Poultry and egg situation

THE


SITUATION
BUREAU OF AGRICULTURAL ECONOMICS
UNITED STATES DEPARTMENT OF AGRICULTURE

PES-53 MAY 1941


IN THIS ISSUE:
A MOVING SEASONAL ADJUSTMENT
FOR EGG PRICES.


INDEX NUMBERS OF SEASONAL VARIATION IN PRICES RECEIVED
BY FARMERS FOR EGGS. UNITED STATES. 1915.1925. AND 1935


PERCENT



140

"- ^1915

120







100




60
JAN. FEB. MAR. APR. MAY JUNE JULY


U. S DEPARTMENT OF AGRICULTURE


AUG. SEPT. OCT. NOV. DEC.

NEG. 39172 BUREAU OF AGRICULTURAL ECONOMICS


THE NORMAL SEASONAL RANGE IN EGG PRICES BETWEEN THE PEAK
MONTH HAS BEEN REDUCED CONSIDERABLY DURING THE PAST 30 YEARS.
HAS COME IN NOVEMBER DURING THE PAST DECADE OR SO, WHEREAS IT
DECEMBER. THESE CHANGES HAVE RESULTED LARGELY FROM INCREASED
WINTER MONTHS.


MONTH AND THE LOW
AND THE ANNUAL PEAK
FORMERLY CAME IN
EGG PRODUCTION IN THE








THE EGG SITUATION AT A GLANCE.


EGGS
DOZENS)

8


7


6


5


4
CASES
I MILLIONS )

8


6


4


2


0
CENTS PER
DOZEN
30



25



20



15


LIIJWw lid MwMt~L2


A M


CASES
I MILLIONS I

12


9


6


3


0
NUMBER
I MILLIONS I

325


300


275


250


I I I
NONAGRICULTURAL INCOME*
(1924-29=100)

/1941


II
LAYERS ON HAND



1940
1941 j94





Average \
1930-39


K--LIAZZL--


JAN. APR. JULY OCT. JAN. APR. JULY OCT.
S DATA. EXCEPT NONAGRICULTURAL INCOME INDEX NUMBERS. ADJUSTED FOR SEASONAL VARIATION
A FIRST OF THE MONTH. EXCLUDING S. M. A. HOLDINGS, BEGINNING APRIL 1.1940


U S DEPARTMENT OF AGRICULTURE


NE& 38961 BUREAU OF AGRICULTURAL ECONOMICS


FIGURE I





PES-53 3 -


THE PO ULTRY A ID EGG S SITUATION


Summary

The denand. for baby chicks has increased as a result of the higher

prices received by producers for eggs. Commercial hatchery n:oduction in

April '.:,s on~ of the largest on record for the month, and about one-tenth

more e .' nere set during April this year than in April 1940. The total

number of baby chicks on advance order on May 1 was more than half again as

large as on the sx.ie date in 1940O. Although part of these advance orders in

some Eastern broiler-producing States may be cancelled as a result of the

recent decline in prices of young chickens in that area, for the country as

a whole the late hatch is likely to be much larger than in 1940. The in-

crease in the number of chickens raised on farms in 1941 over 1' 40 probably

will be 10 percent or more.

Total eg; production appears to be about the same now as a year ago.

Slightly fewer layers are on farr.s but the average rate of lay per hen on

May 1 indicates that the output per layer is the highest on record. Current

human consumption of shell eggs, however, may be a little less than a year

earlier because the quantities of eg-;s now being used for liquid and dried

egg production and for hatching are larger than a year ago. Purchases by

the Department of Agriculture in recent weeks have been much larger than they

were a year earlier.

Total egg production during coming months is expected to be at least

as large as a year earlier, and mqy be a little larger. Prices received

by' f.mers for eggs during the remainder of 1941, however, are expected to

continue above those of a year earlier because of the larger consumer incomes

and price-supporting policies of the Government. Wholesale egg prices now

are about 5 cents higher than a year ago.




MIAY 191 1


Supplies of poultry meat appear to be a little smaller now than at

this time last year. Storage stocks are a little larger than a year ago

but fira r.arkctings appear to have been smaller. Supplies of poultry moat

in the last hilf of this ;-i'.r will be increased as a result of the larger

number of chickens to be raised this year than last. Because of the con-

tinued cumansion in consumer incomes, however, chicken prices a.rc expected

to aver--. higher than a year e.rlicr during the remainder of 1941. The

aveagce price received by farmers for chickens in mid-April vws 15.7 cents

per pound compared i"ith 12.9 cents in April 1940.

-- MWIy 20, 1941

D SIUAT IOI:

According to present indications production of feed gr.ins in 1941
may again to lIare relative to the number of livestock to be fed. Progress
in seeding and *-?rly growth of s-all grain crops have been better than aver-
age in practically ;-11 are.s. So frr this season excessive rinf-.ll in the
Wcstrn nart of the Corn Bclt has d.ldayed corn planting somewhat, whereas
in the E-stcrn Corn Belt rainfall has been deficient.

The po-ssibility that new lgcislotion night increase the lo-n rato on
corn and ".7hc.t -appars to have b,-e.n the prim-ary factor increasing the prices
of these products. Sales of corn by the Commodity Credit Corporation have
increased in recent weeks with a-dv.ncing corn prices. Prices of oats and
barley advanced in o-,ly May after declining during the last half of April.

The cost of poultry ration, based on wholesale prices at Chicago, now
is a foe cents loss than a yo-r a.-go. Egg prices, however, are about 5 cents
higher, -nd about 2 dozen fewer eZ-s arc required now to buy 100 pounds of
poultry r-.tion.at that market thnn et this time last year. The feed-egg ratio
is expected to continue much rnor fr.vor,.ble than year o-rlier for the next
several months.

Feed-egg ratio 'at Chicago

(Dozens of eggs required to buy 100 pounds of poultry ration)

: Jeok ending as of 1941
Year : Jan.: Mar. : Apr. : May :July :Oct.
: 25 : 29 : 12 : 19 : 26 : 3 : 10 : 17 : 24 : 31 : 26 : 25.
:Doz. Doz. Doz. Doz. Doz. Doz. Doz. Doz. Doz. Doz. Doz. Doz.
Aver-.To :
1930-39 5.7i' 6.60 6.77 6.71 .71 6.70 6.70 5.79 6.97 7.11 6.59 4.73

1939 : .65 6.35 6.55 6.69 6.65 6.S4 6.99 7.14 7.21 7.45 5.76 5.13
1940 : 5.3S 7.59 7.1 3.28 3.21 8.05 .-11 7-79 7.92 7.82 -7.61 5.95
194l : 7.16 5.57 6.05 6.14 5.07 6.08 6.19


- 4-








HATCHI1IGS

Higher qe prices are increasing
the demand for baby chicks

Higher egg prices since early April and Governnent encoura-ement
of larger flocks appear to have increased considerably the denind for baby
chicks. These demands have come both from owners of laying flocks who want
more replacement and expansion stock and from broiler raisers. Prelinin.ry
indications noint to about a a-percent larger output of baby chicks by
commercial hatcheries in April this year than in April 1940. The increase
over last ,"ea.r's rate of output a-nears to have been more than 2 percent,
however, because many hatches generally come off on Mondays and April had
only 4 Mondays this year whereas in 1940 it had 5.

On .May 1 about 65 percent more chicks were booked for later delivery
than on the same d.te in 1940. Recent declines in prices of young chickens
in Eastern States nay result, in some cancellations of advanced orders. Never-
theless, with continued higher eCg Frices, it is expected that the late hatch
will be much larger this year than last. This probably will show up particu-
larly in the May and June figures. The number of chickens raised on farms
in 1941 prob-bly will be at least 10 percent larger than the number raised
in 1940.

EGG SITUATION

May 1 rate of lay highest on record

The monthly output of cjss per lyeor in the first 4 months of this
year averaged 8 percent higher than a year earlier and was the highest on
record for the period. In April the 2 percent higher over-.;;o rate of lay
about offset the 3 percent fct7,.ar l..ycrs on farns. Total egg production for
the month was only about 1 percent less than in April 1940 but the output
for the first 4 months of this year was 5 percent larger than ycar earlier.

A continued favor-ible food-cgg ratio would be conducive to better
feeding and care an.d also would restrict the rate at which the number of
layers declines from now until the low point in August. Thus total egg pro-
duction during coming months probably will be at lc.est as la.rgc as a yc".r
earlier and may be a little larg-er.

Receints of CgEs -.t four ma-rkets smaller
thnn a yc.r e".rlier despite lr.rgcr -roduction

Despite the 5 percent 1.-.r-r -.-roduction of eggs in the first 4 months
of this year compared to a yoe.r .'rlier, receipts of cggs a.t four Lmr'kcts
have boon a little smaller. This is not without precedent, however. In 1926
. production in the first 6 months was over 6 percent larger than in the first
6 months of 1925 but receipts -at four manrkts were a little s ,inllr. Prob-.ble
* reasons for this situation in 1941 ?re: (1) Quantities of efgs now being
used in important producing a.ro.-.s for liquid and dried egg production and for
hatching are larger than a year ago; (2) purchases by the Dlp.artmont of
Agriculture have been larger thn a year earlier; -nd (3) nonfan.rr egg pro-
duction may be a little smaller then in carly 1940, since the number and size


- 5 -


PES-53






MAY 19 41


of nonfarm flocks may be expected to decrease as industrial activity is
accelerated rand an increasing number of people obtain permanent employment.

Number of layers on farms, United States


: : : :
Year :Jan. 'Feb. Mar.' Apr.. May "June :July :Aug. :Sept.:
: Mil. Mil. Mil. Hil. I.:il. Hil. l.:il. Mil. I.:il.


Average:
1930-39: 332


325 315 301


301
316
327
318


292
306
318
308


Oct.,
1:il1.


Nov. Dec.
Mil. Mil.


284 267 253 246 256 27S 300


24g
260
270


236
246
252


234
242
247


269
279
279


293
305
303


314
326
320


Average number of e,;gs produced per layer, United States


Year .Jan. Feb. :Mar. :Apr. 7y June: July:Aug. :Sept.:
: ITo. No. No. No. Ho. 2To. No. No. No.


Oct.
ITo.


Average:
1930-39: 6.6 s.9 14.3 15.7 1.s8 14.2 12.7 11.2 8.9 5.9


1938 : 7.9 9.9 15.4
1939 :8.0 9.7 14.9
1940 : 7.2 9.0 14.4
1941 : 8.7 10.3 15.0


17.5
17.0
16.5
16.9


17.3
17.0
17.0


14.9
14.6
14.8


13.6
13.2
13.4


11.8
11.7
11.8


9.4
9.3
9.7


7.5
7.4
7.9


Nov.:
No.


Dec.
No.


5.0 5.2

5.9 6.4
6.0 6.8
6.2 6.8


Total farm production of eggs, United States

Year Jan. "Feb. )Mar. .Apr. May "June .July 'Aug. 'Sert.* Oct. Nov. ,Dec.
: csil. c:il. clil. il. :.cil. !il. Mil. Mil. Ucil. Mil.. cil. Mil.
:cases cases cases cases cases cases cases cases cases cases cases cases


Average:
1930-39: 5.0 8.0 12.5 13.9 13.2 10.5 8.9 7.6 6.4 5.2 4.1


1938
19395
194o
1941


6.7
7.2
6.7
7.9


S.3
8.5
8.2
9.1


12.5
12.6
12.7
12.8


13.5
13.8
14.o
13.9


12.7
13.0
13.7


10.3
10.6
11.1


8.9
9.1
9.4


7.6
7.8
8.1


6.4
6.5
7.0


4.8
5.1
5.2


4.7

5.5
6.1
6.0


Net into-storage movement for frozen eggs
is continuing larger than a year earlier


The net into-storage movement for frozen eggs slowed up somewhat
in early April, but in the middle of the month it accelerated considerably.
In early Hay the into-storage movement was the largest since 1937 the year
of largest August I holdings of frozen eggs on record. Storage stocks of


1938
1939
1940
1941


- 6








frozen eggs in the Inited States increased the equivalent of 1,Q034 cases
in April this year compared with 1,007 cases in April 1940. Stocks of
frozen eggs on May 1 were 25 percent larger than a year earlier.

Weekly net into-storage movements for shell eggs since the into-
storage season began have averaged 15 percent smaller than a year earlier.
The margin unier the 10-year average weekly movements has been even more
pronounced. The net into-storage Liovement for privately owned shell eggs
during April was 31 percent smaller than in April 1940 and 36 percent small-
er than the 1930-39 average for April. United States stocks of privately
owned shell eggs on May 1 were 15 percent smaller than a ycar earlier. Hold-
ings of the Denartment of Agriculture on May 1 amounted to 215,000 cases.
Total United States stocks of shell eggs on that date were 9 -:,ercent smaller
then total stocks on May 1, 1940.

Liquid and dried egg production in 1940

The Agricultural Marketing Service recently estimated that about
218,311,000 rounds of liquid eggs were produced by commercial cgg-breaking
plants in 191'0. Ccmnarable figures for 1938 and 1939 respectively are 134
million pounds and 204 million pounds. The 1940 production wns di2sosed of
as follows: Frozen 37 percent, drying 7 percent, and immediate consumption
6 percent. Liquid egg production to date this year has been rruch larger than
a year earlier.

E,:gs: Storage stocks in the United States and storage
mov.cment at 26 markets


:United Ste.tes: Into-storage movement, week cndins as of 194l
Year : stocks : Apr. : MLy : Jurne
:Apr. l:May 1 : 26 : 3 : 10 : 17 : 24 : 31 : 7
:1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,0CO 1,000
Shell: :cases cases cases cases cases cases cases cases scs cases
Avorga :


1930-39


1939

1940

1941


Frozen:
Average
1930-39


492 495


: 1,105 3,357 412

: 796 3,316 44o
:!/ 0 iN
: 1,065 2,815 322


473 450 416 354


429 434 425 369 338

491 479 489 360 323

468 4r56


: 1,646 2,277


91 132
135 153
173 126


128 127 102
204 133 157


I/ Excludes Surplus Marketing Administration holdings as follows: April 1,
1940, 58,000 cases; May 1, 1940, 25,000 cases; April 1, 1941, 25,000 cases;
: and May 1, 1941, 215,000 cases.
t:..g Preliminary.


1939
1940
1941


1,728
1,263
1,812


2,539
2,270
2,846


PES-53


- 7 -


: 1,4oo 4,131




UAY q141


Total production of dried egg products i. 19q40 was about 7,487,000
pounds. This is second only to the record production of about 10 million
pounds in 1939. Small imports of dried eggs from China in recent years are
partially responsible for the larger domestic output. Because of the strong
demand and probable large export shipments of dried egas under the lend-lease
legislation, dried egg production in this country in 1941 very likely will be
the largest on record.

Eggs purchased by the Department
of Agriculture

The Department of Agriculture purchases eggs in two ways: indirectly
by redeeming blue stamps, and directly b- purchases from producers' associa-
tions or dealers. The quantity of eggs purchased monthly by participants in
the Food Stamp Plan has been published by the Surolus Marketing Administra-
tion. These data are given in the following table together with the quanti-
ties purchased directly.

Commodities purchased by participants in the Food Stamp Pla-. are moved
through regular trade channels, whereas commodities purchased directly are
distributed by State welfare agencies, to undernourished school children
through the cHhool Lunch Progran, to need.; families in areas where the Food
Stamp Plan is not operating, and to charitable institutions.

The quantity of eggs purchased directly in Arril was the largest to
date in 1941 but was considerably smaller than the purchases in May and June
1940. Eggs purchased by the Department now will be used to provide for (1)
export requirements under the lend-lease program, (2) direct distribution in
this country through State relief agencies to needy families and for free
school lunches, (3) release on the market in case of unwarranted speculative
price increases, and (4) filling requests from the Red Cross for any shipment
to war refugee areas.

Eggs: quantity purchased by Department of Agriculture, and blue stamp expendi-
tures for eggs as a percentage of blue stamp expenditures for all food,
January jo9n to April 194l
:Eggs as a percentage
SQuantity purchased :of total expenditures
: : for all foods purchased
: Direct *With blue stamps: with blue stamps
1940 1: ,000 cases 1,000 cases Percent
January ........: 26 25 15
February .......: 41 35 16
March ..........: 291 49 .14
April .......... : 197 63 15
May ............: 662 6g 15
June ...........: 870 69 14
July ...........: 16o 73 14
August ......... : 71 85 14
September ......: --- 84 15
October ........: --- 91 14
November ...... --- 88 13
December ....... : --- 99 13
lq41 '
-January ........: 4 120 13
February ....... : 173 133 12
March ..........: 73 157 12
April ..........: 387 A
mm~m e,, 1







PES-53


- 9 -


The number of participants in the Food Stamp Plan has increased as new
Stamp Plan areas have been added. This accounts for most of the increase in
the quantity of eggs purchased with blue stamps. The percentage of blue
stamps used to purchase eggs has declined in recent months, largely because
the number of commodities on the surplus list has been increased.

Egg prices about steady from mid-April to mid-May

The average price received by farmers for eggs in mid-Anril, 19.7 cents,
was 3.3 cents higher than in mid-March and the highest April rice since 1937.
Usually the average price received by farmers for eggs is about the same in a
mid-April as in nid-March. Important factors affecting egg prices this year w
are (1) a stronger consumer demand in this country, (2) purchases by the Gov-
ernment for domestic relief and for eroort under provisions of the lend-lease
program, (3) a stronger demand for eggs from hatcheries, and (4) large opera-
tions in the egg-breaking and eeg-drying industries. These factors, partic-
ularly the first two, will continue to be in-ortant influences in the situar
tion. As a result prices received by farmers for eggs during the remainder of
the year are rxnectud to be well above those of a year earlier.

Price per dozen received by farmers for eggs, United States

: Jan.: Fe'-.: Mar.: Apr.: May : June: July: Aug.:Sept.: Oct.: Nov.: Dec.
r : 15 15 : 15 : 15 j 15 : 15 : 15 : 15 : 15 : 15 15 15
:Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents
Average:
1930-39: 22.8 18.8 1S.1 16.0 15.9 15.7 17.0 1.7 21.9 24.7 2S.2 26.3

1938 : 21.6 16.4 16.2 15.0 17.6 18.2 19.9 21.0 24.9 27.1 29.0 27.9
1939 : 18.5 16.7 16.o 15.5 15.2 14.q 16.5 17.5 20.6 22.9 25.8 20.5
1940 : 18.3 20.2 l5.4 15.0 15.1 14.4 16.4 17.2 21.0 23.7 26.2 26.8
1941 : 19.7 16.g 16.4 19.7


POULTRY SITUATION

Current consumption of poultry meat
probably is less than a year ago

Receipts of dressed poultry at principal markets in April were about
the same as in April 1940. Farm marketing of live poultry at central western
primary markets, however, are continuing smaller than a year earlier. These
smaller farm marketing probably are largely the result of the much improved
egg prices. Higher egg prices tend to restrict the number of fowls removed
from laying flocks. The number of layers per farm flock declined less than
seasonally, and less than a year earlier, from March 1 to May 1 this year.
The prospective higher egg prices for the next several months, compared to a
year earlier, will tend to restrict further the rate at which farm laying
flocks are culled. However, it is expected that total farm marketing of
chickens (including fowl) during the last half of 1941 will be much larger
than a year earlier because of the larger number of chickens being raised on
farms this year than last.









THE POULTRY SITUATION AT A GLANCE


JAN.
A. M. S. DATA


RECEIPTS OF POULTRY
AT FOUR MARKETS



_ 940


APR. JULY OCT. JAN. APR. JULY OCT.
A FIRST OF THE MONTH INCLUDES BROILERS, FRYBR8 AND ROASTERS
1 PRELIMINARY DATA FOR 1941 ARE PRELIMINARY


U. L. DEPARTMENT OF AGRICULTURE


1IB0. 39177 BUREAU OF AGRICULTURAL ECONOMICS


FIGURE 2


POUNDS
i MILLIONS 1
60




40




20






PES-53


- 11 -


Receipts of dressed poultry at four markets

___(New York, Chicago, Philadelnhin, Boston)
: Week ending as of 19i _
Year Mar. : Apr. : May : July : Sept.
: 29 : 19 : 2 3: j 10 : 17 24 1F 31 : 2b : 27
:1,000 1,00'0 1,000 1,OC0 1,000 1, 000 1,000 1,00 0 1,000 1,000
:pounds pounds pounds pounds pounds pounds pounds pounds pounds pounds pounds pounds
Average:
1930-39: 3,608 3,496 3,793 4,234 4,259 4,386 4,501 4,615 4,8s 0 6,627

1939 : 3,868 3,759 3,640 4,6gg 5,672 5,6oo00 5,749 5,668 6,948 7,530
19q4 : 4,395 4,169 4,623 4,g44 5,184 5,417 6,671 5,522 6,079 8,403
1941 : 4,620 4,294 4,348 5,039 6,556


Storage holdings of poultry are nearing
the seasonal low for the year

Storage holdings of poultry this year declined a little more than usual
during April but slightly less than in April 1940. Total stocks of poultry in
the United States on May 1 were 17 percent larger than on May 1, 1940 and
about 65 percent larger than the 10-year average holdings for that date.
Stocks of fowls on May 1 were 45 percent larger than a year earlier, stocks of
roasters were 81 percent larger, and stocks of fryers were 90 percent larger.
Stocks of broilers were slightly smaller than on May 1, 1940 while stocks of
turkeys were 17 percent smaller.

Net withdrawals of frozen poultry during May usually are no more than
half as large as in Anril and during the summer months there usually is little
net change in total holdings, as the in-movement about offsets the out-
movement. By September, however, storage stocks again begin to accumulate
rapidly, and total holdings reach a neak early in the following January.

Poultry: Storage stocks in the United States and storage
movement at 26 markets

United States : Out-of-storage movement, week ending as of 1941
Year : stocks : Anr. : May : June
: Apr. 1 : May 1 : 26 : 3 : 10 : 17 : 24 : 31 : 7
: 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
: poundss pounds pounds pounds pounds pounds pounds pounds pounds
Average:
1930-39: 83,518 61,170 3,583 2,833 2,238 1,922 1,963 1,222 795

1939 : 90,987 70,568 3,887 3,204 1,731 863 234 1/327 1/669
1940 : 115,442 86,226 6,143 4,722 2,940 2,054 326 272 1/356
1941 : 126,904 2/101,000 4,659 4,386 3,372

1/ Into-storage movement.
2/ Preliminary.







MAY Ic,41


Chicken prices expected to continue
higher than in 1940

The average rice received by farmers for chickens in mid-April was
about 1.3 cents higher than in mid-March and 2.S cents higher than in April
1940. This year's mid-April price was the highest for the month since 1938.
Wholesale prices for live chickens and fowls at Chicago held about steady from
mid-April to mid-May. In recent weeks these prices have been 3 to 5 cents
higher than a year earlier. They have also continued well above the 15-cent
level which the Government announced it would support. Prices of live young
chickens in eastern markets declined several cents in recent weeks, reflect-
ing the continued heavy output of broilers along the Atlantic Seaboard.

For the remainder of 194l prices received by farmers for chickens are
expected to be above those of a year earlier. Changes in demand conditions
frequently offset the effect on prices of the seasonal changes in supplies of
poultry meat. Hence, the effect of seasonal factors on chicken prices is not
readily apparent.

Price per pound received by farmers for chickens,
United States

Year Jan.: Feb.: Mar.: Apr.: May : Junec: July: Aug.:Sent.: Oct.: Nov.: Dec.
ear 15 : 15 : 15 : 15 : 15 : 15 15 1 15 : 15 15 15 15
:Cents Cents Cents Cents Cents Cents Conts Cents Cents Cents Cents Cents
Average:
1930-39; 1.0o 14.2 14.4 15.0 14.7 14.4 14.1 14.o 14.53 1.7 13-3 12.9

1938 : 16.7 16.0 15.9 16.2 16.1 15-7 15.0 l4.2 14.3 13.6 13.6 13.6
1939 : 14.0 14.2 14.3 14.4 13.9 13.4 13.7 13.0 13.6 12.7 12.4 11.7
1940 : 12.0 12.2 12.8 12.9 1.6 13.3 I 4.6 13.4 13.7 13.3 13.1 13.0
1941 : 13.7 14.0 14.4 15.7


DOMESTIC DEMAND

The demand for farm products continues to respond to the improvement
in general economic conditions and consumer purchasing Dower which has ac-
companied progress of the defense program. Industrial production, recovering
quickly from the temporary relapse brought on by industrial strikes in April,
may rach a r.-w high level this month. The gradual improvement in employment,
pay roil_-. nd consumer demand for farm products should continue through the
last half of the .,-ear.

Part of the recent general rise in wholesale prices is attributable to
present a'Ld nosible future Government price-supporting measures for farm
prod:rt:-, b. t 'rie controls exercised over a number of industrial basic com-
moci i-: '.: ;.! a. tco.irency to hold the general advance in check. Prospec-
tive ,.:'...-. *.:.i,,1; nd demand relationships are favorable to a continua-
tion '.. I c-.r'nT of the general level of prices. The amount of in-
cre,-. '.. -..~- "u.3 to depend in considerable measure upon the extent and
chor:.At.-r of .* -: r!iei.t controls, which thus far undoubtedly have been a major
factor in prevc.ti_.ng a much greater rise in prices of industrial commodities
than has actually occurred.


- 12 -






PES-53


- 13 -


Index numbers of nonagricultural income

(124-2E = 10C, adjusted for seasonal variation)
Year Jan.: Feb.: "ar.: Apr.: May Jvne" July: Aug.:Sept.: Oct.: ITov.: Dec.
Average:
'93,-39: 83.4 83.1 63.4 82.9 82.4 83.6 82.7 62.5 82.1 82.3 82.3 S2.7

1939 : 90.6 9C.9 91.3 90.0 9C.8 92.1 91.8 93.3 93.3 95.0 95.9 97.1
1940 : 96.9 96.2 95.9 95.3 96.4 97.4 97.8 99.1 99.9 100.3 101.7 104.1
1941 :104.7 105.6 1/06.2

T Prel iminary.

A MOVING SEASONAL ADJUSTIEF1T FOR EGC- PRICES

Prices received b-, farmers for eggs vary a great deal from month to
month largely because of the pronounced seasonal variation in egg production.
Hence, comparisons between prices for different months are more useful if the
differences due only to the usual seasonal influences are removed. In effect,
adjustments for such differences consist of lowering the prices that are
normally higher than the average for the year and raising the prices which
are normally lover than the average for the year. Thus changes in a season-
ally adjusted series of prices reflect changes in factors other than the
usual seasonal occurrences. Such influences include short-time changes in
supply or demand not seasonal in character, abnormal changes in weather, and
other factors. The adjustments for seasonal variation are made by dividing
the actual price for a given month by the adjustment-factor for that month.

Heretofore, index numbers of seasonal variation in egg prices as well
as for most ether farm product prices have been based or a specified period
of years. For egws the seasonal adjustment used in the Departreut of Agri-
culture in recent years has been based on the period 192S'-38. Such a pro-
cedure is satisfactory in those instances where the seasonal pattern has
remained fairly stable. For egg prices, horevor, a gradual but distinct
change in the seasonal pattern has occurred, primarily as a result of a rela-
tive increase in egg production in the winter months. The normal range in
prices between the peak month and the low month has been reduced, and the
annual peak in egg prices now comes earlier than forrerly. This peak usually
has occurred in November during the past decade or so, -hereas it formerly
came in December. In order to allow for these gradual changes, a flexible
adjustment instead of a constant index of seasonal variation based on any
one group of years is desirable. A series of changing seasonal indexes is
presented in the accompanying table.

Method of computation

For the present study a 12-month moving average, centered, was com-
puted for the mid-month farm prices, Januery 1910 to date. The actual prices
then vere expressed as percentages of the moving average values for correspond-
ing months. These ratios or percentages wmre plotted as time series on graph
paper one chart for each month and freehand curves were fitted to then.







MAY 1941 14 -

First a.wproxirntions to t!.e indexes for each year vere determined by reading
the monthly values frcr. the freehand curves for tihe entire period. These
first approximations w;er adjusted slightly for practically all years in
order that ti.e 12 monthly values would average 100. In making such adjist-
ments, e.s rach as possible of the original rnoothress in the curves was re-
tained. The adjusted readings from the charts are those presented in the
accompanying table.

Two disadvantages of the moving seasonal may be noted. Both arise
indirectly from the flexible nature of part of the procedure. The first of
these has to do with the r.echanics of construction. Assuming that the mnv-
itg; average is the best available trend from which to measure the deriva-
tions, it ma: be argued that the human element is too in-ortant in determin-
ing the freehand curves from which tih indexes are obtained. The correct-
ness of these lines cannot be proved by statistical tests. However, on
the basis of a oriori considerations, these curves appear to be logical.
The a priori considerations consist largely of amowledge of the changes in
the poultry industry and factors affecting it which have occurred since 1910.
As an additional aid in determining the freehand curves, especially for the
first few years after 1910, ratios to moving average of prices of Fresh
Firsts at Few York City, 1873 to date, were used.

1. second disadvantage of a moving g seasonal based on freehand trends
is that it is difficult for other aralysts to reproduce or extend the series
of indexes. Also, the trend may change in. direction or in degree of slope
and the new trend conrnot be definitely: determined for several years. Thus
it is sometimes necessary to revise the indexes for a few recent years.
With respect to the revisions required, however, a moving seasonal is superior
to an index of seasonal variation besed on any one group of years. when
the base is changed fir the latter type of ir.de:', the entire series is af-
fected and must be revised. Uhen a moving seasonal is used, however, it is
seldom necessary to revise the indexes for nore than 5 years.

A moving seasonal for egg prices also is superior to several stable
ones based on successive 5- or 10-year periods. The relation of monthly
egg prices to annual averages has clanged gradually but considerably since
1910. Changes for at least some months have occurred continuously. Thus,
if adjustments are made b" an index of seasonal variation based on 10-year
periods, incorrect results are likely to be obtained at either end of the
periods, indexes based on successive E-year periods are subject to the
same objections as the 10-year periods. In addition, an average based on
only 5 years is relatively unstable. i.n unusual occurrence tends to throw
off a 5-year average considerably, because each observation used in the aver-
age is given a wei-ht of one-fifth compared to only one-tenth in a 10-year
average.

The most important advantage of the moving seasonal is that it offers
a convenient and logical means of adjusting for gradual changes in the
seasonal pattern such as that which has occurred in egg prices. These changes
can be adjusted for currently. In most cases seasonal adjustments for a
few years in the future can be determined with a fair degree of accuracy.
The present series of adjustments will be maintained in the Bureau of







FES -53


- 15 -


Agricultural Economics and additions and revisions villa be published periodi-
cally in the Fo'iltry and Egg Situation.

The changes in tho seasonal pattern of egg prices since 191r, are
indicated by the data in the accompanying table. Changes between selected
years are sho,-n g-raphically in the chart on the cover page of this report.

Testing a seasonal cor section

A rough measure of the effectiveness of a seasonal adjustment is the
extent to which the original variation is reduced. In making seasonal adjust-
ments, however, only those variations due to the usual seasonal occurrences
should be removed. The three series of prices shoi.m in figure 3 are (1) the
actual prices received by farmers for eggs, (2) the 12-month moving average,
centered, of those prices and, (3) the actual prices as adjusted by the
moving seasonal. For the series as a whole the variation in the original
prices has been reduced considerably. The fluctuations of the adjusted
prices around the moving average are due to short-time movements of factors
other then the usual seasonal ones. These may be due to temporary changes
in supply or in demand, both of which may or may not have been caused by
abnormal weather.

Uses of seasonally adjusted prices

Indexes of seasonal variation are used by the Department of Agricul-
ture to calculate some parity prices. The Dopartrent also uses the seasonal
adjustment in connection with its egg price-supporting and egg-purchase
programs.


R. C. KRIESEL














EGGS: ACTUAL AND SEASONALLY ADJUSTED PRICES
RECEIVED BY FARMERS. UNITED STATES. 1910-41


CENTS
PER
DOZEN


U I DEPARTMENT OF AGRICULTURE


NEG. 39171 BUREAU OF AGRICULTURAL ECONOMICS


FIGURE 3


1910 1912 1914 1916 1918 1920 1922 1924






PES -53


- 17 -


Index numbers of seasonal variation of egg prices, 1910-41


Year Jan.. Feb.: ?:ar.: Apr.. May : June: July: Aug..Sept.: Oct.: Hov.: Dec.


1910 : 131 109 82 75 75 75
1911 131 1l S Cl 75 75 75
1912 : 131 1C9 61 74 74 75
1913 : 151 108 81 74 74 75
1914 : 131 107 81 74 74 75
1915 : 131 106 81 74 74 75
1916 : 131 105 81 74 74 75
1917 : 130 105 80 73 74 75
1918 : 130 1C4 80 73 74 75
1919 : 130 104 80 73 74 75

1920 : 129 103 80 72 74 75
1921 : 128 102 80 72 74 75
1922 : 127 101 80 72 74 75
1923 : 126 101 79 72 74 75
1924 : 125 101 79 73 74 75
1925 : 124 100 79 73 74 75
1926 :123 99 79 73 74 75
1927 :122 98 79 73 74 75
1928 :120 98 79 74 74 75
1929 :119 97 60 74 74 76

1930 : 118 96 80 75 74 76
1931 : 116 C6 80 75 75 76
1932 : 114 95 SC 76 75. 76
1933 : 112 94 80 76 76 77
1934 :111 93 80 77 76 77
1935 : 109 93 8C 78 77 77
1936 106 52 81 78 77 77
1937 :104 91 1 79 78 78
1938 1: 2 91 81 s0 79 78
1939 : 100 90 81 80 79 79

1940 : 98 89 82 81 80 79
1941 : 96 88 82 82 81 79


78 84 95 110 138 148
78 84 96 110 138 148
78 84 96 111 139 14
78 84 97 111 139 148
78 85 97 111 139 148
78 85 97 111 140 148
78 85 97 112 140 148
78 86 98 113 140 148
78 86 99 113 140 148
78 86 99 113 140 148

79 86 99 114 141 148
79 80 100 115 141 148
79 87 100 116 141 148
79 87 101 117 142 147
79 88 101 117 142 146
79 88 102 118 142 146
8. 88 102 119 142 146
81 89 103 120 142 144
01 0. 104 120 142 143
81 90 104 121 142 142

82 90 105 121 142 141
82 90 106 122 142 140
83 91 107 122 142 139
83 92 108 123 142 137
64 92 108 124 142 136
84 93 10 124 142 134
85 94 110 125 142 133
86 5 111 125 141 131
87 8.5 111 126 141 129
CC 96 112 126 141 128

89 96 113 126 141 126
90 97 113 127 141 124







MAY 1941


- 18 -


INDEX OF SPECIAL SUBJECTS DISCUSSED IN THE
POULTRY AJD EGG SITUATION


A changing seasonal adjustment for egg prices .se

Outlook for turkeys in 1941 .....................

Downward trend in costs of egg production .......

United States foreign trade in poultry products
in 1940 ................ ............. .......

Estimated storage :.arpin on shell eggs per dozen,
averages 1916-35 ax.d 1925-34, annual 1935-40 ..

Eggs, per dozen: Estimated storage margin, 1516-37

Geographic location of storage stocks of eggs ...

Geographic location of storage stocks of poultry

Factors affecting the average price received by
farmers for turkeys in the United States ......

Poultry and egg outlook for 1941 ................

Chick Hatchery Survey, 1937-38 ................

A comparison of four feed-egg ratios ...........

Feed-egg ratio defined ......................


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UNIVERSITY OF FLORIDA
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Issue

.y 1941

arch 1941

arch 1941


ebruary 1941


february 1941

february 1, 1958

cember 1940


November


1940


October 1940.

September 1940

August 1940

m y 1, 1940

December 4, 1939