The Demand and price situation


Material Information

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


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


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

Record Information

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

Related Items

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

This item is only available as the following downloads:

Full Text





iS E J .....'.
U S. ... IT.


Published monthly by


Approved by the Outlook and Situation abard-Spril 20, 1959
Prices received and net incomes realized by farmers this
year are likely to be somewhat under 1958, when they rose to the
highest levels in 5 years. Farm cash receipts are likely to be
maintained at the 1958 level by a heavy volume of marketing.
But with farm cost rates at record highs and Soil Bank payments
to farmers this year substantially reduced by termination of the
Acreage Reserve program, realized net income may decline about
1 billion dollars from the 13.1 billions realized in 1958,but remain
over a billion above the 1957 level. Part of the prospective decline
in income from farming will likely be offset by increased farm
family income from nonfarm sources as industrial wage rates and
job opportunities for farm people continue to improve.
Heavy supplies continue to dominate the agricultural outlook,
even though consumer markets for food and other products of our
farms are strong. Moreover, foreign takings of U. S. farm prod-
ucts in the second half of this year will likely exceed those of the
last half of 1958, reflecting an improving economic situation
abroad, larger financial reserves, and continued large U. S.
Government export programs.
(Continued on page 3)

________________^ --- --

April 1959
APR. 24, P.M.


Unit or : 1958 1959
Item : base : : : *
Seriod Year Mar. Dec. :a. Feb. .Mar.
________________________________________* ^ W J ~ iV f '_S | ___________ S

Industrial production: Seasonally adj.
All manufactures
Durable goods
Nondurable goods

Total outlays, seasonally adjusted 2/
Public construction
Private residential
Housing starts

Manufacturers' sales and inventories: 2/
Total sales, seasonally adjusted
Durable goods
Unfilled orders-sales ratio 6/
Inventory-sales ratio
Durable goods

employment and wages: /7
Total civilian employment
Workweek in manufacturing
Hourly earnings in manufacturing

Income and spending:
Personal income payments 2/ /
Consumer credit outstanding /

Total retail sales, seasonally adj. 2/
Durable goods
Inventory-sales ratio Y

Wholesale prices, all commodities
Commodities other than farm and food
Farm products
Foods processed

Consumer price index, all items /

Prices received by farmers 8
Livestock and products
Prices paid, interest, taxes and wage
rates /
Family living items
Production items
Parity ratio 8,/

Farm income and marketing: 8
Volume of farm marketing
Cash receipts from farm marketing


1.947-49-00 :

Mil. dol.
Mil. dol.
Mil. dol.

Mil. dol.
Mil. dol.


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

Mil. dol.
Mil. dol.

1947-49=00 :

1947-49=100 :








119 120 119
126 126 127
95 100 91
111 111 109

124 123 124
120 121 119

250 256 244
224 232 213
272 277 269

1910-14=100 : 293
do. : 287
do. : 264
: 85

1947-49=100 :
Mil. dol. :



Annual data for most of these items for the years 1929 and 1939-58 appear
issue of The Demand and Price Situation.















139 127 104
3,034 2,862 2,242
on page 35 of the April














1/ Federal Reserve Board. 2/ U. S. Department of Commerce. V/ Seasonally adjusted annual rates.
S. Department of Labor, Bureau of Labor Statistics. J/ Unfilled orders for durables divided by
monthly deliveries. 6/ Inventories, book value, end of month, divided by sales. V/ Bureau of the Census.
8/ U. S. Department of Agriculture, Agricultural Marketing Service.


APRIL 1959















APRIL 1959




Approved by the Outlook and Situation Board, April 20, 1959



Agricultural Outlook and
Situation .................... 1
General Business Conditions .... 6
Farm Prices .................... 15
Foreign Demand ................. 17
Livestock and Meat ............. 22
Dairy Products ................. 23
Poultry and Eggs ............... 24
Oilseed, Fats and Oils ........ 24
Feed ............... ... .... 26

Wheat ....................... 27
Rice ........................... 27
Fruit ......................... 28
Commercial Vegetables ......... 29
Potatoes and Sweetpotatoes .... 31
Dry Beans and Peas ........... 31
Cotton ....................... 32
Wool ......................... .. 33
Tobacco ...................... 33

continued from cover page -

Growing conditions so far this year have not developed as favorably as
last year, when they were unusually good. But even if yields per acre do not
reach the record levels of 1958, agricultural production could well be large
enough to add further to burdensome surpluses of some commodities. Farmers
intended early in March to plant some 2 percent more acres in crops than last
year. Much of the increase would be in corn, cotton, and wheat, of which
plantings were reduced last year under the Acreage Reserve program. Carryover
stocks of wheat and corn will be at new highs at the end of the current season.
The cotton carryover will be large, though well below recent years. The bulk
of these stocks will be held by CCC under the price support program. CCC in-
vestment in inventories and price support operations totaled 9.1 billion dollars
at the end of February compared with 7.3 billions a year earlier.

Marketings of livestock and of livestock products are increasing. Cattle
marketing may rise only slightly as farmers continue to build up breeding
stock and cattle herds. But hog marketing have risen substantially, reflecting
the large increase in the pig crop last fall. A substantial increase is in
view for the spring crop. Broiler and egg output so far this year has been
well above a year earlier. Output of milk, though presently slightly below a
year ago, is expected to show a small increase for the year.

The sustained recovery in the economy over the past year increased the
flow of disposable income to consumers to a new high. In the first quarter
of 1959, it was about 4 percent larger than in the same period a year earlier.


- 3 -

Page :

APRIL 1959

Demand for food has strengthened and sales at retail food stores were 3 per-
cent above a year earlier. Retail food prices averaged slightly lower in the
first quarter of 1959 than in 1958, though the marketing spread between the
farmer and the consumer has apparently widened.

Over the past year, the main expansionary forces in the economy have
been rising expenditures by Federal, State and local Governments; a shift
from heavy liquidation of business inventories to some accumulation recently,
partly reflecting the possibility of a work stoppage in steel later this year;
a sharp rise in residential construction activity; a rising level of consumer
expenditures generated by increasing employment, a longer workweek and higher
wage rates. Purchases of automobiles which were sharply reduced last year are
running substantially higher this year.

Further increases in consumer incomes and in the demand for food during
the rest of the year appear assured. Federal Government outlays may well level
off, but expenditures by State and local Governments for highways, schools and
other public facilities will continue to increase. Outlays for residential
construction may level off but the most recent survey on business investment
plans conducted by the Securities and Exchange Commission and the U. S.
Department of Commerce indicates that the decline in business outlays for new
plant and equipment has been halted and that some rise is in prospect this
year. Corporate profits apparently have increased substantially in the first
quarter of this year. Further, inventory-sales ratios are generally low,
indicating continued purchases for restocking of business inventories. Thus,
further increases in employment as well as the trend toward higher wage rates
should generate additional increases in consumer expenditures.

The value of U. S. exports of agricultural commodities during the fiscal
year which ends next June 30, is now estimated at 3.7 billion dollars, down
some 7 percent from 1957-58. The decline is due to a substantial reduction in
exports of cotton from the 5.7 million bales of 1957-58. Exports of wheat,
rice, feed grains and soybeans have increased this season. Prospects are
bright for a larger volume of exports in the July-December 1959 period than in
the same period of last year. Cotton exports particularly, should show a
substantial increase, reflecting an improving textile situation abroad as well
as increased availability of U. S. cotton at competitive prices abroad.

Prices received by farmers as of mid-March, averaged almost 5 percent
under a year earlier. Prices of wheat were down about 10 percent, reflecting
the lower price support for the 1958 crop. Otherwise, the major price declines--
potatoes (68 percent), hogs (24 percent), broilers (20 percent), and eggs
(17 percent)--reflected increased supplies. Prices received for beef cattle
were up 7 percent from March 1958, because of smaller slaughter and a strong
demand for replacement cattle.

Average prices to farmers are likely to decline later in the year as
1959 crops come to market and hog marketing from the larger spring pig crop
increase. Price support levels for oil-bearing crops, some feed crops, and

- 4 -


cotton have been reduced somewhat from those in effect for 1958 crops. For
wheat, the 1959 crop support is essentially the same as for the 1958 crop.
For corn, the price support will be higher than the support level available to
those farmers who did not comply with corn acreage allotments in 1958 and who
produced a major part of the corn crop. Dairy support prices for 1959-60 are
the same as those in effect the past year.

On the other hand, prices paid by farmers for production items, interest,
taxes and wage rates in mid-March. were 3 percent above a year earlier and a
record high. Prices of fertilizer and seeds are running slightly under 1958
but prices paid for farm machinery and motor vehicles are higher. Interest
charges and taxes per acre show increases of 8 and 6 percent respectively.
Farm wage rates on April 1 averaged 9 percent above a year earlier. Prices
paid by farmers for feeder livestock in mid-March were about 5 percent above
a year ago, while feed purchased by farmers was slightly higher.

Living costs have held steady over the past year for farm families as
well as for urban consumers. Lower food prices have offset increases in
other categories.

Cash receipts from farm marketing in the first quarter of 1959 were
slightly larger than in the same period of 1958, as an increased volume of
marketing offset somewhat lower prices. Thus, despite a substantial increase
in production expenses, the seasonally adjusted annual rate of realized net
income in the first quarter of 1959 was about the same as in the first
quarter of 1958, though somewhat lower than the average for the year.

For 1959 as a whole, cash receipts may be as large as in 1958 with
increased marketing continuing to offset lower prices. Receipts from wheat
may be down appreciably, because of the prospect that the 1959 winter wheat
crop will be about 200 million bushels smaller than in 1958. With a sub-
stantial increase in cotton acreage, receipts from cotton could be up
considerably. Receipts from hogs will likely be down because of lower prices,
but receipts from cattle and from dairy products will likely increase some.

Production expenses this year will be up again, as in 18 of the past
20 years. The increase this year reflects increased quantities being pur-
chased as well as higher prices. Expenses for feed and for livestock pur-
chased by farmers are rising as a result of expanding livestock operations.
Farm wage costs are also higher. Moreover, overhead costs, including interest,
taxes and depreciation charges, are larger this year than last.

The end of the Acreage Reserve will result in a substantial reduction
in total Soil Bank payments to farmers this year, despite a large expansion of
the Conservation Reserve. Last year, farmers received over 800 million
dollars from this source.

Commodity Highlights

The demand for replacement cattle is expected to remain high through the
spring, and prices will continue strong.

- 5 -


APRIL 1959

APRIL 1959

Farmers are expected to sell a record quantity of dairy products in 1959,
with cash receipts approximating the 1957 record level of 4.6 billion dollars.

Hatchings of 1959 replacement chicks through the end of March were
3 percent above a year earlier, despite sharply lower egg prices.

Prices of edible oils and lard during May-September probably will con-
tinue below the same period of 1958 because the supply is substantially greater
than potential domestic and export market outlets.

As of April 1, the 1959 winter wheat crop was forecast at 966 million
bushels, 18 percent below the 1,180 million bushels crop of last year.

Carryover of rice on August 1, 1959 is expected to be about 16.8 million
cwt., in-=erms of rough rice, substantially below the 18.1 million cwt. carry-
over of a-year ago and the 34.6 million cwt. held on August 1, 1956.

Citrus fruit prices this spring and summer probably will be somewhat
lower than the unusually high level of a year ago, but they are likely to be
higher than those of the several preceding years.

Marketings of fresh vegetables are expected to be about the same during
the next 4 to 6 weeks as those of last year, but prices of most items will
probably average lower.

Domestic mill consumption of cotton will probably continue above a year
earlier through the remainder of 1959. February consumption was the highest
since October 1956; mill and trade inventories are low and unfilled orders
are rising.

Wool incentive payment rates on the 1958 marketing are expected to be
the highest since the beginning of the program on the 1954 clip because of the
low price received by growers this season.


Gross national output in the first quarter of 1959 had risen 38 billion
dollars from the recession low of 427 billion dollars a year earlier. Federal
and State and local Government spending and residential construction increased
sharply during 1958 and early 1959. In addition, businessmen reduced their
rate of inventory liquidation in 1958 and by the first quarter of 1959 were
increasing their stocks at an annual rate of 4.0 billion dollars. With rising
incomes, consumers continued to expand their purchases of goods and services
by 14 billion dollars between the first quarter of 1958 and 1959.


- 6 -

APRIL 1959

Table 1.--Gross national product, 1958 and 1959
(Billion dollars, seasonally adjusted annual rates)

: 1958 : 1959
Item I II III IV Total :I I/

Gross national product..............: 427.1 430.4 439.8 453.0 437.7 465.0
Personal consumption expenditures.: 286.2 288.3 291.5 295.9 290.6 300.0
Durable goods...................: 36.3 35.6 36.1 38.9 36.8 40.0
Nondurable goods................: 139.8 141.4 142.9 143.3 142.0 145.3
Services.........................: 110.1 111.3 112.5 113.6 111.8 114.7

Gross private domestic investment: 50.9 50.7 54.5 61.6 54.4 68.5
New construction................: 36.3 34.9 36.3 38.6 36.5 40.0
Residential...................: 17.1 16.2 17.9 20.1 17.8 21.7
Other........................: 19.2 18.7 18.4 18.5 18.7 18.3
Producers' durable equipment....: 22.9 22.3 22.3 23.0 22.6 24.5
Change in business inventories..: -8.2 -6.5 -4.2 .0 -4.7 4.0

Net exports of goods and services.: 1.7 1.7 1.7 .4 1.5 -.5

Government expenditures for goods :
and services....................: 88.3 89.7 92.0 95.2 91.2 97.0
Federal (excluding sales)......: 49.7 50.7 52.2 54.2 51.7 54.7
National defense ............: 43.7 44.1 44.5 45.3 44.4 46.0
State and local................: 38.6 39.1 39.9 41.0 39.6 42.3

Disposable income..................: 306.1 309.0 315.1 315.8 311.6 321.0

I/ Preliminary estimatesby Council of Economic Advisers.
Department of Commerce.

Consumer Income and Spending

Personal income reached 366 billion dollars, seasonally adjusted annual
rates, in the first quarter of 1959, up 17 billion dollars or 5 percent from
a year earlier, the low of the 1957-58 recession. Wages and salaries rose as
output picked up, accounting for about 14 billion dollars of the gain. Social
security, unemployment benefits and other Government payments and business and
professional income each were up about 1.8 billion dollars.

Consumer incomes after taxes declined from $1,799 per person in the
third quarter of 1957 to $1,769 in the first quarter of 1958 but by the first
quarter of 1959 rose to $1,823. However, "real" per person consumer income
adjusted for changes in consumer prices, in the first quarter of 1959 was still
about 1 percent below the pre-recession high.


- 7 -

APRIL 1959

Consumers increased their purchases of goods and services from 286 bil-
lion dollars in the first quarter of 1958 to 300 billion dollars in the first
quarter this year. Because of an increase in prices, most of which occurred
in the first half of 1958, the volume of goods and services purchased increased
less than consumer expenditures.

Durables Recovered
Sharply in Late 1958

Sales of durable goods declined sharply in early 1958, and did not recover
until late in 1958 after the introduction of the new 1959 model automobiles.

Table 2.--Changes in

installment credit outstanding, by type
figures seasonally adjusted)

: : : : 1958 : 1959
Type 1955 : 1957 : 1958 : : I: : I

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

Total installment
credit ..............: 5,390 2,268 -230 -292 -350 74 486 720

Automobile paper ....: 3,663 950 -1,278 -409 -556 -422 109 358

Other consumer goods
paper .............: 883 182 315 22 63 144 130 167

Repair and
modernization loans: 73 196 54 5 4 23 32 30

Personal loans ......: 771 940 679 144 139 181 215 165

I/ January-February.
Federal Reserve Board.

By the first quarter of 1959 durable sales reached 40 billion dollars, up about
4 billion from a year earlier. Retail sales of the automobile group in January-
March were up 15 percent above a year ago. Modest gains were recorded during
the last half of 1958 in furniture and household equipment sales, but in Jan-
uary-March they were 3 percent above a year ago.

Nondurables and Services
Continue to Advance

Purchases of both nondurable goods and services generally continued to
advance during the recent recession, and in the first quarter of 1959 were
4 percent above a year earlier. Retail sales of food stores in January-

- 8 -


DPS-52 9 APRIL 1959

March were about 3 percent above a year earlier. Urban retail food prices in
the first quarter of 1959 averaged nearly 1 percent below a year earlier, and
about 3 percent below the 1958 high last July. Clothing and shoe purchases
also picked up in the last half of 1958, and retail sales of apparel in the
first quarter of 1959 were about 9 percent above a year earlier.

Installment Credit

Consumer credit at the end of February totaled 44.1 billion dollars, up
1.1 billion dollars from a year ago. This was about half the increase between
early 1957 and 1958. Consumer installment credit outstanding, seasonally ad-
justed, declined in the first three quarters of 1958 but increased in the final
quarter. A sharp rise in sales of new automobiles following introduction of
the 1959 models was the major factor responsible for the rise in installment
credit since late 1958. In the first quarter of 1959 consumer installment
credit was increasing, while a year earlier it was declining sharply.

Consumer Prices
Steady in Early 1959

Consumer prices, both urban and rural were around 1 percent higher in
early 1959 than the same period in 1958. The decline in food prices in the
last half of 1958 and early 1959 more than offset increases in other groups.
In the first two months of 1959, urban consumer nonfood prices were up about
1 percent from mid-1958 and 11- percent from a year ago. Medical care, re-
creation, transportation and housing costs were higher while apparel prices
were about the same as in the comparable period a year earlier. For rural
consumers, the cost of auto and auto supplies, household operations, and
clothing were higher while household furnishings were unchanged.

Government Demand

Government purchases of goods and service rose during 1958 and in the
first quarter of 1959 were at an annual rate of 9 billion dollars above a year
earlier. Purchases by the Federal Government at an annual rate of 55 billion
dollars, were around 5 billion dollars above a year earlier. Increasing ex-
penditures for national defence, larger CCC investment in price support opera-
tions, and higher wage and salary payments were principally responsible. Based
upon recommendations in the President's 1959-60 Budget, purchases of goods and
services are not likely to change much from the current levels for the rest
of 1959.

Purchases by State and local Governments rose to about 42 billion in
the first quarter of 1959, about 4 billion dollars above the first quarter of
1958. Wage and salary pa:,.ments and higher outlays for construction, particu-
larly for schools and highways, accounted for almost all the rise. Recent
trends in State and local Government spending are likely to continue during
the remainder of this year.

APRIL 1959

Private Investment
Private investment expenditures declined from an annual rate of 67 bil-
lion dollars in the second quarter of 1957 to 51 billion dollars a year later,
due to sharp reductions in capital spending and a rapid rate of inventory li-
quidation. By the first quarter of 1959 investment outlays were a little above
the 1957 peak, as businessmen reduced their rate of inventory liquidation in
the last half of 1958 and began to accumulate stocks in early 1959. In addi-
tion, the recovery in private investment outlays was stimulated by a rapid rise
in residential construction and a moderate increase in capital spending begin-
ning in late 1958.
Capital Spending
to Rise Moderately
Outlays for plant and equipment during 1959 are expected to total about
4 percent above the 1958 level of 30.5 billion dollars. The annual survey of
business intentions taken between late January and early March by the Depart-
ment of Commerce and Securities and Exchange Commission reports that most of the
expansion is scheduled in durable and non-durable manufacturing, the airlines,
and gas utilities. Spending by the other major industry groups is not expected
to differ significantly from 1958. The survey data indicate thaG planned in-
vestment outlays will rise to an annual rate of about 32 billion dollars in the
second quarter of 1959. The later McGraw-Hill survey indicates that capital
spending in 1959 may be somewhat higher than that reported by the Department
of Commerce and Securities and Exchange Commission.

The pickup in investment outlays is primarily related to the more fa-
vorable sales and profit expectations. For the airlines, however, much of the
planned rise in expenditure of more than 20 percent has been stimulated by or-
ders for new jet aircraft. Planned investment vill be directed mainly toward
meeting the needs for modernization, with most of the increase for new equip-
Inventories Rise
in Early 1959

Businessmen reduced their investment in inventories in late 1957 and
early 1958 as the demand for new plant and equipment and for consumers' durable
goods slowed and then turned down. By the first quarter of 1958, liquidation
reached an annual rate of 8 billion dollars. Inventory liquidation slowed with
the economic recovery that began in the second quarter of 1958 and by the end
cf the year had ceased. In the first quarter of 1959, businessmen accumulated
inventories at an annual rate of 4.0 billion dollars.
Manufacturing stocks at the end of February totaled 49.8 billion dollars,
seasonally adjusted, still 2.6 billion dollars below a year ago but 600 million
dollars above the end of December 1958.

The durable goods industries accounted for most of the rise in manufac-
turing stocks, particularly the primary and fabricated metals groups. Steel
users have apparently built up inventories in anticipation of a strike around


- 10 -

APRIL 1959

mid-year. Inventory accumulation in the food and chemical industries stimu-
lated the moderate increase in the nondurable goods group. At retail, inven-
tories at the end of February totaled 24.2 billion dollars, up 500 million
dollars from the fourth quarter of 1958 and down 100 million dollars from a
year ago. Most of the increase was in durable goods, particularly new domestic
automobiles in dealers' hands which were close to 825,000 on March 31, compared
with about 395,000 at the end of October. Little change has occurred in stocks
of nondurable goods in recent months. At the end of February, they were about
the same as a year earlier.

With manufacturing and retail sales running well above a year ago, stock-
sales ratios have declined sharply from the highs in the first quarter of 1958.
Those in manufacturing in early 1959 were back to the levels of 1955-57.
Stock-sales ratios at retail declined during 1958 and in early 1959 were below
early 1957 and early 1956. With some further rise in sales anticipated, further
investment in inventories is likely during the remainder of 1959.

Table 3.--Business sales and inventories, first quarter 1958
to first quarter 1959, seasonally adjusted

S1958 : 1959
Item Unit First Second : Third Fourth : Frter
: : quarter
S: quarter quarter quarter quarter : q

Sales 2/ : Bil. dol. : 25.6 25.3 26.5 27.6 28.3
Inventories: Bil. dol. : 52.4 50.9 49.5 49.3 49.6
ratio : Ratio : 2.05 2.01 1.87 1.79 1.75

Sales 2/ : Bil. dol. : 10.5 10.8 11.2 11.6 11.9
Inventories: Bil. dol. : 12.5 12.1 12.1 12.1 11.9
ratio : Ratio : 1.19 1.12 1.08 1.04 1.00

Retail: :
Sales 2/ : Bil. dol. : 16.3 16.6 16.7 17.2 17.6
Inventories: Bil. dol. : 24.3 24.0 23.9 23.7 24.2
ratio : Ratio : 1.49 1.45 1.42 1.38 1.38

i/ 2 month average.
2/ Monthly average.

Department of Commerce.


- 11 -

APRIL 1959

New Private Construction
Outlays Trend Upward

Total expenditures for new construction continued upward through the
first quarter of 1959. Outlays in January-March 1959, totaled 13.6 billion
dollars, seasonally adjusted, 13 percent above the corresponding months of a
year earlier and 4 percent above the peak fourth quarter of 1958. Private
residential construction totaled 5.4 billion dollars, seasonally adjusted, in
the first 3 months of 1959, 27 percent above a year earlier, and slightly
above the final quarter of 1958.

Housing starts during the first quarter of 1959 were at an annual rate
of 1,353,000 units, down 34,000 from the fourth quarter average but 42 percent
above the first quarter of 1958. The 1958 Emergency Housing Act eased the
terms on FHA insured mortgages and VA loan guarantees and provided assistance
for the financing of selected types of home mortgages. The number of appli-
cations for FHA and VA insured mortgages rose rapidly during the second and
third quarters,after enactment of the housing legislation. They declined during
the final quarter, but increased during the first quarter of 1959.
According to estimates of the Federal Home Loan Bank Board prepared in
early 1959, the demand for all mortgage funds needed to support financing of
homes will be greater during this year than in any previous year. The amount
of mortgages recorded should reach a level in excess of 29 billion dollars. up
about a billion from the previous high in 1955 and 2- billion above last year.
A substantial part of this money will be provided from repayments on existing
homes. Consequently, the net increase in mortgage debt to be financed through
new funds should not be much greater than in 1958.

Industrial and commercial building continued to decline in January-
March 1959, when it was 4 percent below the last quarter of 1958 and 12 percent
below a year earlier. Public construction outlays continued to rise through
March 1959. The first quarter total of 4.3 billion dollars, seasonally
adjusted, was 18 percent above a year ago, reflecting large increases in
public highways, and smaller gains for other types of facilities.

Employment and Production

Civilian employment according to reports of the Bureau of Census in the
first quarter of 1959 averaged 63.1 million, about 1 million above a year
earlier. It was steady in January and February but rose about 250,0CO in
March. The Bureau of Labor Statistics reported that nonfarm employment,
seasonally adjusted, in the first quarter at 51.2 million was up about llC,(CO0
from the 1958 recession low, but 1,300,000 below the peak in August 195.
Manufacturing employment in the first quarter of 1959 averaged 15.9 million,up
200,000 from a year earlier but still about 1,0CO,000 below the prerecession
level. Nonmanufacturing employment averaged 30u,000 higher in the first quarter
of 1959 than a year ago. Government registered the largest gain with small
increases in trade, construction and mining. According to the Di-monthly
survey of employer hiring plans in 149 major labor market areas conducted by

- 12 -


- 13 -

APRIL 1959

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APRIL 1959

public employment offices, the usual spring pickup in jobs is expected through
mid-May. The increase in durable goods industries may be more than seasonal.
Unemployment in the first quarter of 1959 averaged 4.6 million compared with
5.0 million in the first quarter of 1958 as civilian employment rose about
twice as much as the labor force. Unemployment, seasonally adjusted, averaged
6 percent of the civilian labor force compared with 6.5 percent a year earlier
and 7- percent last August. With the increase in employment in March, unemploy-
ment declined to 4.4 million, and the seasonally adjusted rate dropped to 5.8
percent of the civilian labor force.

The average factory workweek picked up sharply during the last half of
1958 and was 40 hours in the first quarter of 1959, up about l hours from a
year earlier. Average hourly earnings in January-March were $2.20, up 3 cents
from October-December 1958 and 9 cents from a year earlier. Average weekly
earnings in the first quarter of 1959 were $88, 8 percent above a year earlier,
reflecting higher wage rates and increased hours.


Industrial production seasonally adjusted continued to advance in the
first quarter of 1959 and the index at 145 (1947-49=100) was up 15 percent from
the recession low and 12 percent above a year earlier. The index in March ex-
ceeded by 1 percent the pre-recession level in August 1957 and, by 17 percent,
the low in April 1958. Output of durable goods increased the most with large
gains in primary metals, fabricated metals and transportation equipment. Steel
production has increased rapidly in early 1959, in part reflecting an inventory
buildup and an anticipated steel strike at mid-year. In March 11.6 million
tons of steel were produced compared with 9.3 in January and 6.3 million a year
earlier. Automobile production also rose during the first quarter as sales rose
around a fourth above a year ago and inventories in dealers hands were increased
to meet needs for the seasonally heavy spring sales. The index of auto produc-
tion in March, at 142 was up 54 percent from a year ago. With rising sales of
furniture and other household equipment, the production index of household goods
in January-February at 148 was 18 percent above a year ago.

Nondurable output in the first quarter reached a new high of 139, up
11 percent from a year ago, reflecting a strong consumer demand for nondurable
goods as well as some increase in inventories to handle the present level of

Industrial Prices
Rising in Early 1959

Wholesale industrial prices have risen slowly in the last half of 1959
and in the first quarter averaged 127.8 above mid-1958 and 2 percent above a
year earlier. The increase in industrial prices has been concentrated in metal
products, machinery and related industries, lumber and wool products, fuel
particularly petroleum, hide and leather and rubber. Textile and apparel,
furniture and household durables, and chemical prices are down a little from a
year earlier.


APRIL 1959

Table 4.--Wholesale industrial prices, by quarters, 1958-59

:.ex (1947-49=100)
: 1958 :1959
Commodity : : V :

Industrial prices : 125.8 125.4 126.0 126.8 127.8
Machinery and motive products : 149.3 149.4 149.5 150.9 152.0
Metal working machinery : 178.3 178.0 178.0 177.8 1/178.6
Machinery and equipment : 154.9 155.1 155.2 155.9 1/156.8
Agricultural machinery : 138.7 138.7 139.2 142.1 1/144.4
Metal and metal products : 149.9 148.7 150.3 152.7 153.3
Steel mill products : 183.2 183.1 186.3 188.1 1/188.4
Construction materials :129.9 129.2 130.7 132.0 1/132.8
Lumber and wood products : 114.2 114.4 117.5 118.8 1/120.2
Nonmetallic minerals-structural : 136.1 135.5 135.7 136.8 137.5
Fuel, power, and lighting : 114.0 110.7 113.2 112.8 114.6
Refined petroleum products : 117.0 111.8 116.0 114.3 1/116.7
Rubber and rubber products : 144.8 144.2 144.8 146.3 146.3
Chemicals and allied products : 110.7 110.8 110.1 110.1 110.0
Hides, skins, and leather 99.6 100.0 100.3 102.4 106.0
Furniture and other household durables : 123.6 123.2 123.1 122.8 123.3
1/ Two months average.
United States Department of Labor, quarterly indexes computed by AMS.

Farm Prices

Farm product prices in the first quarter of 1959 averaged 1 percent
below a year earlier with prices of livestock and livestock products, and crops
down about the same amount. The Prices Received index has trended down since
last April when it reached 257 (1910-14=100), the highest in 5 years. Wheat,
hogs, milk, eggs and the oilseeds have contributed most to the easing. Higher
prices for feed grains, cotton, cattle and fruit were partially offsetting.

Table 5.--Agricultural prices, first quarter 1958 to first quarter
1959 (1910-14=100)

: 1958 : 1959
Item : First : Second: Third : Fourth: First

Prices received, all farm products 248 254 251 247 244
Crops 222 231 224 217 218
Livestock and products 270 273 274 271 266
Prices paid, interest, taxes and
wage rates 291 294 293 294 298
Family living :286 288 287 287 288
Production 261 265 265 264 268
Parity ratio : 85 86 85 84 82
Source: U. S. Department of Agriculture, AMS.


- 15 -

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- 16 -

APRIL 1959


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Prices paid by farmers, including interest, taxes and wage rates, were 22- per-
cent higher in the first 3 months of this year than a year earlier. Most of
the increase was among the production items, particularly feeder livestock.
The index of production items rose nearly 3 percent over the year; the feeder
livestock index was up 6 percent. The rise in the Prices Paid index with
the small decline in Prices Received combined to reduce the Parity Ratio
3i percent.

Supports on
1959 Crops

The support level announced for wheat is about the same as in 1958.
The $1.12 per bushel support level for all corn is below last year's $1.36
level for corn grown in the commercial area in compliance with acreage limita-
tions but above the $1.06 level for noncompliance corn. Most corn last year
was grown on noncompliance farms and, this, were eligible for the lower
support level. Tobacco supports have not yet been announced. If legislation
pending in Congress is enacted, 1959 tobacco supports would not be set higher
than the 1958 levels. Support rates for all but one of the "Nonbasics"--
butterfat, manufacturing milk, wool, and mohair--have been set at the same
rates as last year. The only exception in this group is honey, the minimum
support for which is down from 10 cents to 8 cents per pound. The 1959
support level for tung nuts will not be announced until next fall.


World Trade and
Financial Developments

Foreign industrial countries in general greatly strengthened their
balance of payments and improved their liquidity positions in 1958. In many
underdeveloped countries, however, continued internal inflationary pressures
and lower prices received for many primary products resulted in balance of
payments difficulties.

The total value of foreign gold and dollar assets on December 31, 1958
was 35.4 billion dollars, 4.2 billion dollars above a year earlier (table 7).
About 3.3 billion dollars of this rise resulted from an increase in assets
acquired through transactions with the U. S. The remainder was obtained
from purchases of newly mined gold, from dealings with the Soviet Bloc and
from other sources. The stock of gold held by the U. S. was reduced by
approximately 2.3 billion dollars. However, the stock still totals over
20 billion dollars, more than half of the free world's supply. Foreign
holdings of U. S. Government bonds and notes totaled 1,478 million dollars,
slightly above the level of a year ago.

- 17 -

APRIL 1959


DFS-52 18 APRIL 1959

Table 7.--Estimated foreign gold and short-term dollar holdings and foreign
holdings of U.S. Government bonds and notes,December 1957 and 1950

Area and country 1/

S 1957


Gold and dollars
Industrial countries
United Kingdom







Continental Western Europe Total
France 2/
Other Western Europe

Other sterling area

Latin American Republics 3/
Mexico 3/

All other countries 4/

Total foreign countries 5/

International institutions

Grand total

Foreign holdings of long-term
U.S. Government obligations

S14,755 17,607 2,852
1,182 1,522 340
946 1,134 188
4,099 4,394 295
1,531 2,208 677
1,044 1,497 453
2,685 2,778 93
3,268 4,074 806

1,023 1,057 34

4,368 3/4,009 -359
371 366 -5
566 564 -2
1,554 1,213 -341

2,000 1,873 -127

S28 ,577 I32562 3,985

: 2,697



: 31,274 35,438 T-61

: 1,442


1/ Includes dependencies.
2/ Excludes gold holdings of French Exchange Stabilization Fund.
3/ Includes latest report figure (Oct. 31, 1958) for gold reserves.
5/ Not separately mentioned or included in regional totals.
/5 Excludes gold reserves of the USSR and Eastern Europe.

Federal Reserve Bulletin March 1959, P.331.





~_~ ~~~ ~_~__

-- I-

APRIL 1959

The transfer of gold and dollars abroad began several years ago, but it
was reversed during and immediately after the Suez situation when foreign
purchases of U.S. goods increased sharply. However, last year U.S. exports
declined substantially and imports remained virtually the same. Consequently,
the U.S. payments surplus on goods and services dropped from 5.1 billion dol-
lars in 1957 to 1.7 billion dollars in 1958 (table 8). Although this is a
3.4 billion dollar drop from 1957, it is slightly more than the average for
1955 and 1956. The net outflow of private U.S. capital, totaling 2.9 billion
dollars, declined about 10 percent as a result of smaller direct investments
in foreign countries and a reduction in new credit extended to foreigners by
U.S. commercial banks. In addition, the U.S. Government paid 2.6 billion dol-
lars to foreigners in 1958 in economic grants and loans, the same as in 1957.

Table 8.--Selected Items of the United States balance of
calendar 1957 and 1958


Year ending December 31
Item. Change
1957 : 1958 ~ :
Billion Billion Billion
: dollars dollars dollars

Goods and services
Exports 2/ 26.5 23.1 -3.4
Imports / 21.4 21.4_---
Balance 5.1 1.7 -3.4

New outflow of U. S. capital and
Government grants
Private capital 3.2 2.9 0.3
Government loans / 1.0 1.0 --
Government grants 5/ 1.6 1.6 ---

Foreign capital and unrecorded
inflows / 1.2 0.4 -0.8

Net transfer of gold and dollars
to foreigners -0.6 3.3 3.9

1] Preliminary. 2/ Excludes military transfers under grants. / Includes
military expenditures abroad, pensions, and net remittances. 4/ Includes
other short term claims. 5/ Excludes military grants. 6/ Includes direct and
other long-term portfolio investments (other than U. S. Government securities),
and unrecorded receipts appearing in balance of payments as "errors and

Federal Reserve Bulletin, March 1959, p. 246.


- 19 -


- 20 -

APRIL 1959

Most of the decline in U. S. exports in 1958 resulted from smaller ship-
ments of automobiles, wheat and a few industrial materials, such as iron and
steel-mill products, petroleum, coal and cotton. Foreign demand for these com-
modities weakened with the 1957-58 cyclical downswing in economic activity and
a better wheat harvest. Exports in 1957 were high because of a strong foreign
demand resulting from the Suez crisis and its aftermath, a high level of in-
dustrial activity abroad, and the poor European wheat crop.
The foreign trade of the U. S. will probably increase during the re-
mainder of 1959. A rising level of economic activity in the U. S. indicates
continued high imports into this country. Exports seem likely to increase from
current levels in the latter part of 1959 because of the high level of inter-
national reserves and economic recovery abroad. However, the U.S. will con-
tinue to face greater competition in world markets. Industrial plants and
equipment in Europe and Japan have been restored and modernized, and are now
able not only to supply domestic demands but to produce more for the export
U.S. Trade in Agricultural
Commodities in 1958

U.S. agricultural exports in 1958 totaled 3,856 million dollars, 14 per-
cent below the previous calendar year value of 4,505 million dollars. The
value of cotton, wheat and wheat flour shipments dropped substantially, though
exports of feed grains set a new record. Among the 10 best foreign markets
for U.S. agricultural commodities, only Spain showed a significant increase
from 1957 (table 9). Exports to Cuba and Canada remained virtually the same
in 1958 as in the previous year; but shipments to the other 7 countries de-
clined. Exports to these markets constituted well over half of the total value
of U. S. agricultural exports in both 1957 and 1958.

Table 9.--United States agricultural exports, by country of destination,
calendar 1957 and 1958

Country 1957 1958 Change
:Million pounds Million pounds Percent

United Kingdom 501 409 -18
Japan 454 361 -20
Canada 354 344 -3
West Germany 411 286 -30
Netherland 238 206 -13
India :253 176 -30
Cuba 147 146 -1
Spain 98 145 48
Italy :214 142 -34
Korea 123 112 -9
Other 1,714 1,529 -11

Total: 4,505 3,856 -14
Foreign Agricultural Service.

APRIL 1959

Imports of agricultural commodities had approximately the same value,
3.9 billion dollars, in 1958 as in 1957. A rise was registered in deliveries
of meat and animal products, sugar, cocoa, tobacco, and nuts and preparations;
while imports of coffee, wool, crude rubber, and vegetable fats and oils de-
Agricultural Export Outlook
The value of agricultural exports for the fiscal year ending June 30,
1959 is expected to total about 3.7 billion dollars, approximately 7 percent
below the 4.0 billion dollars exported in the previous year. The decline re-
flects a sharp drop in the volume of cotton exports. Exports of agricultural
commodities other than cotton in fiscal 1958-59 probably will be about 4 per-
cent greater than a year earlier.
Agricultural exports in the second half of 1959 are likely to be sub-
stantially above the estimated 1.7 billion dollars shipped during the first
6 months because of a rise in cotton and rice exports and continued high level
exports of feed grains and fats and oils. However, prices of some commodities
will decline so that the increase in the quantity of exports will be greater
than the increase in value.
A major part of agricultural exports will continue to be farm products
shipped under Government programs. U.S. commitments, estimated at about
700 million dollars, market value, under Title I, Barter and Mutual Security
will be carried into fiscal 1959-60. In addition, a substantial portion of
Title I funds remains to be committed under the current authority of 2.25 bil-
lion dollars, CCC cost. The President also has recommended extension of
Title I one year beyond the present expiration date of December 31, 1959, with
an increase in authority of 1.5 billion dollars. Furthermore, it is antici-
pated that Mutual Security funds will be used to finance the sale of agricul-
tural products in fiscal 1959-60. The legislative requirement for the two
previous years was 175 million dollars.
Wheat and wheat flour exports during fiscal 1958-59 will probably total
450 million bushels compared with 402 million bushels in the previous year.
Much of the increase is resulting from larger shipments of wheat to India
under P.L. 480. In addition, the 1958 wheat crop in Europe was somewhat small-
erthan that of the record 1957 crop and the milling quality was poor. Rice ex-
ports are likely to be almost a fourth larger in 1958-59 than the 12 million
hundredweight (milled basis) shipped in 1957-58 because of an anticipated
increase in shipments under barter, the payment-in-kind program, and other
CCC sales for export. Foreign demand for feed grains is being stimulated by
smaller crops abroad and increases in foreign livestock and poultry numbers.
The total for the fiscal year ending June 30, 1959 will exceed the 9.2 million
short tons of the previous fiscal year by over 20 percent. Smaller exports
of corn and oats will be more than offset by larger shipments of barley and
grain sorghums.
Exports of fats and oils in fiscal 1958-59 will be approximately the
same as the 4 billion pounds o-il equivalent) shipped a year earlier. Ship-
ments of flaxseed and linseed oil are expected to be below those of fiscal
1957-58, but exports of soybeans, soybean oil and cottonseed oil probably will

- 21 -


APRIL 1959

rise to new record levels. The increases are resulting from larger sales un-
der P.L. 480, a general upward trend in the consumption of fats and oils, and
greater use in livestock feed. Tobacco exports also are likely to approximate
the 473 million pounds shipped in 1957-58. Although U. S. tobacco is meeting
stronger competition because of larger foreign crops of our principal export
variety, flue-cured, improved economic conditions and increased cigarette con-
sumption abroad are maintaining the level of exports.
Foreign demand for U. S. cotton continues to be weak as a result of re-
sult of sizable disparities between the price of U. S. and foreign cotton, in-
creased exportable supplies in foreign countries and reduced textile mill con-
sumption abroad. Exports in fiscal 1958-59 may total only 3 million bales,
almost 50 percent below the 5.7 million bales shipped in the preceding year.
However, cotton exports are expected to rise substantially during the last
5 months of 1959, with the end of the textile recession abroad and somewhat
smaller supplies in the hands of competing exporters. Furthermore, U. S. cot-
ton will be kept competitively priced on the world market after August 1, 1959.

Exports of fresh apples in 1958-59 are likely to be about 50 percent
below the unusually large 249 million pounds shipped in 1957-58, and exports
of citrus fruit will probably be about 15 percent below the 936 million pounds
of a year ago because of increases in foreign production. Exports of dry
edible beans and peas, however, will increase as a result of shorter foreign
crops. Smaller donations of dairy products abroad are reducing the flow of
shipments. Exports of hides and skins are being curtailed by a relatively
short domestic supply and fewer exports under the Mutual Security Program.
During the next few months, marketing of fed cattle will be large, but
sales of hogs and lambs will decline seasonally. Fed cattle prices are ex-
pected to hold relatively steady. Cow and stocker and feeder prices are prob-
ably near a seasonal high but will hold up well this spring due to a strong
demand for replacement cattle. Hog prices will rise seasonally but will con-
tinue well below a year earlier.
Cattle slaughter in January-March this year was about 9 percent smaller
than a year before. Slaughter of fed cattle was heavy but that for both cows
and calves was nearly one-fourth lower than last year. At mid-April prices for
Choice slaughter steers were equal to April 1958 but cow prices were up $1 to
$2 and calf prices $3 to $4 per 100 pounds.
Cattle feeders in 13 leading States reported 8 percent more cattle on
feed April 1 than last April and stated intentions to market 8 percent more in
April-June than a year earlier. Because slaughter of all other classes will
remain small, the larger supply of fed cattle may cause no more than an oc-
casional drop in price. The demand for replacement stock is expected to
continue strong this spring and prices will hold up well at least during this

- 22 -


- 23 -

Hog slaughter, though declining seasonally until around mid-summer,
will continue significantly above year-earlier levels. Slaughter so far this
year has been up about in line with the 17 percent larger 1958 fall pig crop.
In recent weeks hog prices have been around $5 per 100 pounds below a year
earlier. This spring, prices will likely advance seasonally but will continue
substantially under last spring.
Sheep and lamb slaughter the next few months will be down from the first
quarter slaughter and near a year ago. The early lamb crop was about the same
as in 1958 but the number of old crop lambs available has been greatly reduced
by the heavy first quarter slaughter. So far this year, lamb prices have been
down from early 1958. However, the seasonal rise expected this spring proba-
bly will bring lamb prices up to or above a year earlier. They declined
somewhat in April and May of 1958.

Prices to farmers for milk and butterfat in 1959 will approximate those
of 1958, since price support continues at last year's levels, and supplies of
milk products will be large enough to hold prices at support most of the time.
Farmers probably will sell a record quantity of dairy products, with propor-
tionatity somewhat more used in class I outlets than in 1958. This will help
to raise cash receipts which for 1959 are likely to exceed 1958 and approxi-
mate the 1957 record of 4.6 billion dollars. However, cost of most production
items other than feed are likely to be higher than in 1958.

Milk production per cow has continued to set new records so far this
year, but the number of milk cows has continued under 1958. Output in the
first quarter of the year was 29.8 billion pounds compared with 29.9 billion
a year earlier. For 1959 as a whole, milk production probably will exceed
1958. Reasons for this expectation are stable dairy prices, continued abund-
ant supplies of feeds at slightly lower average prices than in 1958, lower
prices for hogs and a lower culling rate than last year when rising beef prices
stimulated very heavy culling. Tending to limit milk production, on the other
hand, will be rising costs for most items other than feed.

Farmers made a further substantial shift in method of disposing of
milk in 1958. The amount used on farms where produced again declined, so that
a larger proportion of production was sold. Whole milk represented 90 percent
of all milk products sold to plants and dealers, a record percentage, while
the proportion sold as farm separated cream dropped to a record low of 10
percent of such sales. The movement of more whole milk has increased com-
mercial market supplies of the solids-not-fat component of milk. Also, begin-
ning with 1956, butter made from whole milk has exceeded the amount made from
separated cream.

The increase in milk production is not likely to match the gain in
population. With higher employment this year, less dairy products may be
purchased for price support this marketing year than last. The quantity of


APRIL 1959

APRIL 1959

butter and cheese bought in the 12 months ended March 31, 1959, was equivalent
to 3.4 billion pounds of whole milk, compared with 6.8 billion in 1957-58.
Surplus purchases of nonfat dry milk, on the other hand, have been rising each
year and reached a record of 941 million pounds in 1958-59.


Prices for eggs and poultry continue lower than at the same time last
year. Wholesale egg prices fell 6 to 9 cents per dozen in the last;ialf of
March, and continued in early April at about the lowest levels of the year to
date. The April 1 rate of lay was 4 percent above the year before. Production
in late March and early April was at or near its season peak and Lenten and
Easter demands had passed. U. S. average farmers' price of eggs in mid-March,
before the end of the price slide, was 33.8 cents per dozen, 1.6 cents below
the month before, and 7.0 cents below the year before.

The price decline will probably influence farmers' purchases of replace-
ment chicks in the next few months. Hatchings in January-March were 3 percent
above a year earlier, and April 1 eggs in incubators were unchanged from last
year. Farmers' February intentions had been to buy 1 percent fewer replacement
chicks than last year. The laying flock is now 3 percent larger than a year
ago, and of generally younger age.

A high rate of production of broilers until early July is assured by the
heavy volume of recent hatchings and egg settings. For the 10 weeks ending
March 28, these averaged 14 percent above 1958 and almost equal to the 1958
peak, which occurred in June. Mid-March prices received by farmers averaged
17.3 cents per pound, compared with 21.5 cents in March 1958.

Hatchings of heavy bronze turkeys in March were below last year, but
the decline was more than offset by increases in heavy white and Beltsville
type turkeys. If total hatchings in the next few months hold at 1958 levels,
per capital supplies available for the last half of 1959 will be near the 1958
level of consumption, through reduced diversion of stocks to storage. Then
turkey prices at that season might remain little changed from 1958.


Supplies of food fats will be record large during the remainder of the
current marketing year which ends next September 30. Exports and domestic use
are expected to be at peak levels, but the supply is much greater than prob-
able market outlets, and a sharp increase in carryover on October 1 is likely.
Most of the increase will be in soybeans, though lard and vegetable oil stocks
may be somewhat larger. These prospects indicate that prices of edible oils and
lard during May-September 1959 will continue below the same months of 1958.


Exports of food fats (including oil equivalent of soybeans) in 1958-59
are expected to set a new record of around 3.1 billion pounds, compared with
2.6 billion pounds last year. Exports of cottonseed and soybean oils probably
will total around 1,500 million pounds compared with 1,050 million last year
and the record 1,230 million in 1956-57. Around 75-80 percent of the edible
oil shipments this year will move under the P. L. 480 program. About three-
fourths of this year's total edible oil exports is expected to be soybean oil.
The level of exports will be partly determined by the portion of the 1958-59
program oil that is shipped before October 1, 1959.

Soybean crushings in October-March 1958-59 are estimated at around
208 million bushels, roughly 33 million more than the first half of thp 1957-58
marketing year. Soybean exports (based in part on inspection data) from
October 1958 through April 10 are placed at 64 million bushels, about 8 million
above a year earlier. For the entire marketing year, crushings probably will
set a new record of about 400 million bushels compared with 354 million last
year. Exports for the year also are likely to set a new record of at least
90 million bushels or more. About 85 million bushels were shipped in each of
the two preceding seasons.

These estimates indicate a soybean carryover of around 75 million bush-
els on October 1, 1959, about 55 million above a year earlier and 13 percent
of the 1958 crop. It would represent about two months crush at current levels.
Virtually all of the carryover of old crop beans will be in the hands of CCC.
Commercial stocks of beans next fall probably will be small, as lower prices
expected for new crop beans will discourage holding more than a minimum. The
support rate for the 1959 crop beans will be $1.85 per bushel, 24 cents less
than 1958 support. If a large crop is produced, prices next fall will likely
reflect the lower support.

The price received by farmers for 1958 crop flaxseed has been stable
at near loan level of $2.78 per bushel since September 1958, varying between
$2.56-$2.60. This was nearly 40 cents below September-March 1957-58. The
1958 flaxseed crop was much larger than probable market outlets while the 1957
crop was short.

Farmers placed about 15 million bushels, or 38 percent, of 1958 crop
flaxseed under support. CCC acquired most of this on March 31, the maturity
date for loans and purchase agreements.

CCC recently announced a toll crushing program for the flaxseed acquired
from the 1958 crop to help relieve the tight grain storage situation in the
Northern Great Plains. Under the program, processors will submit competitive
bids offering CCC linseed oil. Processors will purchase CCC-owned flaxseed
at the support price applicable for the grade at point of delivery. Current
indications are that CCC probably will toll crush about 4 million bushels of
its flaxseed by July 1, the beginning of the 1959-60 marketing year.

- 25 -

APRIL 1959


.APRIL 1959


The total supply of feed grains for 1959-60, based on early Spring
prospects, is expected to at least equal, if not exceed, the record supply for
1958-59. Farmers will increase the total acreage planted to feed grains in
1959 by about 6 million acres, if they carry out their March 1 intentions.
Production on this prospective acreage with 1954-58 average yields would be
around 142 million tons. Feed grain yields, however, have trended upward in
recent years. If allowance is made for this trend, total production of around
150-155 million tons would be expected in 1959, with a normal growing season.
This would be only a little below the bumper production of 158 million tons in
1958, when yields of each of the four feed grains set new records. Carryover
of feed grains is expected to be up by about 15 million tons to a new high of
nearly 75 million tons, which would give another record feed concentrate
supply in 1959-60.

An increase of 9 million acres is in prospect for corn, the sharpest in
more than 20 years. Nearly all of this increase is in the important mid-
western producing States. The increase reflects, in part, the discontinuance
of acreage allotments and the Corn Acreage Reserve Program. Farmers also
apparently are shifting same land to corn from oats, soybeans, hay and
sorghums. The prospective acreage of oats for 1959 is 6 percent less than in
1958 and 18 percent below the 10-year average. The total acreage planted to
sorghums is expected to be 3 percent below last year while the acreage planned
for barley is 5 percent above. Acreages of both will be much larger than

Prices of feed grains and most of the byproduct feeds have strengthened
during the past month. The price of No. 3 Yellow corn at Chicago has risen
11 cents per bushel since January to an average of $1.28 per bushel for the
week ended April 10. Smaller increases occurred for other feed grains. last
year, prices of feed grains advanced rather sharply from January to April and
terminal market prices in mid-April this year were a little below those of a
year ago. Another favorable growing season for feed grains this year would be
expected to result in at least the usual seasonal decline in prices of oats,
barley and sorghum grain this summer. High-protein feed prices also have
declined since January and a number of these feeds averaged a little lower in
mid-April this year than a year ago.

Farmers placed much more oats under price support from the 1958 crop
than from the 1957 crop, but less barley and sorghum grain. Reductions for
barley and sorghum grain, in spite of the bigger crops, were due at least in
part to exports of grain from the "free" market supply under the payment-in-
kind program. A total of 302 million bushels of corn was placed under price
support through February, much more than in the same period last year. About
41 percent of this total was placed under support at the lower rate by non-
complying farmers. The total quantity of feed grains placed under price
support so far this year is 14 percent above a year earlier, indicating another
record quantity for the 1958-59 season.

- 26 -




The 1959 winter wheat crop was estimated at 966 million bushels as of
April 1. The first estimate of spring wheat will be made June 10, but if yields
equal the average of the last 3 years on intended acreage, the spring crop would
be 253 million bushels. This, together with the estimated winter crop, would
total around 1,219 million bushels. A crop of this size would be 17 percent
smaller than the 1,462 million bushel crop in 1958 but 13 percent above the
1948-57 average of 1,075 million.

A crop of 1,219 million bushels would be around 150 million bushels more
than probable total disappearance. This would leave a carryover July 1, 1960 of
about 1,435 million bushels compared with the estimated July 1, 1959 stocks of
about 1,285 million.

The 966 million bushel estimate for the winter wheat crop is 9 million
bushels above the December 1 forecast, 18 percent less than the record 1958 crop
of 1,180 million bushels but 19 percent above the 1948-57 average. Increases
since December 1 have been largely confined to the Central Great Plains. Such
increases more than offset reduced production prospects in the eastern Corn
Belt and the Southwest.

Cash wheat prices on April 13 generally were at or close to the high for
the season to date. Prices were below the support level, with No. 1 Soft White
at Portland, 2 cents below; No. 2 Hard Red Winter, ordinary protein, at Kansas
City, 8 cents below; No. 2 Soft Red Winter, at St. Louis, 10 cents below and
No. 1 Dark Northern Spring, at Minneapolis, 11 cents below. The price of
No. 2 Hard Red Winter, 13 percent protein, at Kansas City, however, was slightly
above the support. On April 20, Hard Red Winter prices at Kansas City were
about 3 cents lower and Soft Red prices at St. Louis 7 cents lower compared with
April 13. Prices at Minneapolis were about unchanged, while those at Portland
were up slightly. Prices received by farmers in mid-March averaged $1.76, the
highest for the season to date, compared with $1.74 a month earlier and $1.96
a year earlier.

Supplies for 1958-59 estimated at 2,352 million bushels (July 1, 1958
carryover of 881 million, production of 1.462 million and imports of 9 million),
domestic disappearance at almost 620 million and exports of about 450 million
bushels would leave a carryover of about 1,285 million bushels. Exports of
wheat, including flour, July-March totaled about 325 million bushels compared
with 290 million in the same period a year earlier.


The supply of rice for the year beginning August 1, 1958 totals about
65.3 million cwt. rough equivalent. This is 2.0 million cwt. above a year
earlier, but 19.2 million below the record of 19)6-57. Domestic disappearance
is expected to total about 26.5 million cwt., about the same as last year and
the 1953-57 average. Exports are now expected to total about 22 million cwt.,
which is less than expected earlier because of a delay in exports. Exports are

APRIL 1959

- 27 -


APRIL 19,9

again largely under Government financing. The carryover on August 1 is
expected to be about 16.b million cwt., down from the 18.1 million cwt. last
August and sharply below the 34.6 million cwt. on August 1, 1956. But it still
would be about 6-: times the average of 1945-54, before stocks began to

The acreage of rice seeded in 1959 may total 1,605,000 according to
March 1 planting intentions. This would be 11 percent above 1958 but 16 percent
below the 1948-57 average. If intended acreage is seeded and yields per acre
about equal the average of the past 3 years, the 1959 crop would be 51.05 mil-
lion cwt., 9 percent above the 47.03 million cwt. produced last year. Domestic
disappearance in 1959-60 is estimated at about 26.7 million cwt., slightly
higher than this year. Exports are likely to exceed 25 million cwt., which
would result in a further decrease in the carryover on August 1, 1960.


Demand for fresh and processed fruit by consumers, supported by rising
consumer income, is expected to continue at a high level this spring and summer.
Demand for citrus for processing, especially for oranges, remains strong this
spring. Reduced carryover stocks of canned deciduous fruits are expected to
contribute to strong processor demand for the 1959 deciduous crop. Remaining
supplies of citrus fruits are generally larger, those of canned and dried fruits
generally smaller, than at this time in 1958. Prices for citrus fruits this
spring and summer are expected to be somewhat under the unusually high level of
this period of 1958.

Citrus fruit trees and ripening fruit have escaped serious damage this
past winter, unlike 1957-58 when successive freezes, especially in Florida,
resulted in considerable loss. Deciduous fruit trees, vines and berries in
most areas also have come through the winter and early spring in better condi-
tion than last year, when unfavorable weather, particularly in California,
cut production of a number of fruits. On April 1, 1959, the condition of the
new peach crop in the Southern States was about as good as a year earlier and
much better than average, pointing to another large crop. In California pro-
gress of the new crops was better than a year earlier. The season was not yet
far enough advanced to give a clear indication of the size of crops, although
prospects as of April 1 were favorable for heavier supplies of early-season
fruits than last year.

The 1959 crop of strawberries in the early-spring States (Louisiana,
Alabama and Texas), now being harvested, is about 26 percent larger than the
1958 crop but 9 percent below the 1949-57 average. Early marketing from
California also are underway. These strawberries go mainly to fresh markets.
Acreage in the mid-spring and late-spring States, which grow most of the straw-
berries that are processed as well as most of those used fresh, is down somewhat
from 1958. Approximately half of the 1958 crop was processed, mostly by freez-
ing. Cold-storage stocks of frozen strawberries on April 1, 1959 were about
3 percent smaller than a year earlier.

- 28 -


APRIL 1959

Stocks of apples in cold storage on April 1, 1959 were considerably
larger than a year earlier. Much of the increase was in the central and eastern
States and included more apples in controlled atmosphere storage, which are
marketed mostly during spring. But about half of total stocks on April 1 was
in Washington, from which movement has been slow the past winter. At important
shipping points, prices for some red varieties of apples tended to advance dur-
ing late March and early April, while prices for other varieties tended to
hold steady or decline.

Auction prices for winter pears have continued below year-earlier levels,
despite lighter stocks.

Remaining supplies of oranges and grapefruit on April 1, 1959 were much
larger than a year earlier but about the same as 2 years earlier. Remaining
supplies of lemons were about the same as a year earlier. In Florida, both
fresh use and use for processing of oranges and fresh use of grapefruit have
lagged behind utilization a year earlier when use was speeded up to minimize
losses from the freezes. During March and early April, shipping-point prices
for Florida oranges held fairly steady in contrast to sharply rising prices a
year earlier. With remaining supplies heavier, prices are not expected to
make the sharp increases of last spring, hence probably will average somewhat
under year-earlier prices. Prices for Florida grapefruit declined during late
March and early April to levels much below a year earlier. Auction prices for
the increased supplies of California oranges also are expected to continue
somewhat below the relatively high prices of the spring and summer of 1958.

Output of Florida frozen orange concentrate to April 4 of the 1958-59
season totaled about 42 million gallons, slightly larger than a year earlier.
The season total probably will exceed 1957-58 production by a fifth. Even with
much higher early-season prices than in 1957-58, movement to April 4 of the
1958-59 season was 5 percent under corresponding disappearance in 1957-58.
Packers' stocks on April 4, 1959 were about 17 percent below a year earlier.
The Florida pack of canned single-strength tangerine juice, now completed, is
more than twice the light 1957-58 pack. But so far the packs of other canned
juices, especially orange, are considerably smaller. Packers' stocks of all
canned single-strength citrus juices combined, on April 4, 1959, were about
35 percent below a year earlier. This was due largely to the much lighter
pack of orange juice.


For Fresh Market

Supplies of vegetables for fresh market sale are likely to be about the
same during the next 4-6 weeks as a year earlier. Aggregate production of
18 spring crops for fresh market promises to be close to that of last year, and
slightly above the 1949-57 average. These crops typically make up about three-
fourths of total spring tonnage, excluding melons. Above normal temperatures
in the West advanced harvest of most vegetables one to three weeks. But below
normal temperatures and heavy rains in the Southeast delayed planting and
retarded crop development in that area.


- 29 -

APRTL 1959

Among the more important vegetables, smaller production than a year
earlier is in prospect for early spring onions, tomatoes, snap beans,
cucumbers, sweet corn, and for spring peppers. But larger tonnages are
expected for early spring broccoli, cabbage, cauliflower, and lettuce, and
for spring carrots, celery, and spinach. Production estimates are not availa-
ble for the late spring crops or for spring lima beans or cantaloups. However,
indicated acreage of late spring asparaCus is down 1 percent from 1958,
cabbage down 5 percent, and onions and watermelons down about a fifth. Acreage
of spring limL beans is expected to be down 15 percent from year, -nd
cantelon'is Rown 5 percent.

During the next few weeks supplies will increase seasonally and prices
will decline. During the next 4 to 6 weeks total marketing are expected to
be about the s?.re as those of 1958. However, prices of most items are likely
to aver-ige below the high levels of a year earlier.

Intentions reports indicate that growers plan slightly smaller acreage
of early summer cabb age and onions than in 1958, and materially less -ereage
of early and late summer watermelons. But indications are that late summer
acreage of onions will be up about 12 percent.

For Commercial Processing

Remaining supplies of canned vegetables are moderately larger than those
of 1958, and record high. Supplies of sweet corn are substantially smaller
than a year ago, and lima beans, and pumpkin and squash probably smaller. But
stocks of carrots, tomatoes, tomato juice and most tomato products are
materially larger than a year earlier, and holdings of snap beans, and green
peas slightly to moderately larger. Stocks of frozen vegetables, excluding
potatoes, on April 1 amounted to 542 million pounds, slightly less than last
year, but above average.

The prospect of ample to heavy carryover of most items at the end of the
current season is expected to result in processors planning for a smaller pack
this year than last. Production of winter and spring spinach for processing
was much larger than the small crop of 1958. Also, intentions reports
indicate that processors plan to plant or contract 12 percent more acreage of
sweet corn, 5 percent more snap beans, and 1 percent more lima beans. But
these acreage increases are a little more than offset by prospective decreases
of 14 percent for tomatoes, 9 percent for green peas, and 4 percent for
cabbage for kraut (contract acreage only). Should yields and abandonment on
the indicated acreages be near the average of recent years, aggregate tonnage
of those crops would be at least moderately smaller than last year. Pro-
duction of sweet corn would be materially larger than in 1958, and snap beans
slightly larger. But output of tomatoes, green peas, and contract cabbage for
kraut would be substantially smaller, and lima beans slightly smaller.


- 30 -

- 31 -


During the next few weeks, prices of fall crop potatoes are likely to
advance some from the low levels of mid-April. However, with fairly large
supplies in prospect during the next 4 to 6 weeks, overall prices are expected
to remain at relatively low levels. Indicated production of early spring
potatoes is substantially smaller than last year, and acreage of the important
late spring crop is down 17 percent. But weather has been more favorable,
particularly in California, and yields per acre are expected to be moderately
higher. Remaining supplies of fall crop potatoes are probably somewhat larger
than a year ago. Also, maturity of new crop potatoes is somewhat earlier than
in 1958.

Remaining supplies from the 1958 sweetpotato crop will move to market
during the next few weeks. However, shipments are expected to continue
materially above those of a year earlier, and prices substantially lower.
Intentions reports indicate that growers plan to plant about 1 percent more
acreage this year than last. Yields near the average of recent years on the
intended acreage would result in a production slightly to moderately less
than in 1958, and substantially below the 1949-57 average. Prices to growers
for a crop of this size probably would average moderately above those of the
current season.


Supplies of dry beans are somewhat larger than a year ago. However,
both domestic and export demand have been active so far this season and are
expected to continue high for the rest of the season. Prices this season,
although below a year earlier, have held up well considering the larger over-
all supplies, averaging above support levels. Should farmers plant close to
the intended acreage this year, a normal growing season probably would result
in a moderate surplus.

Dry peas are in tight supply. Strong export demand has taken a large
part of the small 1958 production. Prices to growers in mid-March averaged
$6.22 per hundredweight compared with a little less than $3.00 a year ago.
Prices are expected to continue at relatively high levels during the remaining
months of the season.

If farmers plant close to the intended acreage this year, 1954-58 aver-
age yields by States would result in a production of peas moderately above
anticipated domestic and normal export needs. Prices to growers probably
would average substantially below those of the current season.


KPRIL 1959

APRIL 1959


Disappearance of United States cotton during the 1958-59 marketing year
is now expected to total about 11.5 million bales, approximately 2.2 million
less than in the preceding season. Exports are not expected to exceed 3 mil-
lion bales, compared with 5.7 in 1957-58. Domestic mill consumption may reach
8& million bales, a half million bales above last season but slightly below
2 years ago. Cotton ginned from the 1958 crop, according to the Bureau of the
Census, totaled 11.4 million running bales, a half million bales above last
season but 1.8 below 1956. Carryover next August 1 is not expected to vary
substantially from the 8.7 million bales carried over a year earlier.

Domestic mill consumption from August 1 through February 28 totaled
4.9 million running bales, slightly above 1957. The daily rate of consumption
in February totaled nearly 35,000 bales, the highest since October 1956. With
mill margins at their highest in over 2 years, mill and trade inventories low
and unfilled orders rising, consumption is likely to continue above last year
during the rest of this marketing year and through the end of 1959. The pickup
in cotton consumption has been accompanied by increased consumption of other
fibers. As a result, it is expected that per capital consumption of all fibers
will increase in 1959 from the very low levels reached in 1958. In 1958 total
fiber consumption at 33.9 pounds per person and cotton consumption at 22.1
pounds were the lowest in 20 years.

Exports of cotton from August 1, 1958 through February 1959 totaled less
than 1.7 million bales, half as much as a year earlier. As of March 30, sales
of CCC stocks for export under the 1958-59 export program totaled 2.2 million
bales and an additional 257,000 bales were registered under the payment-in-kind
program, including CCC sales for unrestricted use, dispositions of CCC inven-
tories under the 1958-59 programs totaled 2.5 million bales. As a result of the
sales, the CCC inventory of 1957 and previous crop cotton on that date totaled
1.3 million bales. In addition, as of March 27 CCC had loans outstanding on
about 6.5 million bales of 1958 crop cotton. Thus CCC holdings as of April 1
totaled about 7.8 million bales, about 3.1 million above a year ago but well
below the record 14.2 million reached January 20, 1956.

Prices received by farmers this season trended downward until mid-January
when innings were nearly completed. The mid-February price of 28.27 cents
per pound for upland cotton was about the same as a month earlier. However, by
mid-March prices received by farmers rose more than seasonally and averaged
30.19 cents per pound, 4.15 cents above a year ago when the remainder of the
relatively late, weather damaged 1957 crop was being marketed at a heavy

Market prices have fluctuated within narrow limits during most of the
season, but have been below a year ago since December. In March, the average
price of Middling inch cotton on the 14 spot markets reached the season's low
of 34.28 cents per pound. Subsequent increases brought the March average to
34.37 while the average price on April 10 was 34.52. Premiums and discounts are
narrower than a year ago.


- 32 -

APRIL 1959

Farm operators with base allotments of 2.5 million acres indicated a
preference for Choice (B) provided for under the Agricultural Act of 1958. These
farmers received a 40-percent increase in their base acreage allotments, which
raises the national allotment about 1 million acres to 17.3 million acres. The
output from the Choice (B) acres will be eligible for support at an average of
24.70 cents per pound basis Middling 7/8" cotton. Production from the remaining
(A) acreage will be eligible for purchase by CCC at an average of 30.40 cents
per pound, basis Middling 7/8" cotton. An estimated 571,000 acres will be in-
cluded in the Conservation Reserve of the Soil Bank.


The recovery in mill use of both carpet and apparel wool that began
late last year is continuing. World market quotations for wools have advanced
since mid-January. Domestic prices in March remained at about the level of the
preceding 2 months but turned upward early in April. Imports of both dutiable
and free wools are registering notable gains over the relatively low level of a
year earlier.

Domestic mill use of carpet wool has been above a year earlier since
last August and recently has been about one-half again as large as a year ago.
The gain for apparel wool has been less striking but consumption has been above
a year earlier since October. With a further expansion in economic activity in
prospect this year, mill use in both apparel and carpet wool is likely to be
up from 1958.

U. S. imports of both dutiable and duty-free wool for consumption has
been above a year earlier since the closing months of 1958. The gain in mill
use indicates larger imports this year than last.

Because of the low price received by growers this season, incentive
payment rates on 1958 marketing are expected to be the highest since payments
were first made on the 1955 clip. Monthly prices for the 1958 season have
ranged from 38.2 cents a pound to 35.1 cents. Incentive payments will be made
to raise the national average return up to 62 cents.


Cigarette output in 1959 is expected to top the record 470 billion
produced in 1958, though the percentage gain probably will be smaller than from
1957 to 1958. The 1959 consumption of cigars and cigarillos seems likely to
exceed the 6.4 billion level of 1958--the highest since 1929. Consumption of
smoking tobacco for pipes and "roll-your-own" cigarettes rose considerably in
1958 but a further appreciable gain does not appear likely in 1959. The down-
trend in consumption of chewing tobacco will probably continue in 1959 and the
years ahead. Snuff consumption has declined the last 3 years, and in 1959 may
hold about even with 1958.
In the final quarter of 1958 and early months of 1959, output of small
cigars rose sharply. These are cigarette-size and weigh not more than 3 pounds
per 1,000. Small cigars are not included in total cigars as usually reported,
although cigarillos are. If the output of small cigars is maintained at recent

- 33 -


APRIL 1959

monthly rates, calendar year 1959 output may range from 600 to 900 million--
sharply above the 170 million in 1958 and the preceding 5-year average of
58 million.

Total supplies of flue-cured and burley are 3 percent and 2 percent,
respectively, below 1957-58. Although production of flue-cured and burley this
year may be a little higher than in 1958, the gain may be more than offset by
the expected lower carryover. The 1959-60 flue-cured supply may be nearly
3 percent less than for the current year, while the burley supply may be down
1 percent.
The supply of Maryland tobacco in the current marketing year is 4 per-
cent below 1957-58 and the smallest in 7 years. Auctions for the 1958 crop will
begin April 28, about the usual date for this type. The average price of the
1957 crop (marketed mostly in 1958) was.45.2 cents per pound; general quality
of the crop was the poorest in many years. The Government support price for the
1958 crop is 50.8 cents--6 percent more than for the previous crop. Government
price support will not be available when the 1959 crop is marketed in the
spring and summer of 1960, as no quotas or allotments are in effect on this
year's crop. Prospective 1959 acreage of Maryland is 12 percent larger than
in 1958.

Prospective 1959 acreages of fire-cured and dark air-cured tobaccos are
up approximately a fifth and a sixth, respectively, from 1958 harvested acre-
age. With average yields, larger crops than last year's can be expected. The
carryovers of both fire- and dark air-cured by next October 1 will be down
considerably. However, the 1959-60 total supply of fire-cured and dark air-
cured might decline only a little from 1958-59 because of the prospective in-
crease in production.

The 1958-59 supplies of all cigar binder types are at a record low, and
1959-60 supplies will probably be still lower. A sizable reduction is in
prospect for supplies of Connecticut Valley binder. These types have been
particularly affected by the expanding use of sheet binder on cigars in place
of natural leaf binder. There are indications that brands representing per-
haps four-fifths of total cigar output may be using processed binders by the
end of 1959.

The kinds of tobacco under marketing quotas, except fire-cured, dark
air-cured and sun-cured, are supported by law at 90 percent of their parity
prices. Price supports for the excepted types are set at fixed percentages of
the burley support level, but they cannot be set higher than their 1957 supports
unless 90 percent of their own parities exceeds the 1957 support levels. Legis-
lation proposed in Congress would affect tobacco price support determinations;
if enacted, support levels for 1959 crops of flue-cured, burley and other kinds
of tobacco will not exceed the 1958 support levels.
Calendar year 1958 exports of unmanufactured tobacco totaled 540 million
pounds (farm-sales weight)--4 percent less than in 1957 but nearly the same as
the recent 10-year average. Exports last year were equal to about three-tenths
of the crop. Shipments of tobacco sold for foreign currencies under P.L. 480
programs accounted for 8 percent of total 1958 exports, compared with 7 percent
in 1957. Tobacco exports in 1959 may be fairly close to the 1958 level.

- 34 -



- 35 -

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Washington 25, D. C.

Penalty for private use to avoid
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The next issue of the Demand and Price Situation
is scheduled for release May 26, A. M.

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