Agricultural
Marketing Service at 22 percent, was slightly larger than usual. During the
week of November 18-24, there were 7,392,000 persons at work on farms, of
which 5,806,000 were family workers and 1,586,000 hired workers. Compared
with a year earlier, farm employment in November was down 6 percent.


Consumer Prices Advance
To New Record

In October, The Bureau of Labor Statistics index of urban consumer
prices advanced one-half percent to a record 117.7 (1947-49=100). This was
2.4 percent above October 1955. Nearly all the major components of the index
advanced, with sizable increases in prices of apparel, fuels other than gas
and electricity, and one of the popular makes of new cars. Retail food prices
held at 113.1 percent of 1947-49 for the third consecutive month.


Wholesale Prices Average
Higher in November

The Bureau of Labor Statistics index of wholesale prices increased one-
fourth percent in November to 115.9 (1947-49=100)--the fourth consecutive
monthly increase. Compared with a year earlier, prices were up an average of
4.2 percent. The November gain was concentrated in nonfarm commodities, espe-
cially chemicals, rubber products, and machinery. Wholesale prices of farm
products averaged half a percent lower in November than in October, while
processed foods showed no change.


- 12 -





DECEMBER 1956


During November and early December the BLS index of spot market prices
for major commodities advanced around 2%. Price increases were concentrated
in a few important commodities. A gain of about 14 percent in steel scrap
prices, reflecting the strong demand for finished steel, was largely responsi-
ble for an increase of about 2 percent in the index of prices of industrial
commodities. The index of primary market prices for foodstuffs increased
about 3 percent from early November to early December, mainly because of
higher hog prices. Prices of most other farm commodities held steady or de-
clined on central markets since early November. By the first week in December
slaughter steers at Chicago were down about 10 percent; wheat (No. 2, Hard
Winter, at Kansas City) was about the same and corn (No. 3, Yellow, at
Chicago) was moderately higher. Soybeans (No. 1, Yellow, at Chicago) advanced
considerably during November but declined early in December with a lull in
foreign purchases. New York prices of midwestern eggs (Fancy, Heavy Weights,
65%-A) declined about 14 percent between early November and early December,
while chickens (North Georgia broilers) showed a small net advance.

Prices Received by Farmers
Unchanged in November

The Index of Prices Received by Farmers was unchanged from October to
mid-November at 234 percent of the 1910-14 average. Higher prices in mid-
November for commercial vegetables, dairy products, food grains and oil bear-
ing crops offset lower prices for meat animals and fruit. In November 1955,
the index dropped 5 points to 224.

The decline in meat animal prices reflected seasonally heavy market-
ings. However, market receipts of both hogs and cattle were below a year
earlier, and the index of meat animal prices held 8 percent above last Novem-
ber, though below any month in 1956 since March. Heavy movement of new-crop
citrus fruit to market was mainly responsible for a 6 percent drop in the
index of fruit prices during the month. However, prices still averaged
12 percent higher than in November 1955. A 30 percent advance in the index
of commercial vegetable prices resulted primarily from higher prices at mid-
November for tomatoes and lettuce. Supplies of tomatoes were down sharply
from last year, while those of lettuce were moderately smaller.

Prices Paid by Farmers
Rise Slightly

Higher automobile prices were reflected also in the Index of Prices
Paid by Farmers for Commodities and Services, Interest, Taxes and Wage Rates
(The Parity Index), which rose 2 points in November to 289 percent of 1910-14.
This was 4 percent higher than a year earlier and only one point short of the
record level of May 1952. Higher clothing prices contributed to the 1 percent
rise during the month in Prices Paid by Farmers for Family Living Items. A
small rise in production costs resulted from increased prices of feed and
motor supplies, in addition to higher auto prices. Feeder livestock averaged
somewhat lower in price than in mid-October.


- 13 -





DECEMBER 1956


The small rise in the parity index, with prices received remaining un-
changed, caused the Parity Ratio to move down from 82 in October to 81 in
November. This ratio was one percent higher than in November 1955.

UNITED STATES FOREIGN AID AND AGRICULTURAL EXPORTS

Between July 1, 1945, and June 30, 1956 United States grants and loans
to foreign countries, representing economic and military aid, amounted to 61.7
billion dollars. 1/ Net foreign aid amounted to somewhat more than 56 billion
dollars, as a result of reverse aid, return of certain equipment and repayment
of loans.

During these 11 years gross economic aid totaled 44 billion dollars,
with 31 billion in the form of grants in dollars or in kind. Of this 31 bil-
lion, at least 14 billion (46 percent) represented U. S. agricultural ex-
ports. 2/ Loans of 12.6 billion dollars made up the remainder of postwar
economic aid, of which an estimated 2.6 billion dollars was used to finance
agricultural exports. 3/ (Table 4.) Thus, agricultural exports accounted
for some 17 billion or 2/5 of the economic aid extended by the United States
in the postwar period.

During most of the postwar period, government assistance to farm ex-
ports was limited largely to donations and other foreign aid programs. Dona-
tions were recorded in the official statistics as grants. Exports financed
by grants or loans generally were shipped in the same year in which the grants
or loans were made. Thus, Government assistance to farm exports was reflected
in reported data on grants and loans.

This comparability changed when the purpose of government export
activity was expanded to include surplus disposal as well as foreign relief
and assistance. Some of the current export programs, like barter have no
grant or loan component. Furthermore, under the foreign currency sales



j1 All data on U. S. grants and loans are derived from the quarterly
"Foreign Grants and Credits" issued by the U. S. Department of Commerce.

2/ Data on total grants include ocean freight charges paid by the U. S.
Since most of the data on agricultural exports financed is on an f.a.s. basis,
the proportion of total aid attributable to agricultural commodities is under-
stated. In addition, about 1 billion dollars worth of foreign produced agri-
cultural commodities were financed under the grant programs.

3/ Of the 2.6 billion dollars, an estimated one-third has been repaid.


- 14 -




DECEMBER 1956


- 15 -


Table 4.- United States grants and credits, July 1, 1945-June 30, 1956 li


Estimated value of farm
Products financed (or pro-
Program 2_/ : Total :
ceeds of foreign currency
sales disbursed)

Billion Billion Percent
: dollars dollars of total

Non-military grants:
Lend-Lease (postwar pipeline) : 1.2 .7 56
UNRRA, post-UNRRA, interim aid : 3.4 1.6 47
Civilian supplies 5.9 3.3 56
Marshall Plan, Mutual Security,
other economic and technical aid : 18.2 7.9 43
Famine and other urgent relief : .3 .3 100
Department of Agriculture
donations .4 .4 100
Other 1.6 /

Total 31.0 14.2 46

Total credits 12.6 2.6 21

Total economic aid 43.6 16.8 39

Total military grants 18.1 4/
Gross amount of aid extended : 61.7 16.8
Repayments, returns, etc. : 5.5 .9

NET GRANTS AND CREDITS 56.1 15.9


ij Data include only those proceeds of foreign currency sales which have
been utilized as grants or credits ($503 million), but not proceeds which
have been retained for other U. S. uses ($38 million) or have not yet been
utilized ($775 million).
2/ For a description of these programs, see "Government Financing of Farm
Exports in the Postwar Period," Agricultural Economics Research, October 1955.
/ Not available.
Less than .5.





Table 5.- Receipts and disposition under Foreign currency sales
programs for U. S. agricultural commodities I/


S Mutual : PL 480 : CCC : Total
Item : Security Title I : Charter : 3
S Act 2/

Sales proceeds, fiscal year -
1953-54 : 113 19 132
1954-55 : 294 73 11 378
1955-56 : 372 436 1 809
Total sales proceeds 3/ 778 509 32 1,319
Prepayments 3 3 6
Currency losses / :-10 -10

Total net receipts 781 502 32 1,316

Expenditures:
Foreign grants 2/ 308 12 320
Foreign loans : 98 85 183
Other U. S. Government uses :5 11 21 38

Total expenditures 411 108 21 541

Not utilized : 370 394 11 775


1/ Totals include market value of commodities and that part of the transportation costs paid under
these programs.
2/Sections 55 and 402.
3/ Total of unrounded amounts.
SNet losses through exchange rate fluctuations.
/ Including $30 million offshore procurement for military grants.


U. S. Department of Commerce, "Foreign Grants and Credits", June 1956.




DECEMBER 1956


- 17 -


programs only part of the sales proceeds are disbursed as grants and loans,
and these disbursements may lag considerably behind the exports which give
rise to the foreign currency receipts. Thus, during the three years ending
June 30, 1956, exports payable in foreign currencies totaled 1.3 billion dol-
lars, but only 500 million dollars worth of the foreign currencies had in fact
been made available to foreign countries as grants and loans. (Table 5).

For the reasons stated above, data on U. S. Government economic aid
no longer reflect the magnitude of Government assistance to farm exports. In
1955-56 for instance, Government assisted exports under special export pro-
grams 1/ totaled about 1.4 billion dollars compared with 715 million dollars
disbursed as donations, grants and loans. Nevertheless, this 715 million
represented about two-fifths of total net U. S. economic aid in 1955-56. The
proportion of total economic aid represented by agricultural exports, or the
proceeds of such exports, will probably increase during the coming year. Relief
shipments and donations are likely to remain substantial. But more important,
an increased volume of proceeds from foreign currency sales will be available
for disbursement. Foreign currency sales agreements signed under PL 480 from
the beginning of the program through October 1956 provide for non-military
grants and loans equal to 586 million dollars; however, only the equivalent of
97 million dollars had been disbursed by June 30, 1956. Another some 850 mil-
lion dollars worth of foreign currencies will be available from proceeds of
sales under the Mutual Security Act. Even though only part of the available
foreign currencies will be disbursed this year, agricultural commodities could
account for one-half or more of the net economic aid extended to foreign
countries in 1956-57.


FARM INCOME

Farmers' cash receipts from marketing in the first 11 months of 1956
were 27.3 billion dollars, up 3 percent from the corresponding period last
year. Prices averaged slightly lower but the volume of marketing was larger.
Receipts from livestock and products were 14.9 billion dollars, 2 percent
above a year ago, with average prices down nearly 4 percent and marketing
about 6 percent larger than last year. Slightly higher average prices plus
larger marketing accounted for a gain of 7 percent in cash receipts from
milk. Crop receipts in the ll-month period were about 12.4 billion dollars,
4 percent above 1955. Both average prices and volume of crop marketing were
up slightly. Receipts from wheat, cotton, soybeans, potatoes, truck crops,
and fruits were all above last year.


I/ Grants, donations, sales for foreign currencies, loans and barter.




DECEMBER 1956


Total cash receipts in November are tentatively estimated at 3.3 bil-
lion dollars, down seasonally from October but a little higher than in
November of last year. Receipts from livestock and products of 1.5 billion
dollars were up from last year because of higher prices for hogs and cattle
ard larger marketing of milk. Crop receipts in November were about 1.8 bil-
lion dollars, nearly the same as a year ago. Receipts from corn, soybeans,
and some fruits were above last year but cotton receipts were lower.

In addition, Government payments to farmers in the 11-month period were
about 0.5 billion dollars. They include payments for participation in the
Agricultural Conservation Program, the Wool Incentive Program, the Soil Bank
Program, and payments pursuant to the Sugar Act of 1948.

LIVESTOCK AND MEAT

With the probable exception of upper grades of fed cattle, seasonally
rising prices are in prospect for meat animals this winter as marketing taper
off from the heavy fall movement. Prices of the upper grades of fed cattle
will probably decline as supplies continue to increase seasonally, but they
are likely to remain well above the depressed prices of last winter. Hog
prices will likely show the greatest advance.

Hog prices declined sharply late in October under the pressure of heavy
marketing but by mid-December had more than regained this loss. Barrows and
gilts at Chicago the week ending December 15 averaged $16.97 per 100 pounds,
$6.40 above a year ago. Slaughter increased less rapidly this fall than last
and in November dropped below a year earlier. Hog slaughter in December-Febru-
ary will be down sharply from a year before as the effect of the sharp cut in
1955 late spring pigs becomes increasingly evident. Hence, the total seasonal
rise in hog prices this late fall and winter should be as large or larger than
usual, and will hold prices substantially above the very low prices of last
winter.

Under the stimulus of drought the movement of cattle and calves from
ranges and pastures began earlier than usual this year and through November
was generally above a year ago. Shipments in recent weeks have been declining
seasonally and in early December were below last year. Fed cattle marketing
in November and early December were close to those of a year earlier but a
smaller proportion were in the Choice and Prime grades. Nevertheless, prices
for top grades of cattle declined substantially during this period. Prices of
feeders and stockers and the lower grades of slaughter cattle will likely rise
only moderately this winter. During the same period prices of fed cattle will
likely continue to decline somewhat. Fed cattle prices, however, will probably
remain well above the low prices of early 1956.

Sheep and lamb slaughter the first 11 months of this year totaled nearly
the same as a year ago. The number of sheep and lambs on feed for the winter
and early spring market is expected to be a little larger than last year. The
1956 lamb crop was only 1 percent larger than in 1955, and slaughter supplies
during the next few months will likely not be greatly different from a year






DECEMBER 1956


- 19 -


earlier. Hence, lamb prices this winter will likely share in the generally
stronger level of meat animal prices and will probably maintain a modest mar-
gin over early 1956 prices.

DAIRY PRODUCTS

Production of milk in the United States has passed the seasonal low-
point and will rise gradually until late next spring. Barring extremely
unfavorable weather, production is likely to continue above a year earlier
most of the time. The number of cows is about the same as last year, but
the rate of production per cow continues to set new high records. Total
output in 1956 will probably be around 127 billion pounds and a further in-
crease is in prospect for 1957.

Prices to farmers have been averaging slightly above last year since the
spring of 1956 and will average around $4.15 per hundredweight of milk-between
3 and 4 percent over 1955. Cash receipts from dairy products have been running
consistently above 1955. For 1956 as a whole, they will be a little over
$4.5 billion, just short of the 1952 record.

The gradual rise in wholesale butter prices which started in August
came to a halt in mid-November with the total gain about 3 cents. In the last
few days of November and early December prices weakened, presumably reflecting
the beginning of seasonal upturn in milk production. Prices of most other
items have shown essentially no change except for seasonal increases in fluid
milk prices in a number of markets.

Consumption per person of fluid milk and the other dairy products is
continuing near year-earlier levels. Slightly higher retail prices for most
items, compared with a year ago, are tending to offset the effects on per
capital consumption of somewhat higher consumer incomes.

In mid-December, CCC had no butter on hand, a very small amount of non-
fat dry milk, and about 174 million pounds of cheese-less than half the record
holdings of mid-1954. Purchases of nonfat dry milk and cheese continue above
last year but no butter was bought from mid-October to December 12, when the
CCC bought some butter.

POULTRY AND EGGS

With production continuing to set new records this fall, egg prices have
been below year-ago levels. At 37.2 cents per dozen in mid-November, the
U.S. average price received by farmers was 6.2 cents per dozen below a year
earlier. Production is likely to continue above year-earlier records for the
next two months or so, because of increases in rate of lay, which recently
have been about 3 to 4 percent above a year earlier. The number of potential
layers on farms is slightly below last year.






DECEMBER 1956


Farmers' prices for turkeys, especially toms, strengthened in late
November. In California producing areas, prices for heavy toms actually ex-
ceed those for lighter weight hens. The November 1 stocks of all turkeys, at
197 million pounds, were an alltime record but were reduced by withdrawals for
Thanksgiving sales. Stocks were then built up again to a December 1 total of
193 million pounds. The mid-November price to farmers averaged 26.0 cents per
pound, compared with 29.8 cents a year earlier.

The large current slaughter of broilers is competing with seasonally
large supplies of turkeys and red meats. Mid-November prices averaged 17.1
cents, compared with 21.2 cents a year earlier. As in 1955, November prices
were the lowest of the year to date.

Government purchases of medium size eggs and turkeys have ended for the
current year. Purchases from late September through early December totaled
almost 600 thousand cases of eggs, and through November were 27 million pounds
of ready-to-cook turkey.


FATS, OILS AND OILSEEDS

In 1955-56, the United States exported about 5.0 billion pounds of
fats, oils and the oil equivalent of oilseeds. This was 800 million pounds
more than the previous high of the year before and resulted in a sharp cut in
stocks of food fats and linseed oil. Exports were equal to about 35 percent
of total production from domestic materials. Record quantities of edible
vegetable oils, soybeans, flaxseed, and tallow and greases were shipped
abroad.

The strength of export demand will again be a major price-influencing
factor in the coming year on the level of domestic prices of fats and oils.
Production of all fats and oils for the 1956-57 marketing year is forecast at
14.8 billion pounds, nearly the same as last year's record. However, begin-
ning stocks are down somewhat.

The outlook for United States exports of edible fats and oils in 1956-
57 is about as favorable as in 1955-56. At the present level of economic
activity, increased population alone will create additional demand. Further-
more, foreign stocks of fats, oils and oilseeds this fall were relatively low
partially because of the shortage of olive oil production last year. For the
year as a whole, part of the increased foreign demand which will result from
these factors probably will be met by some increase in foreign production of
edible fats and oils but with the present troubled situation in the Middle-
East, record quantities of fats and oils have been moving from the United
States to European countries.

Without taking into account the possible effect of foreign buying to
build up stocks, exports of U. S. edible oils and fats other than butter but
including the oil equivalent of soybeans, in 1956-57 are likely again to be


- 20 -





DECEMBER 1956


about 2.7 billion pounds, or about the same as last year. This would include
about 1.1 billion pounds of soybean and cottonseed oils, over 75 million
bushels of soybeans (roughly 850 million pounds in terms of oil) and about
600 million pounds of lard. Exports of butter probably will decline sharply
because CCC stocks have been exhausted.


FEEDS

Prices of feed grains have shown more strength than usual at this
season of the year and in mid-November averaged 12 percent above a year
earlier. Prices of high protein feeds also have advanced since October and
in November averaged slightly higher than a year earlier.

Corn prices at midwestern markets have advanced 10 to 15 cents per
bushel from the low level reached about the middle of October. The early har-
vesting of the very large and good quality crop appears to have been largely
responsible for the early seasonal dip in prices. While the low point reached
in October may be the seasonal low for the 1956-57 marketing year, corn prices
are not expected to rise as much from this fall to next summer as in 1955-56.
Corn prices are again considerably below the support price, although they are
nearer the support level than in late 1955.

Sorghum grain prices also have increased rather sharply and oats and
barley more moderately. Prices of the 3 grains in mid-November were near or
above the 1956 supports.

The total feed concentrate supply for 1956-57 is estimated at a new
record high of about 200 million tons, on the basis of the December crop
report, up slightly from last year and 15 percent above 1950-54. While the
acreage of feed grains harvested was down 10 percent from 1955, production
was only 1 percent lower reflecting higher average yield per acre. The corn
supply is 8 percent larger than last year, setting a new record of over
4.6 billion bushels. Supplies of each of the other feed grains were smaller
than the big supplies in 1955-56. The 1956 feed grain production is expected
to be more than adequate to meet total domestic requirements in 1956-57 and
a further increase of around a tenth in the feed grain carryover into 1957-58
is in prospect.

As a result of the December 11 referendum of corn producers in the
commercial area, the corn acreage allotment program remains in effect. About
61 percent of the 421,101 farmers voting favored the Soil Bank Base Acreage
program. Approval by more than one-third of the farmers voting was required
for the Acreage Allotment Program and by two-thirds or more for the base
acreage program. Acreage allotments for the 1957 commercial area of 894
counties total 37.3 million acres compared with 43.3 million acres for the
840 counties in the commercial area in 1956. In recent years 57 to 59 mil-
lion acres have been planted in the counties included in the 1957 commercial
area. The national average price support of $1.36 per bushel will be avail-
able to producers who comply with their 1957 allotments.


- 21 -






DECEMER 1956


WHEAT

Cash wheat prices are above the effective loan and generally at or
near the high for the season to date, having advanced generally since the new
export program was announced July 13. On December 14 the price and amount
above the loan was as follows: No. 1 Dark Northern Spring, ordinary protein,
at Minneapolis, $2.36, 7 cents above the effective loan; No. 2 Hard Winter,
ordinary protein, at Kansas City, $2.32, 7 cents; and No. 1 Soft White at
Portland, $2.46, 30 cents. Since July 13, the price of No. 2 Hard Red Winter
at Kansas City advanced 28 cents and No. 2 Soft Red Winter at St. Louis
advanced 41 cents. In the case of the latter, the advance also reflects the
relatively short free supplies of this type of wheat.

In mid-November, prices received by farmers for wheat averaged $2.05
compared with $1.98 in mid-October, $1.95 in mid-September, and $1.94 in
November 1955. Terminal market prices in mid-December were slightly above
a month earlier. Through November 15, growers had placed 219 million bushels
of 1956-crop wheat under price support. This compares with 209 million of
1955-crop wheat a year earlier. About 16 million bushels of 1956-crop wheat
had been withdrawn from support by November 15, 1956 compared with less than
2 million bushels by the same date in 1955. However, with the market for
some types well above the effective loan, redemptions may be expected to
increase, especially in January after the beginning of the next tax year.

Wheat held by CCC is available for sale in the domestic market at
the market price, but not less than the 1956 applicable terminal loan rate
for class, grade and quality, plus 24 cents per bushel. In December, this
is $2.55 for No. 1 Hard Winter Wheat at Kansas City and $2.58 for No. 1
Dark Northern Spring at Minneapolis.

CCC sales and other disposition of wheat in the July-October period
totalled 146.2 million bushels.


FRUIT

Consumer demand for fruit is expected to continue strong this winter.
With increased maturity of 1956-57 crop citrus fruits, demand for canning and
freezing will be seasonally heavy after the first of the year. Prices receiv-
ed by growers for most fresh fruits this fall have averaged somewhat higher
than a year earlier.

Because of delayed maturity of the Florida orange and grapefruit crops,
utilization of the new crops by December 1, 1956 had been considerably under
that of a year earlier. By that date, weekly movement to fresh markets had


- 22 -





DECEMBER 1956


- 23 -


reached the volume of a year previously, but movement to processors, espe-
cially of oranges, continued much smaller. Even so, some increase in output
of frozen concentrate is expected this season. On December 1, stocks of
frozen orange concentrate held by Florida packers were somewhat larger than
a year earlier while stocks of canned orange juice were much smaller. Move-
ment of the new navel orange crop in California started in late November,
about the same as usual. In early December, terminal auction prices for
California orange averaged considerably under the relatively high prices of
a year earlier, when shipments were lighter. Auction prices for Florida
oranges averaged a little lower, and those for Florida grapefruit averaged
moderately higher.

The U. S. Department of Agriculture reported that cold-storage hold-
ings of apples and grapes were lighter on December 1 than a year earlier,
while stocks of pears were heavier. Prices for most varieties of apples at
shipping points in commercial apple areas tended to increase in November.
In early December, apple prices generally averaged above a year previously.
Prices for D'Anjou pears in Washington also averaged higher.



COMMERCIAL VEGETABLES

For Fresh Market

Acreage of 15 fresh vegetables for winter season harvest is down
12 percent from a year ago according to December 1 indications. Prospective
production is down 10 percent from a year earlier but is about in line with
the 1949-54 average. Drought and a shortage of water for irrigation in
South Texas are largely responsible for the reduced acreage and indicated
lighter production this winter. Cool weather and frost also caused some
loss of vegetables and retarded plant development in many producing areas.
Compared with last winter the smaller supplies of beets, broccoli, cabbage,
carrots, celery, lettuce, shallots and spinach are expected to more than off-
set increases in artichokes, brussels sprouts, cauliflower, and escarole.
Prospects are for larger imports of winter vegetables, particularly tomatoes,
from Mexico and Cuba. Demand for fresh vegetables is expected to continue
strong, and with smaller supplies anticipated, prices are likely to average
moderately higher this winter.

Both onions and potatoes are expected to be in heavier supply this win-
ter than a year earlier and prices are expected to remain at fairly low level.

The Department of Agriculture, in its acreage and marketing guide, has
suggested a 2 percent cut in the acreage planted to vegetables for spring
harvest. Should planted acreage be near that recommended, average yields
would result in moderately smaller tonnage than last spring.





DECEMBER 1956


For Processing

Indications are that the supplies of both canned and frozen vegetables
are substantially larger than in 1955. Among canned vegetables, supplies of
sweet corn are up about a fourth from last year and supplies of green peas are
moderately larger. Although pack figures are not available for most items,
prospects are for substantially larger supplies of snap beans, tomatoes and
most tomato products, and moderately larger supplies of cucumber pickles.
With the larger indicated supplies, retail prices of processed vegetables,
particularly some of the major canned items, are expected to average a little
lower this winter than last.


POTATOES AND SWEETPOTATOES

Demand for potatoes in 1957 is expected to continue at about the 1956
level. But large stocks of 1956 crop potatoes are available and the produc-
tion of potatoes for winter-season harvest is expected to be larger than a
year ago. With the expected heavy supplies, prices of potatoes are expected
to remain at fairly low levels this winter. Prices paid to farmers on
November 15 averaged $1.53 per hunderweight, up 19 cents from mid-October and
21 cents above a year earlier.

Supplies of sweetpotatoes are about a fifth smaller than last year and
prices are substantially higher. Prices paid to farmers in mid-November aver-
aged $3.70 per hundredweight, 62 cents above a year earlier. Prices of sweet-
potatoes are expected to rise seasonally into the spring and to remain well
above the low levels of a year earlier.

COTTON

Disappearance of cotton in the United States during the 1956-57 market-
ing year is estimated at about 15.5 million bales, compared with 11.4 million
bales in the preceding season. This includes an estimated 9 million bales for
consumption by domestic mills and 6.5 million for export.

The average daily rate of domestic mill consumption during August-
October 1956 was about 4 percent below the same period a year earlier. Rela-
tively high prices for cotton from February to July 1956 and increasing mill
stocks of cotton broadwoven goods in relation to unfilled orders from February
through August are two important reasons for the lower rate of mill consump-
tion prevailing at present. Later in the season, however, the rate of mill
consumption probably will increase over current levels because of the lower
level of cotton prices since August, continued high level consumer income, and
smaller manmade fiber consumption.

Exports of cotton from the U. S. in the 1956-57 marketing year probably
will be the largest of any season since 1933-34 when.7.5 million bales were
exported. The increase is being caused primarily by the very small carryover


- 24 -






DECEMBER 1956


- 25 -


in the foreign free world on August 1, 1956, down about 1.9 million bales from
a year earlier, the lower export price which is about 6.5 cents below the 1956
support level, and the stability of the U. S. export prices. The prices for
which CCC sold cotton for export generally were competitive with foreign spot
market prices for comparable qualities of foreign grown cotton. The estimate
of exports assumes that foreign free world consumption of cotton will increase
by about a million bales over 1955-56, and that foreign free world stocks on
August 1, 1957 will be about 1.5 million bales larger than they were August 1,
1956. This increase is smaller than the decrease in stocks during 1955-56.

If the crisis in the Middle-East continues, foreign free world coun-
tries might increase their stocks and consumption of cotton even more than
indicated above. Foreign free-world production of cotton in 1956-57 is
estimated at about 16.2 million bales, compared with about 16.1 million bales
in 1955-56. Funds available under various U. S. Government programs to
finance cotton exports in 1956-57 total about 424 million dollars. If com-
pletely used these funds would finance the export of about 2.8 million bales,
compared with about 1.6 million bales financed in 1955-56.

With production estimated at about 13.2 million running bales the
carryover at the end of the current marketing year is expected to be close to
12.3 million bales, compared with the record high of 14.5 million on August 1,
1956.

The Commodity Credit Corporation sold about 6.2 million bales for ex-
port during the 1956-57 season as of December 11. Stocks of upland cotton
held by the CCC (owned and held as collateral against outstanding loans but
excluding cotton sold for export) were about 9.4 million bales as of Novem-
ber 27. Of this, CCC owned about 0.7 million bales, about 2.7 million bales
were pledged as collateral against the 1956 crop loan and about 6.0 million
were pledged as collateral against the 1955 loan. The CCC will take ownership
of all outstanding loans from the 1955 crop on January 1, 1957.

Prices for cotton have remained close to the loan level since the start
of the current season on August 1, 1956. The average spot market price for
middling 1-inch cotton on December 14 was 33.14 cents per pound. This com-
pares with an average loan rate at these markets for this quality of cotton of
33.02 cents per pound.

The total of State acreage allotments for the 1957 crop of upland
cotton is about 17.6 million acres and the national acreage allotment for
extra-long staple cotton is 89,357 acres. These allotments compare with
1956 allotments of 17.4 million, and 45,305 acres,respectively. On December 11
referendums for the 1957 acreage allotments were held and they were approved
by 92.4 percent and 95.4 percent of those voting for upland and extra-long
staple allotments.
Upland cotton producers who participate in the acreage reserve pro-
gram will receive 15 cents a pound times the yield per acre determined for
acreage reserve purposes for planting less acreage to cotton than is permitted






DECEMBER 1956


under their acreage allotment. The national goal for the acreage reserve pro-
gram is 3.5 to 4.5 million acres and the national average yield for acreage
reserve purposes has been set at 361 pounds per acre.

WOOL

The general advance in wool prices in domestic and foreign markets
which began last April continued into early December. It reflects a strength-
ening of world demand relative to available supplies. The situation in the
Middle-East has contributed. The net advances since early April range up to
almost 30 percent for some descriptions.

Effective from November 1, 1955, wool owned by the Commodity Credit
Corporation has been sold on a competitive bid basis with monthly sales for
domestic use limited to 6 1/4 million pounds, actual weight. However, the
monthly limitation does not apply to sales made at 103 percent of 1954 loan
schedule rates plus selling commission. With market quotations for some
descriptions in the neighborhood of these so-called "schedule prices", some
wools began to sell outside the competitive bid program late in November.

World consumption of wool during the third quarter is estimated to have
been about 6 percent below that of the second quarter, mainly because of sea-
sonal factors, but about 8 percent above a year earlier. Mill use of other
materials was 4 percent above a year earlier. Aggregate consumption of wool
for the first 9 months of 1956 Vas higher than a year earlier.

Domestic mills have been using more of both apparel and carpet wool
this year than last year. During January-October mill use of apparel wool was
up 7 percent and carpet wool was up 13 percent compared with the same months
of 1955. The October average weekly rate of mill use of apparel wool was
6 percent above October 1955. The rate of carpet wool use was 7 percent
higher than a year earlier.

United States imports of dutiable wool for consumption during January-
September were about the same as last year. However, they were substantially
below a year earlier during June-September. This reflected the earlier mar-
keting of the domestic clip this year than last year, larger CCC sales than
last year, a higher foreign market, and probably some reduction in trade
stocks. Imports of duty-free wool during January-September were substantially
higher than last year, but due to a reduction in stocks they were below a year
earlier after the first quarter.

TOBACCO

Burley auction markets opened on November 27 and through December 14,
the volume marketed was 323 million pounds--averaging a record 63.3 cents per
pound. This was 8 percent above the price average in the comparable period of
last season. Prices in the medium- and lower-grade groups advanced sharply
over a year ago. Deliveries for Government loans were approximately 1l per-
cent of gross sales (includes resales) compared with 19 percent in the


- 26 -





DECEMBER 1956


- 27 -


corresponding period in 1955. Burley supplies are a little lower than last
year because of a smaller carryover, but are still large in relation to pro-
spective disappearance. The high market average results from the extremely
strong demand for certain qualities. Most of the surplus is in loan stocks,
which consist almost entirely of grades not currently in demand by domestic
manufacturers.

The Virginia fire-cured auction market opened on November 26 and
through mid-December prices averaged 40.2 cents per pound--one fourth above
last season. Quality is much better this year than last.

Auctions for Virginia sun-cured, and the Kentucky-Tennessee dark air-
cured types opened during the first third of December. Through mid-December
prices for Virginia sun-cured averaged 35.3 cents per pound--one third above
early season prices last season reflecting higher grade prices and improved
average quality. For the Kentucky-Tennessee types through the same date,
prices of One Sucker and Green River averaged 34.2 and 30.4 cents per pound,
respectively. Prices of One Sucker averaged 8 percent higher than early sea-
son prices last year while those for Green River averaged about the same as a
year earlier.

Marketing of the Kentucky-Tennessee fire-cured types are expected to
begin in January.

Supplies of the dark air-cured and fire-cured types are large and sub-
stantial quantities from previous crops remain in Government loan stocks.

The auctioning of 1956 crop flue-cured is nearly completed and the
overall season average price at about 51.2 cents per pound for gross sales is
about 1 cent lower than last season's average.

The 1957 marketing quota and acreage allotment for flue-cured was
announced on November 27. Allotments for individual farms will be reduced
about 20 percent next year. The 1956-57 total supply of flue-cured is at a
record high of 3,668 million pounds and about 3 times prospective yearly dis-
appearance. A more normal ratio is about 2- times yearly disappearance. Over
one-fifth of the 1956 crop was placed under Government loan. Carryover of
flue-cured next July 1 will reach a new high--probably around 7 percent above
last July 1.

Total manufactured tobacco exports in the 1956-57 marketing year are
likely to be down 10 to 15 percent from the high 1955-56 level.




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