March 1961
FOR RELEASE
MAR. 30, A.M.


DEMAND and PRICE


SITUATION

DPS-75


I Nl V OF rL L I
U.S DEPU rSI4 T ?



US DEPOSIT,')RY


Published monthly by
AGRICULTURAL MARKETING SERVICE
UNITED STATES DEPARTMENT OF AGRICULTURE


Growlh Through Agiulltri Progress


kF~ -


?: 7Z


7/a


Approved by the Outlook and Situation Board, March 23, 1961
SUMMARY
Cash receipts from farm marketing in the first two m,.,ths of
1961 were about a tenth higher than a year ago; farm productprices
averaged 4 1/2 percent higher. The big improvement in prices was
among livestock and livestock products, which averaged about 9 per-
cent higher, mostly because of sharp increases in hog and egg
prices. Marketings of cattle were u, but prices were close to a
year earlier. Although crop ioye ved up some in recent
months, they wereclose to in January-Febru-
ary. Cash receipts fro mar e s January-February
were up about a sixth, d ly to a muc r volume of mar-
ket ings. i
An emergency 1-ye f d grain pgra signed into law
by the President on Ma Farms, er to be eligible
for support on any of the drains frov production, must
reduce their corn and gra or y at least 20 per-
cent from their average acr f 19 d 1960. Cooperating
producers alsowill be eligible for supr on barley, oats, and rye
at the announced levels. The Secretary of Agriculture announced
feed grain supports for 1961 crops as follows: Corn, $1.20 per
bushel; barley, 93 cents per bushel; grain sorghums, $1. 93 per
hundredweight; oats, 62 cents per bushel; rye, $1. 02 per bushel
(for additional detail see page 20). In addition, supports for 1961-
crop oilseeds were set at $2. 30 per bushel for soybeans, $2. 80 per
bushel for flaxseed, and $49. 00 per ton (loan rate) for cottonseed.
Previously, the Secretary of Agriculture announced increases in
support prices for cotton, dairy products, rice, peanuts, and gum
naval stores.
(Continued on page 3)


AASJ







MARCH 1961


ECONOMIC FACTORS AFFECTING AGRICULTURE


Item


Industrial production, seasonally adj. I/
Final products
Consumer goods
Autos
Equipment, including defense
Materials

Construction: 2/ 3/
Total outlays
Public construction
Private residential
Housing starts

Manufacturers' sales and inventories: 2/
Total sales, seasonally adjusted
Durable goods
Unfilled orders-sales ratio 4/
Inventory-sales ratio, total 5/
Durable goods

Employment and wages: 6/
Total civilian employment
Nonagricultural
Unemployment
Workweek in manufacturing
Hourly earnings in manufacturing

Income and spending:
Personal income 2/ 3/
Consumer credit outstanding / .'
Automobile y /
Total retail sales, seasonally
Durable goods
Inventory-sales ratio 5/

Prices: 6/
Wholesale prices, all commodities
Commodities other than farm and food
Farm products
Foods processed
Consumer price index, all items
Food

Prices received by farmers _/
Crops
Livestock and products


: 191-14=1oo
: do.
: do.


1960 : 19
Year Feb. Nov. Dec. Jan. Feb.


Unit or
base
: period

:1957=100
do.
S do.
S do.
do.
do.


Mil. dol.
: Mil. dol.
: Mil. dol.
: Thousands


: Mil. dol.
: Mil. dol.












: Bil. dol..
: Mil. dol.
: Mil. dol.
: Mil. dol.
M il. doln



1 947A49;0C0
do.
do.
do.
S do.
S do.
:do.


:


















*1t
:

:

:


108
ill
111
115
117
103
106


55,173
16,244
22,024
1,240


30,417
14,692
3.17
1.79
2.15


66.7
60.7
3.9
39.7
2.29


404.2
56,050
'17,925
18,319
, 5,928
1.39


120
128
89
108
126
120


110
110
113
125
102
109


54,389
15,180
22,536
1,367


31,580
15,670
2.99
1.71
1.99


64.5
59.9
3.9
39.8
2.29


395.7
51,468
16,519
18,100
6,040
1.37


119
129
87
106
126
117


105
109
113
109
102
101


55,430
16,849
21,428
1,212


29,250
13,810
3.13
1.85
2.25


67.2
61.5
4.0
39.2
2.30


409.0
54,626
17,967
18,400
5,938
1.38


120
128
90
109
127
121


103
108
112
97
101
99


56,135
17,537
21,490
970


29,140
13,620
3.15
1.84
2.26


66.0
61.1
4.5
38.8
2.32


406.9
56,049
17,866
17,977
5,561
1.42


120
128
89
109
128
121


102
107
110
73
100
98


54,433
17,102
19,845
1,100


102
107
111
78
100
98


54,835
16,951
20,432
1,049


28,590
13,260
3.21
1.87
2.31


64.5
59.8
5.4
38.8
2.32


406.6
55,021
17,611
17,675
5,430
1.42


120
128
90
110
127
121


238 233 241 242 241 244
221 218 218 217 218 221
252 245 261 263 261 263


Prices paid, interest, taxes and wage
rates 7/ :1910-14=100 : 299
Family living items do. : 290
Production items do. : 264
Parity ratio / : 80

Farm income and marketing: 7/
Volume of farm marketing : 1947-49=100 : 132
Cash receipts from farm marketing : Mil. dol. : 33,746

Annual data for most of these items for years 1929, 1939, 1941,
April 1960 issue of The Demand and Price Situation.


100 172 143
2,059 3,712 3,121


and 1946-59 appear on page 40 of the


1/ Federal Reserve Board. 2/ U. S. Department of Commerce. 3/ Seasonally adjusted annual rates.
fUnfilled orders for durables divided by monthly deliveries. 5/ Inventories, book value, end of month,
divided by sales. 6/ U. S. Department of Labor. 7/ U. S. Department of Agriculture, Agricultural Mar-
keting Service.


301
291
267
80


143
3,065


302
291
267
81


104
2,300


__ _.


DPS-75


- 2 -


64.7
59.9
5.7
38.8
2.32


405.9


17,821
5,457



120
128
90
110







DPS-75 3 MARCH 1961


THE DEMAND AND PRICE SITUATION


Approved by the Outlook and Situation Board, March 23, 1961



CONTENTS

Page Page

: Summary ......................... 1 Wheat ........................ 21
: General Business Conditions ..... 5 Fruit .......................... 22
: Farm Income ..................... 15 Commercial Vegetables ......... 23
: Livestock and Meat ............. 16 Potatoes and Sweetpotatoes .... 24
: Dairy Products .................. 17 Dry Beans and Peas ............ 25
: Poultry and Eggs ................ 18 Cotton ........................ 25
: Oilseeds, Fats and Oils ......... 19 Wool ......................... 27
: Feed ........................ 20 Tobacco .........*........... 28



Continued from cover page --

Planting intentions on March 1 indicate about the same acreage devoted
to all crops in 1961 as in 1960. Since the intentions were reported before
enactment of the feed grain program, growers' early season plans may be subject
to greater than usual changes this year. Feed grain plantings were expected
to total 149 million acres, 1 percent less than in 1960. Corn and barley were
expected to be down slightly, with sorghum grains down nearly a million acres.
With improved price prospects, acreage planted to soybeans is expected to rise
2.2 million acres. Sugar beet acreages are expected to be up 11 percent. Other
crops showing increases are oats, tobacco, dry peas and potatoes, smaller
acreages are intended for spring wheat, flaxseed, peanuts and hay crops.

The current moderate decline in plant and equipment spending by business
may be nearing the end, according to the recent survey conducted by the Securi-
ties and Exchange Commission and the Department of Commerce. A cutback of 4
percent in capital spending in the first half of 1961 from the last quarter of
1960 is indicated. In the last half of 1961, businessmen are planning to in-
crease their spending rate slightly, particularly for electric and gas utility
programs.

Severe winter weather contributed to the declining trends in economic
activity during much of February. Since late February economic activity has
improved some; dealer sales of new automobiles picked up, department store
sales rebounded, and steel production edged higher. Retail sales were slightly
higher in February than January. Manufacturers' new orders were slow and stock







MARCH 1961


reductions continued. Industrial production was the same in January and Febru-
ary, but sharp downward adjustments were made in auto production schedules in
order to work down heavy stocks. Unemployment rose to 5.7 million in February
compared with 3.4 million a year ago. The seasonally adjusted unemployment rate
in February, at 6.8 percent, however, showed little change from the previous two
months. Personal income in February was at an annual rate of $405.9 billion,
slightly below January, but 2| percent above a year ago. The gold outflow de-
clined in February and no sales were reported in early March. During the first
months of 1961 the U. S. balance of payments improved considerably from the
final quarter of 1960.

Commodity Highlights

Relatively stable cattle and hog prices are likely this spring. Cattle
marketing are above a year ago and will probably continue to do so during the
next few months. Hog marketing are declining seasonally and will continue
below 1960 levels; prices are well above a year ago.

Higher price supports for manufacturing milk and butterfat in 1961-62
than in 1960-61 will mean higher farm product prices. Effective March 10,
support prices for manufacturing milk were increased from $3.22 per hundred-
weight to $3.40 per hundredweight, and for butterfat from 59.6 cents per pound
to 60.4 cents per pound. With milk production expected to increase, income to
dairy farmers is also likely to rise.

Eg l production will likely remain below 1960 levels during the first
half of 1961, after which it will rise above year ago output. January-March
chick hatchings are estimated 29 percent above a year ago. Wholesale egg prices
in March were higher than those a year ago but by a narrower margin than in the
last 5 to 6 months. Egg prices in the second quarter are likely to be below
April-June 1960.

Food fat prices have advanced over 35 percent between October 1, 1960
and mid-March. Cottonseed and soybean oil prices are up the most, followed
closely by lard. Food fat supplies are slightly smaller than a year earlier.
With record export and domestic demand, carryover stocks at the end of the mar-
keting year likely will be smallest since 1957.

Feed grain prices were relatively stable in March after advancing 12
percent since November. Generally favorable returns for livestock are improv-
ing the demand for feed grains and protein feed.

Remaining supplies of Florida oranges are somewhat below a year ago;
and prices are much above. The early spring crop of strawberries is expected
to be nearly a fourth larger than the 1960 crop, with peak movement in late
March.


DPS-75







MARCH 1961


Supplies of a number of tender fresh vegetables, including snap beans,
cucumbers, eggplant, green peppers and tomatoes, are much larger than they were
last winter. Despite smaller supplies of some of the hardier vegetables, over-
all prices are significantly below the relatively high levels of a year earlier.
Supplies of potatoes during the next few months will remain slightly to mod-
erately above a year earlier and prices during the next 6 to 8 weeks likely
will remain below a year earlier.

The price support for the 1961 crop of upland cotton has been announced
at a minimum of 33.04 cents a pound for Middling 1-inch cotton at average loca-
tion. This compares with the 1960 crop support rates of 32.42 cents per pound
for Choice A and 26.63 cents per pound for Choice B cotton.

Domestic shorn and pulled wool production in 1960 totaled 300 million
pounds, up 2 percent from 1959. Shorn wool production in 1961 is expected to
be about the same as in 1960.

Auction prices for 1960 crops of several kinds of tobacco were at record
or near record levels. Prospective 1961 acreage of flue-cured is the same as
last year's but that of burley is larger, reflecting a 6 percent increase in
allotments.


GENERAL BUSINESS CONDITIONS

Severe winter weather east of the Rockies in part contributed to the
poor economic performance during most of February. Some improvement in late
February and early March was associated mostly with a somewhat firmer level
of steel production and rising department store and auto sales. Overall, the
level of industrial production in February was the same as in January and 7
percent below a year ago. Changes in employment and unemployment during Feb-
ruary were about seasonal. Manufacturers' new orders declined in January, but
leveled out in February. Liquidation of inventories, largely at retail,
continued. Capital spending by business is expected to decline in the first
and second quarter of 1961; residential construction activity improved a little
from December lows.

Capital Spending Declines:
Pick-up Expected After Mid-year

Capital expenditures by U. S. industry on new plant and equipment during
1961 are expected to total $34.5 billion, 3 percent less than in 1960, according
to a survey conducted jointly in late January and February by the Securities
and Exchange Commission and the U. S. Department of Commerce.

The decline in investment, which began in the third quarter of 1960, is
expected to continue through the second quarter of 1961. For the second half
of 1961 expenditures at a rate of $35 billion will compare with the $34 billion
rate anticipated for the first 6 months. If the decline does end at mid-year the
downturn would have lasted four quarters--same as the capital equipment slumps
of 1948-49 and 1957-58. The 1954-55 capital equipment contraction--heavily


- 5 -


DPS-75







MARCH 1961


influenced by post-Korean readjustments--lasted six quarters. At the anticipated
rate of expenditures during the second quarter of 1961, $33.8 billion or T per-
cent below the 1960 high, the current decline will be the most moderate of the
four postwar cycles. Previous troughs were 20, 11, and 22 percent, respectively
below their antecedent peaks. Moreover, capital goods prices have been rela-
tively stable during the current period of decline, with no change during the
past 3 months, while the increase in construction costs has been far below that
experienced during previous postwar slumps.

The rise in the most recent investment expansion was also more moderate
than during previous periods of growth. After seven quarters of rise, total
outlays remained 4 percent below the previous peak. During each of the two
previous periods of expansion, lasting fifteen and ten quarters, respectively,
the dollar value of outlays rose 62 and 47 percent and topped out at about 30
percent over the previous high. But in real terms the increases were much
smaller, whereas in the 1958-60 expansion the growth in volume corresponded
more closely to the dollar value of outlays.

1960 Outlays 10 Percent
Above 1959

Final figures for 1960 indicate that outlays for business fixed invest-
ment were about 10 percent above 1959. Among the sharpest of the 1960 gains
were those in the cyclically sensitive manufacturing industries: Primary iron
and steel, motor vehicles, and chemical and allied industries increased their
outlays over 1959 by 54,39, and 30 percent, respectively. The total increase
in outlays by manufacturers over 1959 was $2|, billion, or 20 percent,
with most durable and nondurable groups participating in the increase. The
relative advance for communications and railroads was also substantial. Only
two categories exceeded their 1957 totals: The commercial group continued its
steady advance; investment in the nonrail transportation group had peaked out in
1959 with conversion of major airlines to jets, but investment outlays in 1960
were only slightly lower.

Capital Spending
in 1961

Planned expenditures by businessmen as of the opening months of 1961
generally follow the pattern set during late 1960. Outlays peaked at midyear
in durable manufacturing, railroads, and other transportation, and the sub-
sequent decline is expected to continue in 1961. Iron and steel companies
which expect to curtail outlays by 25 percent in 1961, will account for much of
the decline in durable goods. Stone, glass, clay, and fabricated metal product
firms are also scheduling relatively large decreases. Automobile companies,
however, are planning to increase outlays by about 15 percent. Makers of non-
durables and public utilities, which had maintained their earlier rate of in-
vestment during the second half of 1960, plan to register further gains in 1961,
except for paper and textile companies. The sharpest reduction in outlays is
scheduled by railroads; declines in purchases of new equipment will bring out-
lays to the lowest level in 15 years. Expenditures by trucking firms also are


- 6 -


DPS-75






MARCH 1961


Table l.--Postwar cycles in plant and equipment expenditures, quarterly
totals at seasonally adjusted annual rates, 1948-61

Change in expenditures
Quarter Total expenditures from previous
and
year
: Peak : Trough Peak Trough
:


Billion
dollars


Billion
dollars


Percent


Percent


IV 1948
IV 1949


II 1960
II 1961 _/


22.3


28.8


37.8


36.3


17.8


25.7


29.6


33.8


3/
-20.0

29.5
-11.0

31.0
-21.6

- 3.8
- 6.9


3/

61.8
44.0

47.2
15.4

22.6
14.2


Duration from Change in costs from
previous previous period

: a Capital :
Peak : Trough goods :Construction 2/
g .W


Quarters


Quarters


IV 1948
IV 1949


III
I

III
III


1953
1955

1957
1958


II 1960
II 1961 /


I BLS wholesale price index for producer finished goods.
/ Engineering News Record index of construction costs.
3 Sustained postwar rise not considered cyclical.
/Estimate by SEC and Department of Commerce based on a survey in January-
February 1961.
5/ Through January 1961.


III
I

III.
III


1953
1955

1957
1958


Percent


Percent


3/
4.7


17.3
1.7

16.7
2.0

2.5
5/ .3


27.0
5.6

14.2
4.5

6.2
5/1.0


- 7 -


DPS-75






MARCH 1961


expected to contract sharply and more than offset increases by airlines and
the pipeline industry. Outlays by the commercial and other groups (including
trade, service, finance, and construction) which had acted contra-cyclically
to the general investment cycles of the 1950's are also expected to decline dur-
ing 1961. The decline will result from lower spending by retail trade firms which
may reflect, in part, the previous decline in construction of new housing sub-
divisions. Prospective capital outlays of mining companies remain at the re-
latively low rate of the past few years.

Factors Influencing Spending

While certain investment programs represent long-range planning by
management or are a corollary to the growth of research expenditures, appropria-
tions and expenditures by corporations for capital expenditures are influenced
by financial and demand factors. These include profit rates and total cash
flow, current and anticipated demand in relation to capacity, and interest
rates and other investment costs. Management decisions are based on the com-
bined effect of these factors. In the past year for instance, reduced demand
and profits in certain industries appear to have spurred investment in cost-
cutting equipment even though financial conditions for such outlays may not
have been favorable. Modernization, also influenced by foreign competition
here and abroad, was reflected in the relatively high ratio of equipment out-
lays to new plant construction.

Actual investment in 1960 was about 4 percent less than planned at the
beginning of the year, as nonrail transportation companies spent 10 percent
less than anticipated and durable goods manufacturers and public utilities
lowered their outlays by 6 percent. Reduced earnings in the latter part of
1960 brought about further downward revisions for early 1961 in the planned
expenditures of durable goods and commercial firms, while the reverse situa-
tion raised planned outlays by public utilities.

While official data for all of 1960 are not yet available, corporate
reports indicate that despite higher production and sales in 1960, profits in
most manufacturing industries were limited by a cost-price squeeze. For the
first 3 quarters of 1960, the Federal Trade Commission-Securities and Exchange
Commission reported an overall reduction of 6 percent in the net income of man-
ufacturing corporations, compared with a year earlier. The decline was even
more pronounced in relation to sales. The least favorable comparison was in
durable goods. However, a survey of corporate reports by the First National
City Bank of New York indicates that overall profits of all industries during
1960 were probably fairly close to 1959, reflecting the continued sales ex-
pansion of public utilities and further recovery of the petroleum industry from
its heavy set-back in 1958. Financial institutions, mining companies and firms
in the amusement and service fields have also reported better earnings, while
profits were somewhat lower in trade and sharply lower in air and rail trans-
portation. Results in manufacturing would have been even less favorable with-
out the strong export demand and increasing earnings from foreign affiliates.


- 8 -


DPS-75







MARCH 1961


For most manufacturing companies declining profits contrasted with
continued high dividend payments. The FTC-SEC reported that in the first 3
quarters of 1960, profits, after taxes, were $815 million below a year earlier,
while dividends rose more than $400 million. However, the decline in retained
earnings was partly offset by the continuing rise in depreciation, depletion
and amortization allowances. The combined total in the first 3 quarters of
1960 at $13.8 billion was 6 percent below a year earlier. Since in recent
years internal sources of financing have accounted for as much as 80 percent of
corporate financing, the level of retained earnings and depreciation is an im-
portant determinant of corporate expansion. The lower rate of accumulation
through September 1960 had less effect than usual on business expenditures,
however, as liquid assets released from financing inventories were used exten-
sively.

Industrial Construction
and Machine Tool Orders

Reflecting the reduced trend of appropriations for new plants, awards
for private industrial building, which had shown an overall 7 percent decline
between 1959 and 1960, are expected to decline another 10 percent in 1961. On
the other hand, the outlook is for continued strength in commercial building.
Contracts for this type of construction increased 17 percent in 1960 over 1959,
which also showed a 25 percent gain in 1959.

For all of 1961, a McGraw-Hill survey found that new orders for ma-
chinery are expected to average 2 percent below last year. In January, machine
tool orders for metal cutting equipment were 26 percent below December and 19
percent below a year ago. Domestic orders were the lowest since November 1958.
On the other hand, orders for forming tools, used to press and shape metal into
products,did increase significantly. Due in large part to replacement programs
in the automobile industry, such orders in January were 74 percent above De-
cember 1960 and 55 percent above a year earlier.

Construction Activity Dips

Residential construction outlays continued to lag in early 1961,
though new nonfarm starts picked up from the low annual rate in December. The
downtrend in new housing starts has continued since the spring quarter of 1959,
when starts on an annual rate basis totaled 1,596,000 units. In the first
quarter of 1960 private starts were at an annual rate of 1,282,000; by Decem-
ber they were down to 970,000 units. Starts recovered in January and in Feb-
ruary were at an annual rate of 1,100,000, about 14 percent below the first
quarter of 1960. Applications for FHA commitments and requests for VA apprais-
als also showed a declining trend since early 1959, and in January-February
totaled 52,500 units compared with 61,500 units a year ago.

The recent reduction in FRA and VA maximum allowable interest rates
from 5 3/4 to 5 1/2 percent, along with easier credit conditions since mid-1960,
have improved mortgage terms to borrowers and should strengthen the volume of
starts this year. Other factors which will tend to hold down the level of


- 9 -


DPS-75







MARCH 1961


starts are the hieh level of vacancies, particularly among rental units,
recent lower income of consumers and rising costs of iew hohes, which in
1960 were up 3 percent from 1959. In January and February the new nonfarm
residential construction put in place, which follows starts, was at an annual
rate of $20.1 billion, 12 percent below a year ago.

The other types of private construction have risen moderately since
early 1960. In January-February these were at an annual rate of $17.4 billion
compared to $17.0 billion a year earlier, due mostly to increases in the in-
dustrial and commercial categories. Public construction at an annual rate of
$17 billion in January-February, was up about $2 billion or 14 percent from
early 1960. Largest gains were for increases for highways and schools, but
practically all groups were up substantial amounts.

Government Purchases Higher

Government purchases of goods and services in the final quarter of
1960 were at an annual rate of $102.1 billion, $5-7 billion above a year ear-
lier. Most of the rise, nearly $5 billion, represented increased spending by
State and local Governments. Federal purchases eased off in the first half of
1960 but picked up in the last halg led by higher national defense programs.
Inventories and loans held by CCC under the price support program were about
the same in 1960 as in 1959. Expansion of expenditures for civilian aviation
facilities and higher Federal salary rates increased "other" purchases between
late 1959 and 1960. The Budget submitted last January implies further in-
creases in Federal purchases through mid-1962.

Manufacturers' New Orders
Level Out
0-08
Manufacturers' new orders declined slightly in January, but those of
durable goods firms picked up in February, mainly reflecting some improvement
in steel, and a leveling out of autos after the sharp drop in January. At the
end of January, the book value of manufacturing and trade inventories, season-
ally adjusted, totaled $91.9 billion, $400 million below December. The liqui-
dation of stocks was mainly in autos at retail; manufacturing inventories were
down $100 million in contrast to $400 million the previous month. The slight
improvement in new orders of some industries and a pickup in auto dealer sales
from the depressed levels of late January and early February, along with some
slackening in the rate of liquidation of manufacturing stocks, helped level
out industrial production.

Industrial Production
Level

The Federal Reserve Board's index of industrial production was the
same in January and February at 102 (1957=100), but 7 percent below a year ago.
Durable and nondurable goods output in manufacturing in February were the same
as January, but 13 and li percent, respectively, below February 1960.


DPS-75


- 10 -








Table 2.--Government purchases of goods and services, by quarters,
1959 and 1960,seasonally adjusted at annual rates

1959 : 960
Item : :
S IV I II III : IV
:

: Billion Billion Billion Billion Billion
: dollars dollars dollars dollars dollars

Federal purchases : 52.5 51.8 51.7 52.7 53.3
National defense: 45.5 44.9 44.7 45.1 45.7
Other : 7.5 7.5 7.6 8.2 8.2

State and local 43.9 45.7 46.9 48.0 48.8

Total : 96.4 97.5 98.6 100.7 102.1

Department of Commerce.

Production of consumer goods at 110 percent of the 1957 average was
about the same as in January. Production of autos in February was about 40
percent below a year ago, and for the first quarter it is likely to be about
1.2 million units compared with the 2.0 million for the first quarter in 1960.
Production of other consumer durable goods and apparel dipped in February.
Production of business equipment and of materials was unchanged.

Unemployment P

The civilian labor force in January-February was about 1- million above
a year ago, but civilian employment was up only about 300,000. Since mid-1960
employment, seasonally adjusted, has declined about a half million, all of it
in the nonagricultural sector, a big share being concentrated in manufacturing.
State and local Government and service were the only major groups in which em-
ployment rose in the last half of 1960.

Unemployment reached 5.7 million in February, the highest level since
the summer of 1941. However, the seasonally adjusted rate of unemployment at
6.8 percent was about the same as in the two preceding months but substantially
above the 4.8 percent of a year earlier. Persons placed on part-time because
of production cutbacks increased in number to 1.7 million, up from 1.1 million
a year earlier. There also were increases in numbers of long-time unemployed
(15 weeks and over), and in the number of workers who had exhausted their unem-
ployment benefits. The factory workweek, seasonally adjusted at 39 hours in
February, was about the same as January, but 1 hour below February 1960. Aver-
age hourly earnings of manufacturing workers at $2.32 were three cents above a
year ago. Because of the decline in the work week, average weekly earnings, at
$90.02, were $1.12 below a year ago.


MARCH 1961


DPS-75


- 11 -







MARCH 1961


Table 3.--Manufacturers' new orders,
trade inventories and production
1960-1961


sales, manufacturing and
for selected periods,


1960
, ,J| L '


: Unit :


May/ :


Oct.:


Nov.:


S 1961

Dec.: Jan.: Feb.


Manufacturers' new orders
Durable
Nondurable

Manufacturers' sales
Durable
Nondurable

Manufacturers' and trade
inventories
Durable
Nondurable

Industrial production
Consumer goods
Equipment
Materials


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

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


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

:1957=100:
:1957=100:
:1957=100:
:1957=100:


30.5
14.7
15.8

31.0
15.1
15.9


93.2
50.8
42.5

109.8
116.5
104.1
107.3


29.2
13.7
15.5

29.6
14.1
15.5


93.0
50.2
42.8


29.0
13.6
15.4

29.2
13.8
15.4


92.7
49.9
42.8


28.7
13.2
15.5

29.1
13.6
15.5


92.3
49.5
42.8


106.3 104.6 103.2
114.7 112.9 112.1
102.7 101.7 100.7
102.9 101.2 99.3


1/ Peak of 1958-60 business cycle.
n.a. Not Available.

Department of Commerce and Board of Governors of the Federal Reserve System.


month but 21 percent above a year ago. Wage and salary disbursements at a
rate of $270.5 billion dipped from January; unemployment, social security and
other Government transfer payments increased slightly.

Consumer spending picked up in the final quarter of 1960 because of high-
er purchases of autos, foods and services. While detailed estimates of con-
sumption spending for the first quarter are not yet available, retail sales
declined 3 percent between October-December and January-February.

Retail sales in February, however, rose slightly from January, nondurable
goods the most. February retail sales at $17.8 billion were 1 percent below
a year earlier. In late February and early March auto sales picked up.
Department store sales for the four weeks ending March 11,were 13 percent
above a year ago.


Item


28.4
13.0
15.4

28.6
13.3
15.3


91.9
49.0
42.9

102.1
110.5
99.5
98.0


n.a.
13.3
n.a.

n.a.
13.4
n.a.


n.a.
n.a.
n.a.

102
11o
100
98


- 12 -


DPS-75






MARCH 1961


Table 4.--Employment, hours and.hourly earnings
for selected months, 1960-61


1960 1961
Item :Unit : : : :
: : Jan. : Feb. : June : Jan. : Feb.


Civilian labor force: / : Mil. : 69.8 70.0 71.2 71.5 71.9
Employment : Mil. : 66.1 66.7 67.2 66.6 66.8
Agricultural : Mil. :5.7 5.7 5.7 5.7 5-8
Nonagricultural : Mil. : 60.3 60.8 61.6 60.7 60.9
Unemployment : Mil. : 3.7 3.4 38 4.7 4.9
15 weeks and longer : Mil. : .9 .8 .8 1.4 1.4
Exhaustions of unemployment
benefits : Thous. : 121 125 134 193 193


Average weekly hours: I
Production workers : Hr. : 4.4 40.0 39.9 38.9 39.0
Durable : Hr. 41.2 40.7 40.2 39.4 39.6
Nondurable : Hr. : 39.6 39.2 39.5 38.6 38.4
Building construction : Hr. : 35.1 35.8 35.6 n.a. n.a.
Retail trade : Hr. : 37.5 37.6 37.6 n.a. n.a.

Average hourly earnings:
Manufacturing :Dol. : 2.29 2.29 2.29 2.32 2.32
Durable :Dol. :2.46 2.45 2.45 2.47 2.47
Tondurable : Dol. : 2.05 2.05 2.08 2.12 2.12
Building construction :Dol. : 3.32 3.33 3.34 3.47 n.a.
Retail trade :Dol. : 1.79 1.79 1.82 1.84 n.a.


- 13 -


Y/ Seasonally adjusted. n. a.
Department of Labor.


Not available.


Auto Sales Low

Auto production in October 1960, the beginning of volume production on
1961 models, exceeded 600,000 units, and retail sales were up 13 percent from
the July summertime low. Sales dropped off in November and December of 1960
and in January-February they were about a third below October and 22 percent
below a year ago. With sales declining, stocks climbed rapidly--they have
held close to a million units since November. Auto production has been
reduced sharply recently, stocks remain heavy, but sales have recovered con-
siderably in late February and early March.

Reflecting low auto and other retail sales, installment credit outstand-
ing in January declined $103 million, the first reduction in 2 years. Auto
paper was off $148 million.


DPS-75






MARCH 1961


Table 5.--Auto sales, stocks, production and prices, quarterly averages, 1960-61

: 1960 : 1961
Item : Unit : : : : :
I II III IV I

Production / : 1957=100:. 124 120 114 110 2/76

Retail sales automotive 1/ : Bil.dol.: 3.4 3.4 3.1 3.3 3/29
Retail inventories 1/ : Bil.dol.: 4.8 5.1 5.1 5.3 /5.0

Auto paper : Bil.dol.: 16.8 17.8 18.0 17.9 3/17.6
Factory sales, domestic : Number :648936 589,991 371,294 566,4213/395,075
Imports : Number : 61352 46,722 24,8805/22,398
New car prices, end of : 1947-49=:
period. : 100 : 138.3 136.5 132.4 139.0 /139.0


S' Seasonally adjusted. / Average of January-February. 3/ January only.
4 Credit outstanding, end-of-period. 5/ October-November average

Federal Reserve Board and Departments of Commerce and Labor.

Credit Markets Continue Easy

In early 1961, money and credit market conditions eased further, and most
interest rates continued to trend lower. Federal Reserve credit policies
encouraged monetary ease, and free reserves (excess reserves less member bank
borrowings) ranged from $600 million to $700 million in January-February 1961.
A year earlier member bank borrowings were about $350 million greater than
excess reserves. In early March member bank borrowings rose and free reserves
declined some. The Federal Reserve system followed a policy of restraint in
early 1960 when economic activity was moving upward rapidly. As economic
activity slackened, monetary policies changed and by the second half of 1960 a
policy of encouraging easier credit was followed. The resulting sharp decline
in short term interest rates widened the spread between foreign and domestic
interest rates and, in part, contributed to a large outflow of gold from the
United States.

With economic activity turning down in the last half of 1960 the demand
for credit also eased. Total credit extended in 1960, at $37 billion, was
down sharply from the $61 billion in 1959. However, only about half the drop
between 1959 and 1960 was due to the declining business activity; the remainder
was due to a lower volume of Federal Government financing. The cash surplus of
$3.6 billion for calendar year 1960 compared with a Federal deficit of $8.0
billion in 1959. In the final quarter of 1960, the cash surplus after seasonal
adjustment dipped, reflecting a dropoff in receipts and a pickup in spending.
Other sectors that contributed to reduction in credit extended were lower
mortgage loan activity, a slackening in the rise in consumer credit outstanding,
and reduced State and local government borrowings.


DPS-75







MARCH 1961


Gold Sales End

The gold outflow declined in February, and no sales have been reported
through early March: The gold price in the London market has returned to the
normal range and speculation in gold has been dampened. As a result, during
the first months of 1961, the U. S. balance of payments improved considerably
from the fourth quarter of 1960, according to the Department of Commerce. The
transfer of liquid assets from the U. S. in 1960 totaled $3.8 billion, about
the same as in 1959. In the final quarter of 1960, the adverse balance of
payments was the highest of the year, resulting in a decline in monetary gold
holdings of the U. S. and a rise in our short-term liabilities of $1.4 billion
after seasonal adjustment. The rise from $1.1 billion in the third quarter
was accounted for by special transactions and by a substantial outmovement of
capital for speculative purposes, including purchases of gold. Without these
special and speculative transactions, the payments balance in the fourth quarter
would have been more favorable than in the third quarter, due in part to a
rising trade balance.

Farm Product Prices Steady

Prices received by farmers advanced 1 percent between mid-January and
mid-February. The index at 244 (1910-14=100) was 5 percent above a year ago.
Between January and February prices of hogs, eggs, soybeans, oranges, and most
grains were higher. Between mid-February and mid-March, prices of most grains
and oilseeds on wholesale markets rose. In contrast, prices of hogs, eggs,
and chickens were down sharply.

Farm cost rates were fairly stable in the last half of 1960, but the
index of prices paid including interest, taxes, and farm wage rates, advanced
over 1 percent in early 1961 and at 302 equaled the previous record reached
in April 1960 as the cost of interest, taxes, and farm wage rates jumped in
early 1961.


FARM INCOME

Cash receipts from farm marketing totaled $5.3 billion during the first
2 months of 1961, more than a tenth higher than January-February 1960. The
increase resulted from a 41-percent rise in the general level of prices re-
ceived and an increase of nearly 7 percent in the volume of marketing.
Receipts from livestock and products of $3.1 billion were up 9 percent due
mostly to larger marketing of cattle and calves and sharply higher prices for
hogs and eggs. Receipts from crops totaled $2.2 billion for the 2 months--
about 16 percent above a year earlier. Aggregate crop prices were steady, but
volume rose sharply above January-February 1960. Marketings of wheat, soy-
beans, corn, tobacco, and oranges were sharply higher. Cash receipts from all
other food and feed grain items were pushed above year earlier levels by larger
marketing. Receipts from cotton rose as higher marketing more than offset
lower average prices. Receipts from vegetables dropped as lower prices more
than offset larger marketing.


- 15 -


DPS-75







- 16 -


Cash receipts during February 1961 are tentatively placed at $2.3 billion,
10 percent above a year earlier. This was the tenth consecutive month in which
total receipts exceeded those of the same month a year earlier. Livestock re-
ceipts responded to higher prices for hogs and eggs--at $1.5 billion they were
about 6 percent above February 1960. Receipts from crops of $0.8 billion were
above a year earlier as marketing of nearly all major crops were up. In
addition soybean prices had improved sharply.


LIVESTOCK AND MEAT

Prices of meat animals have not changed greatly so far this year. Price
declines for hogs during the early weeks of March have about offset February
gains. Market prices for fed cattle have eased off slightly but other classes
are generally above levels at the beginning of the year. For the first
quarter this year cattle slaughter is estimated about 3 percent larger but hogs
10 percent smaller than a year before. During the next few months cattle
marketing will probably continue close to current rates but hogs and lambs
will be seasonally lower.

Relatively stable fed cattle prices are in prospect this spring in con-
trast to a downtrending price a year earlier. January-March receipts of fed
steers and heifers at 12 leading markets indicate feeders are following earlier
marketing intentions fairly closely. Feed lot marketing plus a larger move-
ment of stockers and feeders point to fed cattle sales continuing moderately
above a year earlier for some months. Some seasonal price gains are likely for
cows and other grass cattle with the onset of new pastures, but the gains will
not likely be large.

Hog prices are expected to continue above last year's prices until about
midyear. On March 1, 10 of the Corn Belt States reported 3 percent fewer hogs
and pigs on hand 6 months old and older. This included about 8 percent more
aows. The number 3 to 6 months old was up 6 percent and pigs under 3 months
up 9 percent. Hence, hog prices this summer may average close to last summer
and the fall price decline will likely be moderate. These 10 Corn Belt States
plan for 5 percent more sows to farrow in June-August this year than last.

Sheep and lamb slaughter in January-March was up slightly from a year
earlier and average prices to producers for lambs have shown little recovery
from last fall's seasonal low. A strong seasonal uptrend is in prospect for
the next several weeks as slaughter of old crop lambs, including those on feed,
is largely completed. The number on feed in 7 major feeding States on March 1
was a third smaller than on January 1. The number of early lambs born in the
principal early lamb States, however, is about 4 percent above a year earlier
and, in general, the growth and development of early lambs has been faster than
normal. Hence, sheep and lamb slaughter during the next few months will prob-
ably be close to or a little below a year earlier, but slaughter this summer
may approximate the relatively high rate last summer.

Total meat production in 1961 will probably set a new high, but, due to
population growth, supplies per person may be down a little from the 161.7 pounds
consumed in 1960.


MARCH 1961


DPS-75







MARCH 1961


DAIRY PRODUCTS

The Secretary of Agriculture on March 10 raised price supports for manu-
facturing milk and butterfat. At $3.40 per hundredweight for milk used for manu-
facturing purposes and 60.4 cents per pound for butterfat, the new level of
supports represents an increase from the $3.22 and 59.6 cents. To implement
this action, the CCC purchase price for Cheddar cheese was raised 1.85 cents to
36.10 cents per pound and for spray process nonfat dry milk, 2 cents to 15.90
cents. These higher prices apply to cheese and nonfat dry milk produced on and
after March 10. The purchase price for butter remained unchanged at 60.5 cents
in San Francisco and Seattle and 61.25 cents in Hew York. The computed price
for Chicago, which is the New York purchase price adjusted for the freight rate,
is 60.466 cents.

Congress established the previous support level for milk and butterfat on
September 17, 1960, by passing a special law. Prior to that date, manufac-
turing milk in 1960 had been supported at $3.06 per hundredweight and butterfat
at 56.6 cents per pound.

The higher level of price supports will mean that farmers will receive
higher prices for milk and butterfat in 1961 and early 1962 than a year ear-
lier. With milk production expected to expand, cash receipts from dairy prod-
ucts will show an even greater increase.

Since September of 1960 milk production has been running about 1 percent
higher than a year earlier. Although February milk output at 9.4 billion
pounds was 2 percent lower than in 1960, it was also 1 percent higher when
adjusted for the extra day in February last year. In recent months, production.
per cow has failed to register the usual year-to-year increases, but as the
year progresses, it may resume its upward trend of recent years. Annual gains
in milk production per cow have averaged about 3 percent since 1955. As num-
bers of cows'and heifers 2 years old and older kept for milk declined much less
in 1960 than in 1959, milk flow for the year as a whole in 1961 is likely to
show a greater gain than occurred last year. Output in 1960 increased to
122.9 billion pounds, from 122.0 billion pounds in 1959.

Utilization of milk for fluid milk products on a per capital basis de-
clined somewhat in 1960 from the year before. Consumption of fluid cream de-
clined less than the previous year. Skim milk, sour cream, and milk and cream
mixtures registered per capital increases. Per capital consumption of ice cream
declined to 18.4 pounds in 1960 from 18.7 pounds in 1959.

The proportion of total milk production used in manufactured dairy prod-
ucts was greater in 1960 than in 1959 and, except for evaporated milk, pro-
duction of all of the major dairy products was higher in 1960. Although pro-
duction increased, the aggregate consumption of manufactured dairy products
was about the same in 1960 as in 1959. Consumption from commercial sources
was higher while CCC distributions to domestic users were lower. Private and
government storage stocks on January 1 were higher at the beginning of 1961
than a year earlier by roughly the equivalent of 1 billion pounds of milk.
Greater stocks of butter, mostly in the hands of the Commodity Credit Corpo-


DPS-75


- 17 -









ration, and greater private stocks of cheese accounted for most of the increase
in storage holdings. Purchases of butter by the CCC from the beginning of 1961
through March 21 amounted to 55 million pounds, compared with 50 million pounds
during the same period of 1960. Deliveries to CCC of nonfat dry milk were about
the same. No cheese has been offered to CCC this year; only a nominal amount
was purchased in the entire calendar year 1960.

POULTRY AND EGGS
Poultrymen are increasing production for 1961. Marketings of broilers
and turkeys are running ahead of last year, and such trends as hatchings sug-
gest that output of poultry meat will continue above the high 1960 records all
this year. Until about mid-year egg production will probably remain below 1960
because the laying flock is smaller, but after mid-year it is likely to exceed
1960 levels. The January-February hatch of egg-type chicks was up 32 percent
and eggs in incubators March 1 were 26 percent above last March. This would
average to a 29 percent increase for January-March chick hatchings.

Generally higher prices for eggs, broilers, and turkeys in 1960 are
stimulating increased output. Production costs were probably lower than in
most recent years, reflecting improvements in technology and the lower average
value of poultry ration which, at $3.32 per 100 pounds, was lower in 1960 than
in any other year since 1945.
The margins that existed under those favorable conditions have already
tightened somewhat in 1961, though part of the change is seasonal. If produc-
tion increases continue at rates indicated by recent hatchery reports, egg and
poultry prices are likely to weaken further in relation to those of last year.

Although egg prices in early March remained above those of last March,
the difference was narrower than it had been in the preceding 5 or 6 months.
The mid-February average price received by farmers was 39.4 cents per dozen,
almost 10 cents above last year. While April prices in 1960 moved up from the
months before, prices this spring are likely to be seasonally low, and in the
second quarter egg prices will likely be below those of the year before.
A large hatch, with a suggestion of large supplies of eggs in the fall,
provides the basis for expecting no immediate recovery in egg prices comparable
with that of late March and April 1960. The hatch outruns to a considerable
degree farmers' intentions in February, which were to raise 12 percent more
chickens than the 339 million of 1960. Demand for eggs for storage is accord-
ingly limited, but egg breakers and processors are in the market to meet the
trade's immediate needs and to supply the purchase program of the U. S. Depart-
ment of Agriculture. Since early February USDA has bought an average of over
1 million pounds of dried egg solids each week for welfare distribution.
Broiler prices reached a peak in late February--the prevailing price of
18 cents per pound in Georgia was the highest since April 1960. The mid-
February U. S. average broiler price was 17.6 cents per pound, about the same
as the year before, and a cent higher than January 1961. Declines which have
occurred since then.-prices were 152 cents in Georgia in the second and third
week of March--have not limited hatching egg settings. In the 3 weeks most
recently reported hatchings were 18, 23 and 26 percent above last year. The


MARCH 1961


DPS-75







- 19 -


sale in July 19.0-February 1961 of chicks for broiler hatchery supply flocks was
20 percent above a year before. As a consequence, the supply of hatching eggs
and chicks will be large later this year.

USDA has started to purchase cut-up broilers for the School Lunch program.
The approximately 6.8 million pounds to be purchased would account for about
2.6 million birds from the monthly production of about 150 million.
Sales of turkeys from farms are presently near a seasonal low. Mid-
February prices, averaging 23.7 cents per pound, were 2 cents below February
1960. Bearish influences upon this price are the 23 percent larger turkey
stocks now available (compared with March 1, 1960) and the relatively large
number of turkeys, from the hatches since November, which are nearly ready for
marketing. Marketings of turkey breeders may be advanced this spring if the
indications of a considerably expanded turkey crop eventually limit the oppor-
tunity to sell poults. If the season-average increase in turkey production is
more than 10 or 12 percent by fall, the difference between 1960 and 1961 aver-
age monthly prices is likely to widen from the 2 cent difference in February.
OILSEEDS, FATS AND OILS
Food fats and oils have shown more price action during the first half of
the 1960-61 marketing year than in any comparable period since 1955-56. The
general level of food fat prices has advanced over 35 percent between the be-
ginning of the current marketing year, October 1, 1960, and mid-March 1961.
Cottonseed and soybean oil prices lead The advance, closely followed by lard.
While the prices of these commodities have displayed most of the increase
expected for the entire 1960-61 marketing year, they will nevertheless remain
firm this spring and summer, averaging well above the same period last year.
Higher food fat prices this year stem from slightly smaller domestic
supplies coupled with record export and domestic demand. The rise in exports
was due to increased shipments under government-financed programs and to a
world shortage of food fats. Carryover stocks next October 1 are expected to
be the smallest since 1957, mainly reflecting reduced stocks of soybeans (oil
equivalent basis), although stocks of edible vegetable oils are likely to be
down some from last year.
Total supplies of soybeans available during the second half of the 1960-61
marketing year will be somewhat smaller than in the spring and summer of 1960
and the supply situation will become tight before new crop beans become available,
usually around mid-September. Soybean prices to farmers have increased sharply
from $1.94 per bushel last October to $2.48 in February 1961, whereas last year
prices were relatively stable during these months, at about $2.00 per bushel.
While most of the seasonal rise probably has occurred, prices should continue
strong this spring and summer, averaging sharply above last year.
Crushings of soybeans for oil and meal in 1960-61 likely will total
around 400 million bushels compared with 392 million last season. Soybean
exports for 1960-61 are expected to approximate the record 141 million bushels
that went out last year. These estimates indicate a carryover of about 5 mil-
lion bushels on October 1, 1961, down sharply from the 23 million bushels last
year and the smallest bean inventory since 1956.


MARCH 1961


DPS-75








Early season prospects indicate that supplies of food 'ats in the market-
ing year beginning October 1, 1961, probably will be the largest of record.
Starting stocks will be down from last year but production is expected to reach
a new high. Moderate increases in the output of lard, cottonseed oil, and butter
are in sight whereas soybean production likely will be up sharply.
Soybean farmers' intentions as of March 1 indicate they plan to plant a
record 26.4 million acres in 1961, nearly a tenth above last year and 6 percent
above the previous peak in 1958. The increase reflects some diversion of land
from feed grains and hay and the currently favorable soybean prices. Also, con-
tributing to the switch to soybeans this year is the increase in the 1961 sup-
port price to $2.30 per bushel, 45 cents above last year's rate. Plans may be
more uncertain than usual this year because details of the 1961 emergency feed
grain program were not known when farmers filled out their intentions reports
about March 1.
Price supports for other 1961 oilseed crops were recently announced as
follows: Cottonseed, $49.00 per ton for loans on farm-stored seed (basis grade,
100), up $11.00 per ton from 1960; flaxseed, $2.80 per bushel, up 42 cents; and
peanuts, $221 per ton, up $19.76 per ton (net to producers of $28.76 per ton).
FEED
A special program for 1961 feed grains was authorized by Congress and
signed into law by the President on March 22. Under this program, producers of
corn and grain sorghum will be required to divert at least 20 percent of their
corn and grain sorghum acreage (using 1959 and 1960 average as a base) to soil
conserving crops in order to be eligible for price supports for 1961 feed
grains. Those producers of barley, oats and rye who do not produce corn or
grain sorghums also are eligible for price supports. Payments in cash or in
kind will be made to participating farmers for the land diverted to conservation
practices. For diverting acreages equal to 20 percent of their base or 20 acres,
whichever is larger, producers will be eligible for a payment equal to 50 per-
cent of their normal production on their diverted acreage based on county
support price. Further reductions can be made in any amount up to 20 percent
more for which farmers will receive payments based on 60 percent of their normal
production. National average support rates announced by the Secretary on
March 22 are as follows: Corn, $1.20 per bushel; oats, 62 cents per bushel;
barley, 93 cents per bushel and sorghum grain, $1.93 per cwt.
Based on the March 1 prospective plantings, farmers would plant smaller
acreages of corn, grain sorghum and barley in 1961, but a slightly larger acre-
age of oats than in 1960. The total acreage of feed grains in 1961, based on
the March 1 plans, would be 149 million acres, 1.5 million less than in 1960 and
6 million below the 1955-59 average. These plans were made before the 1961 feed
grain program was announced. The extent to which the new program will influence
prospective acreages based on March 1 plans will depend on the extent of partic-
.ipation in the program would be expected to result in more substantial acreage
reductions in corn and grain sorghum than indicated by farmers' March 1 plans.

Feed prices have been generally stable during the past month after ad-
vancing more than seasonally from November to February. Since November, feed


MARCH 1961


DPS-75


20 -






DPS-75 21 MARCH i3il

grain prices have gone up about 12 percent and hiGh-protein feed prices about
18 percent. In the first half of Iarch feed grain prices averaged close to
the level of a year earlier while high-protein prices were 8 percent higher.

Prices of corn, sorghum grain, and soybean meal have led the general rise
in feed prices. The price of No. 3 Yellow corn at Chicago has advanced about
18 cents per bushel since November, averaging about *1..14 per bushel at Chicago
in the first half of March, only slightly lower than a year earlier. The price
of Milo at Kansas City also has advanced substantially since last fall. Prices
of both corn and sorghum grain are nearing 1960 support prices. While prices
of most feeds leveled.off in February, soybean meal has continued to rise, and
in the first half of March averaged $63.00 per ton at Decatur, up $18.00 since
last fall and 13 percent above prices a year earlier.

Feed prices in February and early March continued below average in
relation to prices of hogs, beef cattle, dairy products, and eggs. Favorable
returns to livestock and poultry producers have helped to improve the demand
for feed grain and protein feeds this year. Generally favorable returns last
year are likely to result in increasing livestock production in 1961, partic-
ularly for hogs and poultry.

Through February, farmers had placed 476 million bushels of 1960 corn
under price support, a record for that period and 97 million bushels more than
in the same period of 1959-60. Farmers have until May 31 to place their 1960
corn under support. The quantity of 1960-crop barley placed under price support
totaled 50 million bushels; oats, 20 million; and sorghum grain, 203 million
bushels, all substantially above the corresponding quantities in 1959-60. The
deadline for placing these grains under support was January 31.

WHEAT

March I intentions indicate seedings of all spring wheat at 12.2 million
acres, down 2 percent from the acreage seeded in 1960 and 28 percent below the
1950-59 average. If growers carry out their intentions and yields per seeded
acre this year about equal the 1956-60 average by States, a spring wheat crop
of 228 million bushels would be produced. Based on conditions as of December 1,
1960, a winter wheat crop of 1,034 million bushels was forecast for 1961. A
total wheat crop of 1,262 million bushels in 1961 is indicated compared with
the 1960 crop of 1,363 million bushels. Winter wheat in the northern Great
Plains came through the winter in generally fair condition, although moisture
is needed in some areas. Considerable growth was shown in the central Great
Plains, as the crop responded well to generally favorable weather. Warm
temperatures in the southern Great Plains has stimulated rapid growth and con-
dition in most districts is reported good to excellent. Fall-planted wheat
generally continued to make good progress in the Far Northwest.
Cash wheat prices reached their highs for the marketing year to date in
late January and early February, then gradually declined. On March 23, prices
of the dominant classes and grades were down 2 cents at Minneapolis, and 8 cents
at Kansas City, St. Louis, and Portland. When prices were at their highest
level, they were generally at or above the support--a level at which


... .... A. .


--







MARCH 1961


wheat was sold by farmers and other holders in increased quantities. Prices of
hard winter and spring wheats have now declined to below the effective support
and sales have fallen off substantially.

On March 23, prices were below the effective support rate as follows:
No. 2 Hard Red Winter, ordinary protein, at Kansas City, at $1.98, 8 cents,
No. 1 Dark Northern Spring, ordinary protein, at Minneapolis, at $2.10,
4 cents, and No. 2 Soft Red Winter at St. Louis, 2 cents. On the other hand,
the price of No. 1 Soft White at Portland at $1.98 was 10 cents above the
effective support. Compared with a year earlier, prices at Kansas City were
13 cents lower, those at Minneapolis, 9 cents lower and at St. Louis, 5 cents
lower. Prices of No. 1 Soft White at Portland, were about 1-2 cents higher
than a year earlier, reflecting continued large exports from a smaller crop.
Prices of hard wheats reflected continued large supplies, while those of soft
red wheat, adequate supplies.

Supplies of wheat for the 1960-61 marketing year total a record 2,684
million bushels, including a carryover of 1,314 million, a crop of 1,363 mil-
lion, and imports of about 7 million, mostly of feeding quality and seed wheat.
Domestic disappearance in 1960-61 is expected to total about 610 million
bushels and exports are now expected to reach 590 million bushels. The carry-
over on July 1, 1961, therefore, will total about 1,485 million bushels, com-
pared with 1,314 million last July 1.

FRUIT

Harvest and use of Florida oranges, especially by processors, continued
seasonally large during February and early March. Remaining supplies, mostly
Valencias, are somewhat smaller than a year ago. Prices for fresh market
oranges at Florida shipping points, which had held steady during January and
early February, increased moderately during late February, then, during early
March, fell below the previous levels. But prices for Florida oranges for
frozen orange concentrate continued to increase into March. Remaining supplies
of the light crop of California oranges also were smaller than a year earlier.
For both Florida and California oranges, prices in mid-March continued much
above year-earlier levels.
Remaining supplies of Florida grapefruit in mid-March were about twice
the volume of a year earlier. This increase was due mainly to continued lag-
ging movement following a delayed start of harvest last fall. The heavy
remaining volume of grapefruit will be reduced substantially during late March
and April as processing of mid-season varieties of oranges declines and pro-
cessors shift emphasis to grapefruit while waiting for Valencia oranges to
reach sufficient maturity for orange concentrate. Prices for fresh market
grapefruit at shipping points in Florida, which held fairly steady during
January at higher levels than in this month of 1960, declined during February
and early March to levels considerably below a year earlier.
Auction market prices for lemons in mid-March averaged somewhat above
prices a year earlier. Fresh use of lemons to mid-March was about the same as
a year earlier, but use by processors was much smaller. Remaining supplies
were about the same as a year earlier because of the 17-percent reduction in
the 1960-61 crop.


DPS-75


- 22 -








DPS-75 23 MARCH 1961

In Florida, fresh use of oranges was much smaller up to March 18 of the
1960-61 season than a year earlier, partly the result of delayed maturity of
the fruit. But use by processors, especially for making frozen orange concen-
trate, was moderately larger. Output of frozen orange concentrate to March 11,
1961, was about 21 percent above a year earlier. Packers' stocks were up 10
percent. Both fresh use and use by processors of Florida grapefruit to March 18
were much below a year earlier. Output of canned grapefruit products, and
canned orange juice, was down from a year earlier and stocks continued lighter.
Movement of apples from cold storage was somewhat lighter during February
1961 than in February 1960, that of pears was heavier. On March 1, 1961 stocks
of apples continued smaller, those of pears larger,than a year earlier. Pear
stocks in Oregon and Washington were heavier this year than last. Prices for
most varieties and styles of packs of apples at important shipping points held
fairly steady during late February and early March at levels slightly to sub-
stantially above a year earlier. Prices for the D'Anjou pear, the leading
variety in storage, averaged somewhat lower at shipping points in Washington
and on the principal auctions during late February and early March than a year
earlier.
Harvest of the Florida winter crop of strawberries, which is slightly
larger than the 1960 crop, was seasonally heavy during early March. Grower
prices in mid-March averaged considerably below a year earlier. Mainly because
of increased yields per acre, the early spring crop is expected to be about
23 percent larger than the 1960 crop. Most of the increase is in Louisiana,
the heaviest producing early spring State. Harvest and movement of the Loui-
siana crop was expected to peak in late March.
COMMERCIAL VEGETABLES
For Fresh Market
Early March estimates place production of winter season vegetables for
fresh market at 32.1 million hundredweight, moderately more than the 1950-59
average, but down 6 percent from last winter. Among major items, supplies
of carrots, celery and cabbage have been materially below the heavy supplies
of last winter; supplies of spinach also have been lighter. However, output
of a number of tender items including snap beans, cucumbers, eggplant, green
peppers and tomatoes has been much larger this winter than the light supplies
of a year earlier. With better balance between tender and hardier types of
fresh vegetables available, prices both at the farm and retail levels have
averaged significantly below the relatively high prices of a year earlier.
Scattered frost and high winds in early March caused some damage and delay in
crop development. However, except for sweetcorn and watermelons, overall losses
were relatively small.
Indicated production of early spring asparagus, lettuce and onions is
substantially smaller than a year ago, and broccoli and cauliflower moderately
smaller. Acreage of early spring tomatoes is about the same as last year and
acreage of cabbages is a tenth larger.
Among late spring crops, acreages of asparagus and cabbage are close to
those of a year earlier, but onions and watermelons are down. Acreage of spring
carrots is down materially.









Planting intentions indicate acreage cuts of 3 percent for early summer
cabbage, 15 percent for onions, 5 percent for watermelons, and 4 percent for
late summer onions.
For Commercial Processing
Remaining supplies of canned vegetables are moderately smaller than a
year ago. Supplies of some items, including asparagus, lima beans, pumpkin and
squash, sauerkraut, and tomato catsup and chili sauce are larger than at this
time last year. But supplies of canned green peas, sweet corn and beets are
materially smaller than a year ago, and tomatoes and cucumber pickles moder-
ately smaller. Markets for many items are firm to strong, with f.o.b. prices
averaging moderately above those of a year ago. Overall supplies of frozen
vegetables are substantially larger than a year ago. Frozen green peas are in
fairly light supply, and mixed peas and carrots are slightly below a year ago.
However, holdings of other major items are moderately to substantially larger
than a year ago.
Reports indicate a slightly smaller tonnage of winter-early spring
spinach for processing this year than last. March 1 intentions indicate that
processors plan to plant or contract 7 percent more acreage of tomatoes for pro-
cessing than last year, and 13 percent more acreage of green peas; the report
indicates 9 percent more acreage of peas for canning and 20 percent more for
freezing.
POTATOES AND SWEETPOTATOES
Growers planted about 2,000 fewer acres of potatoes for early spring
harvest this year than last, but January intention reports indicate plans to
increase late spring plantings by 3,000 acres. Yields near the average of re-
cent years, on the indicated acreages, would result in slightly less total
spring production than in 1960. But stocks of fall crop potatoes on March 1
amounted to more than 61 million hundredweight, compared with 57 million hun-
: dredweight a year earlier. Thus, supplies of potatoes available during the
next few months are likely to remain slightly to moderately larger than a year
earlier. Over the next 6 to 8 weeks, prices received by farmers for potatoes
are likely to remain well below those of a year earlier. A diversion program,
announced in early March and scheduled to end in May, is being operated in some
areas to assist farmers in disposing of their large supplies.
March intentions reports indicate 7 percent more acreage of late summer
and fall potatoes this year than last, with most of the increase in the Western
and North Central States. Should yields, by States, be near the average of re-
cent years, production on the intended acreage would be at least moderately
larger than in 1960.

Indications are that materially less sweetpotatoes are available than
a year ago. During the past 10 or 12 weeks unloads of sweetpotatoes in the 39
markets have been about a fifth lighter than a year earlier, and prices have
averaged materially higher. March intentions reports indicate that growers plan
to plant about the same acreage to sweetpotatoes as last year. Intended acreage
with yields near the average of recent years would result in a smaller pro-
duction than last year.


MARCn 1961


DPS-75






DPS-75 25 bMA'RCH 1961

DRY BEANS AND PElS

Remaining supplies of colored classes of dry edible beans appear to be
moderately larger than those of a year ago, and supplies of white classes prob-
ably are the same to slightly larger. Exports of both white and colored classes
so far this season have been smaller than those of a year earlier. Prices of
most colored classes are substantially below the high levels of a year ago,
while white classes are the same to higher than a year earlier. Though pea
beans are in heavy supply, the Department of Agriculture is purchasing this
class for distribution to needy families and prices are about the same as a
year ago.

According to March intentions, growers plan to plant about the same acre-
age of dry beans as last year, with a 10 percent cut in the Northwest offset by
a slight increase in the Northeast, and moderate increases in the Southwest and
California. Should yields be near the 1956-60 average, production on the in-
dicated acreage would be moderately smaller than in 1960. Dry peas are in
substantially lighter supply than a year ago, and prices to growers substan-
tially higher. Growers report intentions to plant 9 percent more acreage to
peas than in 1960. Should yields be near the 1956-60 average, production of
peas would be about a fourth larger than the small crop of last year.

COTTON

Consumption of cotton by domestic mills 1/ during 1960-61 probably will
be around 8 million bales. This compares with about 9 million bales during
1959-60. Domestic consumption of cotton in 1960-61 probably will be about 8.1
million bales.

Domestic consumption of cotton per capital in the calendar year 1960 was
about 23.6 pounds compared with 24.1 pounds in 1959. With the exception of
1959, the 1960 figure was higher than any year since 1956. Domestic consump-
tion was higher than mill consumption in 1960 because imports of cotton tex-
tiles and picker laps in 1960 were at a record high, equivalent to about
581,000 bales, and exceeded the cotton equivalent of exports of textiles by
about 85,000 bales. When mill consumption was adjusted for such imports and
exports, domestic consumption of cotton per person in the United States was
larger than mill consumption per capital by about 0.2 pounds. In 1959, the
cotton equivalent of textile and picker lap imports was smaller than the cotton
equivalent of exports of textiles by about 123,000 bales. Therefore, domestic
consumption per capital in 1959 of 24.1 pounds was about 0.4 pound below mill
consumption per capital.

Lower mill consumption of cotton during the current season is indicated
by a high stocks-unfilled order ratio for broadwoven goods, lower rates of
mill consumption for the first 6 months of the season, low values for gray
goods, and large imports of textiles and picker laps. For several months all

1/ Mill consumption is defined as raw cotton opened and processed by mills.
Domestic consumption includes mill consumption plus the cotton equivalent of
cotton textile and picker lap imports less the cotton equivalent of such exports.






MARCH 1961


these factors have been moving in directions which indicate smaller mill con-
sumption. In January, however, the stock-unfilled order ratio for broadwoven
goods declined instead of rising--since February, 1960 it had been rising. If
this ratio continues to decline during the next 2 or 3 months, a prospective
increase in mill consumption in the last half of 1961 will be indicated. But
if this movement is irregular and not sustained, the decline probably does not
signal an increase in mill consumption of cotton.

Exports of cotton during 1960-61 are large--they probably will total
about 6.5 million bales, compared with 7.2 million bales in 1959-60. Exports
from August 1, 1960 through January 1961 were about 3.4 million bales--approxi-
mately 0.2 million bales larger than during the same period a year earlier.

Registrations under the payment-in-kind program as of March 17 were 5.9
million bales, about 0.1 million bales smaller than on the same date last
season.

The supply of cotton in the United States is estimated at about 22.0 mil-
lion bales, including a crop of about 14.3 million, a starting carryover of
around 7.6 million, and imports and a city crop of around 200,000 bales. The
carryover at the end of the current season is expected to be about the same as
the carryover at the start of the season.

Stocks of cotton held by the Commodity Credit Corporation on March 10
were about 3.4 million bales, approximately 2.5 million bales smaller than a
year earlier. CCC-held stocks have declined rapidly since the announcement of
the 1961 price support level on February 21. On February 17, CCC-held stocks
were about 4.6 million bales.

The price support level for the 1961 crop of upland cotton has been
announced at a minimum of 33.04 cents per pound for Middling 1-inch cotton at
average location. This compared with the Choice A rate for the 1960 crop of
32.42 cents per pound and the Choice B level of 26.63 cents per pound. The
minimum sales price Tor Choice A cotton purchased by CCC from the 1960 crop was
110 percent of the Choice B loan rate, 29.29 cents per pound for Middling 1-
inch at average location, plus carrying charges. Carrying charges were 0.1 of
a cent per pound for October 1960 plus 0.2 of a cent for each succeeding month
through July 1961.

At the same time of the support level action, the Department announced
that the export payment rate during the 1961-62 marketing year would be 8.5
cents per pound for cotton shipped between August 1, 1961 and July 31, 1962.
The export payment rate for the 1960 crop is 6 cents per pound.

The average 14 spot market price for Middling 1-inch cotton on March 20
was 31.11 cents per pound. This compares with 30.45 cents a month earlier and
32.03 cents a year earlier. Market prices have tended to increase since the
announcement of the price support level for the 1961 crop.

Disappearance of extra-long staple cotton is expected to be slightly
larger during 1960-61 than 1959-60. The cause is larger consumption during the
current season which probably will be around 150,000 bales compared with


- 26 -


DPS-75









137,000 during the preceding season. Because of the larger dlsa.pp:ararncc, the
carryover on August 1, 1961 will probably be slightly smaller than the 154,400
bales of 1960.

WOOL

Activity in the domestic wool industry declined moderately during 1960
to levels below 1959 but above the average of 1955-59. Domestic consumption
of wool declined less than mill consumption as the import balance of foreign
trade in wool products increased. Imports of raw wool decreased. Average
prices received by producers were less. Domestic production of shorn wool
increased. Woven fabric production declined as an effort was made to keep
inventories of gray and finished goods low. At the end of the year, unfilled
orders also were down, but the ratio of stocks to unfilled orders was rising,
probably indicating a further moderate decline in mill consumption. Mill
activity usually increases seasonally in the first half of the year. Due to
conditions at the end of 1960, the rise in mill activity in the first half of
1961 may be less than seasonal; therefore, mill consumption of wool fiber in
1961 may be smaller than in 1960.

The average price received by growers for shorn wool in the open market
for the 1960-61 marketing year will be about the same as the 43.2 cents per
pound received for the 1959-60 season. The 10-month (April 1960-January 1961)
average price received by growers was 43.2 cents per pound compared with 42.8
cents for the same period a year earlier. The incentive level for the 1961-62
marketing year is continued at the 62-cent level of the first 6 years of the
program.

With mill activity slowing down, sales of domestic wools were limited
during the last 6 months and prices remained relatively stable. Demand con-
tinued strong for the medium wools, and, as a result, the price differential
between fine and medium wools has continued to narrow. Shearing of the new
clip is underway in the Southwest and in parts of the fleece wool States. But
due to mill conditions, shorn wool from the new clip may remain in producers'
hands longer than they did in the previous 2 years, as buyers and mills wait
for price and mill use trends to develop. Domestic shorn and pulled wool
totaled 300 million pounds in 1960, 2 percent more than 1959. Shorn wool out-
put totaled 266.6 million pounds, pulled wool 33.6 million pounds. The clean
equivalent of this output was 145.2 million pounds in 1960 compared with 142.8
million pounds in 1959. With sheep numbers about the same, 1961 shorn wool
production can be expected to be about as in 1960.

Domestic consumption of wool--mill consumption plus the foreign trade
balance of wool products--in 1960 totaled 531.6 million pounds, 4 percent less
than 1959, but 9 percent greater than the 1955-59 average. The decrease in
domestic consumption of wool is less than the decrease in mill consumption due
to the continued increase in the imports of wool products. Mill consumption
of raw wool declined 6 percent in 1960--the decrease was 7 percent for apparel
wool, 5 percent for carpet wool. The raw wool equivalent of imports of wool
products exceeded those of exports by 127.4 million pounds,a record high. This
import trade balance is 4 percent higher than 1959 and 42 percent above the
1955-59 average.


- 27 -


MARCH 1961


DPS-75







- 28 -


Production of woven wool fabric (except felt) during 1960 totaled 283.3
million linear yards, 9 percent less than the same period a year earlier. Non-
apparel items decreased more than apparel fabric. Production of men's and boys'
items were down substantially while those of women and children were only
slightly below 1959. Output during the fourth quarter of 1960 was 12 percent
less than the third quarter and 15 percent less than the corresponding quarter
a year earlier.

World wool prices have moved gradually upward in recent weeks to the
highest levels of the current season, but 8 to 15 percent below a year earlier.
With prevailing supply and demand conditions, there'is little likelihood of
wide fluctuations in price movements during the next year.

The Foreign Agricultural Service has estimated world sheep numbers in
1960 at 983 million head, 1 percent above 1959. The Commonwealth Economic
Committee recently estimated world sheep numbers, eliminating the nonwooled
species, at 917 million head or 2 percent more than its estimate for 1959.
World wool production in 1960-61 is now estimated by FAS at 5,565 million
Pounds, grease basis (3,200 million pounds, clean), 1 percent less than 1959-60
but 7 percent greater than the average of the 5 previous seasons. Due to ad-
verse weather conditions in some of the major producing countries, world sheep
numbers and production may be less in 1961-62 than in the current season.

World wool consumption in 1960 probably surpassed the previous high of
3,157 million pounds, clean content in 1959. Many segments of the world wool
industry were still increasing production from the 1957-58 recession; these
increases outweighed declines in other major manufacturing countries. In view
of the declines in mill activity in some of the countries during the latter
half of 1960, the outlook for 1961 is for world wool consumption to be at ap-
proximately 1960 levels. Consumption in the 10 chief consuming countries in
1960 is estimated by the Commonwealth Economic Committee att1,998 million pounds,
clean content, 2 percent more than in 1959.


TOBACCO

Marketing of 1960 crop tobacco, except for the Maryland and Puerto Rican
crops, have been completed. The Puerto Rican crop, planted late in the year,
is harvested and sold in the first half of the following year. Auctions for
1960 Maryland are scheduled to open April 25 and to close around mid-July. Sales
are also made on the Baltimore hogshead market, where about a tenth of the crop
is marketed. The 1960 crop of Maryland will receive Government price support
at an average level of 50.8 cents per pound.

The total supply of Maryland tobacco for the current marketing year is
1 percent less than in 1959-60, and the lowest in 10 years. The 1960 crop is
estimated to be moderately larger than the previous year's, but the gain is
more than offset by the reduction in carryover stocks.


MARCH 1961


DPS-75









At auctions already concluded for the 1960 crops, the price averages
for flue-cured, Kentucky-Tennessee fire-cured and Virginia sun-cured were
highest on record, while price averages for burley, Virginia fire-cured, and
dark air-cured were second highest ever received. Quantities going under
Government loan generally were smaller than a year ago. There are indications
that prices for most cigar tobacco--the bulk of which is purchased at the "barn
door" during the fall and winter--are near, or lower than, last year's levels.

On February 24, growers of fire-cured (types 21-23) and dark air-cured
(types 35-36), voting in two separate referendums, by overwhelming majorities
approved continuation of marketing quotas on their 1961, 1962 and 1963 crops.

According to the March 1 report on prospective acreage for 1961, the
indicated acreage of flue-cured at 694,300 is equal to that harvested in 1960.
Acreage allotments for most farms were the same as last year. The 1961 acreage
indicated for burley is 315,900--up nearly 20,000 acres from 1960. Farm
allotments for burley were increased 6 percent, the first general increase
since the sharp cutback in 1955.

The March 1 intended acreage for fire-cured and dark air-cured were
5 percent and 3 percent larger than harvested last year. Since allotments
for 1961 are practically the same as for 1960, it appears that allotments will
be more fully planted.

Indicated 1961 acreage for cigar binder in the Connecticut Valley is
about a fifth less than harvested in 1960. Allotments for most farms were
reduced 10 percent. Manufactured sheet binders have replaced natural leaf
binders on many brands of cigars in recent years, and this has sharply reduced
requirements for leaf binders, particularly the Connecticut Valley types. For
the Wisconsin binder types, the March 1 intended acreage is 4 percent above
1960.

Ohio cigar filler acreage this year is indicated at 7 percent above
last year, while Pennsylvania filler acreage may be down by 3 percent.

The March 1 intended acreage for shade-grown wrapper in the Connecticut
Valley and Georgia-Florida are 2 percent and 7 percent lower, respectively,
than last year's harvested acreage.

By legislation enacted early last year, price supports for 1961 crops
of the eligible tobaccos will be based on the applicable 1959 level, adjusted
in proportion to the change between (1) the 1959 parity index (the index of
prices paid by farmers, including interest, taxes and farm wage rates), and
(2) the average of the indexes for 1958, 1959 and 1960. (For Maryland, the
1959 level is considered to be the level that would have been in effect had a
marketing quota applied to that crop.) This ratio of change in prices paid by
growers results in no change in 1961 support levels from the 1959 (or 1960)
levels.


MARCH 1961


- 29 -


DPS-75







MARCH 1961


The Demand and Price Situation is
published monthly.



The next issue is scheduled for
release April 27, P. M.


- 30 -


DPS-75









U. S. Department of Agriculture
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DPS-75 The Demand and Price Situation


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