DEMAND and PRICE
L UN' OF -L L'.
U S. 3-EPPIC:IT.,P'Y
Published monthly by
AGRICULTURAL MARKETING SERVICE
UNITED STATES DEPARTMENT OF AGRICULTURE
Approved by the Outlook and Situation Board, September 18,1
Although the work stoppage in steel and its attendant disrup-
tions to economic activity have brought some reductions in indus-
trial production, employment and consumer incomes, these
economic indicators continue substantially above a year earlier.
Consumer markets remain strong and relatively unaffected, with
sales of new automobiles in August, up about 50 percent from a
year earlier. Furthermore, business intentions to invest in new
plant and equipment are again being revised upward. The latest
survey conducted by the U. S. Department of Commerce and the
Securities and Exchange Commission now indicates that business
intends to spend 18 percent more in the fourth quarter for new
plant and equipment than in the fourth quarter of 1958.
The September Crop Report indicates that crop output this year
totals only a shade under the record of 1958. The wheat crop is
almost a fourth smaller but the corn crop was estimated at almost
4. 4 billion bushels, about 600 million bushels above last year's
record. Even with smaller crops of oats, barley and grain sor-
ghums, feed grain production in total is estimated some 6 percent
larger than a year ago. The cotton crop is also substantially larger
(Continued on page 3)
mamilult~mmtat umin nan ana uan mu \
SEPT. 24, A. M.
COOMIC FACTORS AFFE-2-CTING AGRICULTURE
Z0IMC FACTORS AFFECTING AGRICUIa'URE
Unit or 1958 : 1959
Item : base : :
e: bperioas Year Aug. : May June July Aug.
Industrial production: Seasonally adj. '
Total outlays, seasonally adjusted 2/
Manufacturers' sales and inventories: 2/
Total sales, seasonally adjusted
Unfilled orders-sales ratio 5
Inventory-sales ratio 6
Employment and wages:
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/
Inventory-sales ratio j/
Wholesale prices, all commodities 4/
Ccanodities other than farm and food
Consumer price index, all items k/
Prices received by farmers 8/
Livestock and products
Prices paid, interest, taxes and wage
Family living items
Parity ratio /
Farm income and marketing: 8
Volume of farm marketing
Cash receipts from farm marketing
124 124 124 124 125
120 121 118 119 119
250 24 245 242 240 239
223 221 230 229 226 221
273 272 258 252 252 254
Annual data for most of these items for
issue of The Demand and Price Situation.
the years 1929 and 1939-58 appear on page 35 of the April 1959
1/ Federal Reserve Board. 2/ U. S. Dep~-r.m=nt of Commerce. 3/ Seasonally adjusted annual rates.
4 U. S. Department of Labor, Bureau of Labor Statistics. J/ rUfill-ed orders for durables divided by
monthly deliveries. 6/ Inventories, book value, end of month, divided by sales. '/ Bureau of the Census.
8/ U. S. Dep,-itarmin- of Agriculture, Agricultural Marketing Service.
THE DEMAND AND
Approved by the Outlook and Situation Board, September 18, 1959
Summary .... ..................
General Business Conditions ...
Farm Income ...................
Livestock and Meat ............
Dairy Products ................
Poultry and Eggs ..............
Fats and Oils ..................
1 Wheat .......................
4 Fruit ....... ...............
13 Commercial Vegetables ......
13 Potatoes and Sweetpotatoes ..
14 Dry Beans and Peas ..........
15 Cotton ......................
16 Wool ........................
17 Tobacco .....................
-continued from cover page--
than in 1958. With production of livestock and livestock products running
above a year ago, total farm output of both crops and livestock this year is
expected to be slightly larger than in 1958 and some 25 percent above the
Meantime, prices received by farmers have eased off slightly this
summer and in mid-August averaged nearly 4 percent below August 1958. Prices
paid by farmers, including interest, taxes and farm wage rates, have also
shown a slight overall reduction in recent months, primarily due to lower
prices paid by farmers for feeder livestock and for feed. Nevertheless, the
average in mid-August was still slightly higher than a year earlier.
Cash receipts from farm marketing in the first 8 months of 1959 totaled
some 2 percent less than in the same period of 1958, primarily due to somewhat
lower prices of farm products. In addition, higher production costs and a
reduction in Soil Bank payments to farmers as a result of the termination of
the Acreage Reserve Program were reflected in an annual rate of realized net
farm income during the first 3 quarters of $11.5 billion, compared with
13.1 in the same period of 1958. A substantial part of the reductions occurred
in the third quarter when this year's much smaller crops of wheat and small
feed grains were being marketed heavily. In the fourth quarter, the much
larger crops of cotton and corn will be moving to market in volume.
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Seasonal weakness in stocker and feeder cattle prices is expected this
fall, while the seasonal price decline for hogs probably will be less than
usual. The September Pig Crop Report indicates that producers in 10 Corn
Belt States plan a 4 percent decrease in December-February farrowings.
Mid-August egg prices averaged about 6.0 cents above the springtime low,
but 6.8 cents below prices in August 1958. Since mid-August, the trend of
most egg prices has been upward.
Record large supplies of edible fats, oils and oilseeds now appear
certain for the marketing year beginning October 1.
Prices of corn and sorghum grains are expected to decline seasonally
this fall and oat prices probably will continue to be relatively higher than
those of other grains through the 1959-60 marketing year.
Fresh market grower prices for most deciduous fruit probably will
remain below last year's prices during the early fall.
Prices received by growers for fresh market vegetables this fall are
likely to average somewhat above the levels of a year earlier if supplies are
down materially as now indicated.
An increased cotton crop primarily is responsible for the 17 percent
increase over last year in the total supply. The estimated 23.7 million bales
for 1959-60 is the largest supply since 1956-57, but disappearance may well
increase as much as supply.
Opening prices on the Australian wool auctions were slightly higher
than those expected by the wool trade; and if these auctions hold firm, prices
in other world markets may be expected to advance above those of the last few
Exports of tobacco are expected to increase seasonally during the next
few months because of the large volume of new crop flue-cured tobacco
GENERAL BUSINESS CONDITIONS
Economic activity has tended to level out in the current quarter as a
result of the direct and indirect effects of the steel strike. Consumer
incomes, retail sales, employment and factory production eased in August.
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Consumer Income and Spending
After advancing since April 1958, personal income dropped $2.6 billion
in August to an annual rate of $381.4 billion. The dip is attributable mostly
to the effects of the steel strike on payrolls in the primary metals, mining
and transportation industries. Wage and salary disbursements in distribution,
service, construction activities and Government, as well as proprietor's income,
interest and dividends, continued to trend upward. Total transfer payments,
after holding steady the last three months, rose to a seasonally adjusted rate
of $26.6 billion, compared with $26.3 billion in July. This $0.3 billion in-
crease reflects primarily a rise in social insurance benefits paid to umemploy-
ed persons in steel and related industries.
Retail Trade Declines
Total retail sales during August amounted to an estimated $18.1 billion,
adjusted for seasonal factors and trading day differences, down from the July
record of $18.3 billion but nearly 71 percent above August 1958. Both durable
and nondurable retail sales were down a little from July. Small declines were
widespread among the various groups, but, dealer's sales of new automobiles
amounting to 485,000 units in August were 7 percent more than July and about
the same in August 1955. Department store sales also rose in August and
reached a new high of 150 percent of the 1947-49 average, compared with 149 in
July and 147 last August.
Cost of Family Living
Items Down Slightly
In August the index of prices paid by farmers for family living items,
at 288 (1910-14=100), was down a point from the July record. Lower food and
building material prices were partially offset by rising costs of clothing,
household expenses and auto supplies.
Prices of urban consumer goods and services began a slow advance in
April and in July reached a new record of 124.9 (1947-49=100). The index was
stable in late 1958 and early 1959, as declining prices for foods were offset
by continued increases for other groups. Food prices turned upward in May and
other groups continued to rise. However, food prices in July were about 2 per-
cent below a year ago.
In the past year costs of medical care and transportation have increased
more than 4 percent. Rent, household operations and other services have con-
tinued to trend upward and nondurable goods other than food have risen moderately.
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Prices of new cars have declined seasonally in recent months but are still
5 percent above July 1958. The demand for used cars has been particularly
strong and prices have increased by about a seventh in the last 12 months.
Changes in prices of other durable goods have been very small.
U. S. business firms are planning to increase expenditures for plant
and equipment in the fourth quarter to an annual rate of $35.3 billion, com-
pared with an estimated $34.2 billion in the third quarter, according to a
survey conducted in July and early August by the Department of Commerce and
the Securities and Exchange Commission. If these expectations materialize,
spending in the current year will reach an annual rate of $33.3 billion, about
9 percent above the $30.5 billion in 1958. However, existing plant capacity
in a wide range of industries will keep outlays well below the record $37.0
billion invested in 1957. Actual outlays in the first and second quarters of
this year were at an annual rate of $30.6 billion and $32.5 billion,
respectively, (Table 1).
More than a third of the planned outlays for plant and equipment is
concentrated in the manufacturing group, although all major industry groups
except public utilities anticipate that their expenditures in 1959 will be
Table 1.--Expenditures for new plant and equipment by U. S. business
for 1958-59 and by quarters seasonally adjusted at annual rates
: : 195 : 1959
Item 1958 1 : Oct.- Jan.- Apr.- July- : Oct.-
S1c/ c Mar. June : Sept.1/" Dec.1/
: Bil Bil. Bil. Bil. Bil. Bil. Bil.
:dol. dol. dol. dol. dol. dol. dol.
Manufacturing : 11.43 12.44 10.58 11.20 11.80 12.81 13.72
Durable goods :5.47 6.02 4.86 5.26 5.74 6.28 6.65
Nondurable goods :5.96 6.42 5.72 5.94 6.06 6.53 7.17
Mining : .94 1.00 .97 .95 .94 1.04 1.06
Railroad : .75 1.03 .58 .63 1.00 1.41 1.12
than rail :1.50 2.02 1.62 1.71 2.08 2.19 2.12
Public utilities : 6.09 5.84 6.26 5.80 5.82 5.80 5.93
Commercial and other: 9.81 10.92 9.96 10.33 10.87 11.04 11.39
Total : 30.53 33.26 29.97 30.62 32.51 34.29 35.34
I/ Estimates are based on
late July and August 1959.
anticipated expenditures reported by business in
Securities and Exchange Commission and U. S. Department of Commerce.
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substantially above those in 1958. In 1959, stone, clay and glass products,
motor vehicles, machinery and transportation equipment categories are expected
to show the largest increases in the durable manufacturing group while the
greatest gains among the nondurables probably will be in the textile mill,
paper, petroleum, rubber and food groups. Among other industries, particularly
heavy outlays are indicated for railroad and other transportation companies.
The other than rail group expects to increase outlays almost $500 million or
35 percent over 1958. To a great extent, this rise reflects expenditures for
jet aircraft already programmed by many commercial airlines.
As in the recovery phase of previous business cycles, heavy business
expenditures mirror general confidence for continued expansion in the demand
for industrial products. Furthermore, trade reports indicate that business
anticipates a further rise in sales in the coming months.
Inventory Rise Slackens
The total value of manufacturing and trade inventories held in July
amounted to $89.8 billion, seasonally adjusted, compared with $85.9 billion
in July 1958. Inventories edged up by $500 million from June, primarily
because the material increase in automobiles on hand and some gains in other
durable manufacturing offset reduced steel inventories caused by the mid-
July shutdown. However, July inventory figures do not fully reflect the
impact of the strike because additions to steel inventories in preparation
for the stoppage continued through the middle of the month. Within other
groups, inventory liquidation occurred in transportation, while stocks of non-
durable goods remained virtually stable. The inventory changes in August will
be influenced by a further reduction of steel stocks, along with a substantial
reduction in dealer stocks of new cars of over 250,000 units.
Dip in July
Factory sales, after reaching new highs prior to the steel strike and
vacation season, fell from $31.2 billion in June to $30.8 billion in July.
The drop was concentrated in the durable goods sector, principally because of
reduced sales of primary metals. In July, the inventory-sales ratio was 1.70,
approximately the same as in the three preceding months. Throughout the year,
additions to inventories have lagged behind the advance in sales and the ratio
has remained below prerecession averages.
New orders to manufacturers, seasonally adjusted, also came in less
rapidly in July. The total of $30.9 billion was $0.5 billion below June,
reflecting a decline in primary metals and to a lesser extent reductions in
new orders to electrical machinery and transportation equipment producers.
Other industries reported a $180 million increase in new orders during July.
A rise in unfilled orders was mainly attributable to an increased backlog in
orders of machinery producers.
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The value of new construction put in place this year amounted to $36.9
billion, seasonally adjusted through August, approximately 16 percent above
the $31.9 billion registered during the comparable period in 1958. Total con-
struction activity in August remained at the record July level of about $4.6
billion. Residential construction expenditures dropped by $53 million to
$1.8 billion in August, but they were 22 percent higher than those of a year
ago. Private nonresidential and public utility construction rose more than
seasonally, but the increase in farm construction was less than seasonal.
Outlays for industrial buildings showed the first year-to-year gain since
December 1957. Public construction remained unchanged from the July level of
$1.4 billion and was 9 percent above August last year.
Demand for Credit
Consumers and business greatly increased their spending and demand for
credit with the upsurge in economic activity after mid-1958. Although the
major sectors within the economy have shared in this recovery, there have been
differences in the timing and size of the increases. According to the Federal
Reserve's quarterly flow of funds accounts, funds borrowed in credit markets
reached an estimated total of $25.0 billion in the first 6 months of 1959,
compared with $16.4 billion during the comparable period a year earlier.
Consumer borrowing (including mortgages) accounted for 53 percent of the
increase over a year-earlier, while business and financial institutions were
responsible for 29 and 19 percent, respectively. Total Government borrowing
changed little but that of foreign countries decreased.
Loan activity of the commercial banking system since late 1958 has
reflected the rise in the demand for credit. Commercial bank loans averaged
$100.4 billion in the first half of 1959, up $7 billion from the same period
in 1958. In July these loans reached $105.9 billion, compared with $93.6
billion in July 1958.
The strength of residential construction was reflected in part by a
$1.1 billion rise in outstanding real estate loans at member commercial
banks between January and June 1959. The sharp increase in automobile sales
along with a substantial rise in other consumer durables, resulted in an
increase to $13.9 billion of installment credit held by commercial banks in
June 1959 compared with $12.5 billion a year earlier.
The advance in business loans lagged behind consumer loans and did not
show a material increase until the second quarter of 1959. In the early part
of the year, business firms were able to increase plant and equipment expendi-
tures and accumulate inventories without extensive resort to commercial bank
funds because of the large volume of new security issues sold in 1957 and
1958, low capital expenditures during the recession, and increased internal
funds from the higher levels of corporation profits in late 1958 and early
1959. In the April-June quarter, outstanding business loans of weekly
reporting banks increased nearly a billion dollars. A sizable portion of
these loans was made to metals manufacturers in response to the inventory
additions before the steel strike.
Commercial banks moderately increased their holdings of State and local
securities. After a considerable rise in holdings of U. S. Government securi-
ties in 1958, commercial banks reduced their investments at the beginning of
1959 to satisfy the demand for loans. The recent rise in the demand for funds
and a somewhat more restrictive credit policy has resulted in a gradual
tightening of the money market and a general upward movement in rates of
interest. In September the rediscount rate was raised to 4 percent, the fifth
increase since the low of 1-3/4 percent in May 1958.
By early August, most interest rates approximated their postwar peaks.
These rates have risen irregularly over the maturity range, with yields on
short term securities jumping much more sharply than those on longer term
securities. The greatest increase occurred on U. S. Government 9 to 12 month
issues. Rates on these rose from .98 percent in June 1958 to 4.25 percent on
August 1, 1959 compared with a rise in the average yield on 10-year Govern-
ment bonds of 0.90 percentage points. During a corresponding period, other
types of credit instruments showed a similar pattern. Bankers' 90 day
acceptance rose from 1.13 percent to 3.50 percent on August 1, while yields
on the highest grade corporate bonds climbed from 3-57 percent to 4.45 per-
cent. Interest rates on short-term securities usually show the most marked
increase in the recovery phase of the business cycle.
Declines Further in August
The upsurge in industrial production during the first half of 1959 was
reversed with the onset of the steel strike in mid-July. According to the
Federal Reserve Board, the seasonally adjusted index of industrial production
for August dropped 4 points to 149 percent of its 1947-49 average. This
compares with June's post recession high when the index reached 155. With
steel production reduced to only 12 percent of capacity during the entire
month of August, output in the primary metals group dropped by 41 percent
(table 2). Curtailed steel production reduced output in the related coke,
coal and ore mining industries, while copper production dropped because of
a strike in that industry. In August, the index of mineral production fell
to 119, compared with 120 in July.
The strike-bound steel industry had relatively small, if any, effect on
the automobile industry in August because of the large inventory holdings and
- 9 -
Table 2.--Indexes of industrial production, seasonally adjusted, August 1958
and June, July and August 1959 with percentage change
:1958 :1959 : Percentage
S: : change
Item : : : : : Aug. 1959
SAugust June : July August : from
: : ::: Aug. 1958
: 1947-49 1947-49 1947-49 1947-49
: =100 =100 =100 =100 Percent
Industrial production, total : 136 155 153 149 9.6
Manufactures : 138 158 157 152 10.1
Durables : 144 172 168 159 10.4
Primary metals : 109 150 108 64 -41.3
Metal fabricating : 156 184 186 183 17.3
products : 132 150 150 144 9.1
Machinery : 147 178 180 179 21.8
Transportation equipment : 186 216 218 215 15.6
Autos, trucks, and
parts 96 139 142 135 40.6
Nondurables : 133 144 146 146 9.8
Textile and apparel : 108 123 126 125 15.7
Rubber and leather
products : 116 131 142 142 22.4
Paper and printing : 150 159 164 164 9.3
Chemical and petroleum
products : 174 193 191 190 9.2
Foods, beverages, and
tobacco : 116 119 118 119 2.6
Minerals : 120 125 120 119 -.8
Federal Reserve Board.
reduced steel use resulting from the model changeovers. The usual shutdowns
for model changover reduced output of automobiles sharply in August, but the
index of auto production was 40 percent above that of August 1958. Among the
nondurable goods industries, output was unchanged between July and August.
Drop in Employment
Reflects Steel Strike
The number of civilian job holders totaled 67.2 million in August, about
350,000 less than July. The steel strike and the model changeover in the auto
industry were the most important factors affecting the job situation in August.
- 10 -
- 11 -
Table 3.--Employees on payrolls of nonagricultural establishments,
seasonally adjusted, August 1958 and June, July and
August 1959, with percentage change
: 1958 1959
August June July August from
: Thou- Thou- Thou- Thou-
: sands sands sands sands Percent
total : 50,552 52,407 52,585 52,047 3.0
Manufacturing : 15,326 16,527 16,586 16,051 4.7
Durables: 8,601 9,573 9,638 9,112 5.9
Primary metal industries 1,078 1,291 1,277 848 -21.3
Fabricated metal products :1,029 1,106 1,109 1,071 4.1
Machinery 2,581 2,874 2,928 2,941 13.9
Transportation equipment :1,504 1,704 1,692 1,616 7.4
Nondurables: 6,725 6,954 6,948 6,939 3.2
Food and kindred products :1,470 1,494 1,463 1,463 -.5
Textile-mill and apparel
products : 2,108 2,221 2,222 2,211 4.9
Paper and printing :1,402 1,428 1,438 1,440 2.7
Rubber and leather
products : 598 632 645 639 6.9
Nonmanufacturing : 35,226 35,880 35,999 35,996 2.2
Mining 705 709 712 619 -12.2
Contract construction 2,716 2,799 2,809 2,832 4.3
Transportation and public
utilities : 3,869 3,928 3,922 3,897 .7
Wholesale and retail trade : 11,168 11,425 11,459 11,494 2.9
Government 7,975 8,076 8,099 8,155 2.3
U. S. Department of Labor.
DPS-57 12 SPTE;.3ES 1959
In the steel industry 500,000 were on strike and an additional 125,000 were
laid off in activities closely related to the production cf steel. In addi-
tion, about 80,000 auto workers were laid off during August for :;: di-l cL.ange-
over. Elsewhere very few persons had been laid off as a result of shor'tag es
of steel. Emplc'cel, .T:a.ong non.i.rabLe goc,.., firmsheld st-?ady in August.
Among the nonmanufacturing groups, mining and transportation empL..-..nt was
adversely effected by the steel strike. "Tie changes in the other nonmanu-
facturing groups were little more than seasonal between July and August
The work week in manufacturing rose seasonally in August but average
weekly earnings declined more than a dollar to $88.70. ihe lower average
weekly earnings is due to a smaller number of steel and auto workers whose
wages are above average. Unemployment declined seasonally in August by
300,000 to 3.4 million. This change between July and August is less than
usual and resulted in an increase in the seasonally adjusted rate of unem-
ployment to 5.5 percent in August, compared with 5.1 percent in July. For
several months prior to the steel strike, the rate of unemployment had aver-
aged around 5 percent compared with 4-4- percent in 1955-57.
Down a Little
Farm product prices averaged a little lower in Auaist than in July.
The index of prices received by farmers at 239 (1910-14=100) was down a
point from July and was nearly 4 percent below a year earlier. Between July
and August most of the price changes were small. Prices of hogs which de-
clined sharply between June and July increased a little to an average of
-:14.00 per cwt. but there were offsetting declines in beef cattle, calves and
sheep to leave the meat animal index ulnchancd. Tiholesale milk prices in-
creased and in August the dairy products index was 1 percent above a year
earlier. Potato prices declined sharply over the past month but were still
about a fifth above a year ago. Prices of cotton and oil-bearing crops also
Parity Ratio Down
The index of prices paid by fanners for commodities and services, in-
cluding interest, taxes and farm wage rates, in August was down 1 point from
July but was up 1 percent from a ye;r earlier. Prices of production items
were unchanged between July and August but increases in the cost of gasoline
and other motor supplies were offset by reductions in prices paid for feeder
and replacement livestock and feed. The parity ratio in mid-August at 80
was down 1 point from a month earlier and the lowest level since March 1957.
Farmers' realized net income in the first three quarters of 1959 is
estimated at an annual rate of approximately :11 billion. This was 1.6 bil-
lion or 12 percent lower than in the first three quarters of 1958, but a half
billion or 4-- percent above 1957. The decline so far this year resulted from
lower average prices, increased expenses, and discontinuance of Acreage
Reserve payments. Much of the effect on income of smaller crops of wheat and
small feed grains this year was concentrated in the third quarter. The much
larger cotton and corn crops will be marketed heavily in the fourth quarter.
Cash receipts from farm marketing during the first 8 months of 1959
totaled $19.1 billion, down about 2 percent from the same period in 1958.
Prices received by farmers averaged 3 percent lower in the 1959 period but
the physical volume of marketing was slightly larger. January-August
receipts from livestock and products in 1959 were about $11.9 billion, 4 per-
cent below the same period in 1958. Lower prices for hogs, broilers, and
eggs, more than offset larger marketing of hogs, broilers, and eggs, and
higher prices for cattle. Cash receipts from crops were about ,"7.2 billion
in the first 8 months of 1959, little changed from the same period in 1958.
Substantial increases in receipts from corn, oranges, and tobacco were offset
by a sharp drop in receipts from sorghum grain and wheat.
Cash receipts for August 1959 are tentatively estimated at $2.6 billion,
8 percent below a year earlier. Receipts from livestock and products were
about $1.5 billion, down 6 percent from August 1958. Receipts from crops of
$1.1 billion were down 10 percent. Smaller receipts from hogs and poultry and
eggs accounted for the decline in livestock and products, while smaller mar-
ketings of wheat more than accounted for the decline in cash receipts from
crops. Receipts from tobacco also were down, but receipts from cattle, cotton,
and vegetables were up.
LIVESTOCK AND II EAT
Prices of hogs advanced moderately in August, following the sharp drop
in July, but have again turned downward. The seasonal decline this fall is
expected to be less than usual. Prices will be well below those of the past
3 years but will average somewhat higher than in late 1955.
The expansion in hog production which began last fall appears to be
slowing down and may end in 1960. This year's spring crop was up 12 percent.
Last June, hog producers expected to increase their 1959 fall farrowings
8 percent but the September Pig Crop Report for 10 Corn Belt States indicates
that the increase in these States may be smaller than indicated in June. Pro.
- 13 -
ducers in the 10 States also reported intentions to farrow 4 percent fewer
sows in December-Febraary than a year earlier when these 3 months accounted for
an unusually high proportion of the total spring crop.
Cattle numbers will set a new high mark this year. Around 102 million
head probably will be on farms January 1 and some further expansion is likely
for several years. So far, the rapid growth in numbers has meant smaller
slaughter supplies and higher prices. As the build-up progresses and the rate
of expansion eases off, increases in marketing and lower prices are probable.
On July 1, the number of cattle and calves on feed in 13 States was
record high for that date, 10 percent a ove July 1958. Since then marketing
have been close to last year's rate but new placements have been up. This
could result in a backlog of heavy well-finished cattle this fall. However,
price adjustments are expected to be moderate as supplies of grass cattle will
continue at a reduced level. Stocker and feeder cattle prices are expected to
show some seasonal weakness this fall. The prospect of a slowly declining
price level for cattle will discourage feedlot operators in bidding for
Prospects for favorable returns from lamb feeding are somewhat brighter
this fall than last. Feeder lamb prices are lower than a year ago. In
addition, lambs are coming off Western ranges at lighter weights this fall,
providing considerably more flexibility in feeding operations. Early in
September feeder lamb prices at Omaha were about $19.00 per 100 pounds and
Choice slaughter lambs $20.50. Last fall feeder prices were often as high or
higher than slaughter lambs. Fed lamb prices are currently below a year ago
and may show some seasonal decline this fall. However, prices are not
expected to drop sharply late this fall as they did last year, and for this
winter may average as high or a little higher than last winter.
Milk production in August in the United States was below that of a year
earlier although not as much below as in June and July. Production of butter
and cheese in some recent weeks showed smaller declines from a year earlier
than anytime since June. Volume of sales to CCC dropped further seasonally,
in terms of milk equivalent. Wholesale prices for butter and fluid cream
have increased in the past month but prices for other items have shown little,
if any, change.
Production of milk on farms, in terms of annual rate, dropped to the
lowest level in 4 years this past summer, apparently reflecting high tempera-
tures and unfavorable pastures in important dairy areas. Some increase in
this rate was noticeable by September 1 though output apparently was still be-
low a year earlier. The number of milk cows is declining again this year,
though not as much as in 1958. As in other recent years, however, the higher
- 14 -
rate of output per cow has been largely offsetting the lower cow numbers,
except for June, July and August. A resumption of the early 1959 annual rate
of production per cow is likely this fall.
With larger consumer incomes, civilian purchases per person of fluid
whole milk and ice cream have been above a year earlier. A number of the
fluid skim milk items also are showing significant increases. On the other
hand, civilian purchases of butter and evaporated milk are showing a slight
With less milk produced in recent months and larger quantities used in
fluid whole form and for ice cream, the quantity available for manufactured
dairy products has been reduced. As usual, in circumstances of this kind, the
decline was greater for butter than for other products.
Prices to farmers for milk and butterfat have risen a trifle above a
year earlier. During July and August, the milk equivalent of butter and cheese
sold to CCC was about one-third that of a year earlier. Sales of nonfat also
have been below last year's level.
POULTRY AND EGGS
Egg production is now near the seasonal low point, though slightly above
a year earlier. The laying flock is slightly smaller than it was at this time
last year, but the rate of lay per bird is up, and monthly egg production may
continue to exceed 1958 in the remaining months of this year. This September 1,
the number of potential layers on farms was 5 percent below last September 1,
which will result in further reductions, percentagewise, in the size of the
laying flock by January 1. Soon after the first of the year numbers of layers
are likely to be below a year earlier by enough to about offset the usual year-
to-year increases in rate of lay. Egg production in early 1960 probably will
be below 1959.
Egg prices by early September had recovered considerably from the long-
time lows recorded in April, May, and early June, but east of the Rocky
Mountains prices continued sharply below 1958. At some Pacific Coast points,
prices were somewhat closer to 1958. At 30.9 cents per dozen in mid-August,
the U. S. average was 6.0 cents above the springtime low, but 6.8 cents below
August 1958. Since mid-August, the trend of most egg prices has been seasonally
upward. A factor in the recent rise was announcement of a $1 million export
program of eggs for Spain. The USDA purchase of egg solids (dried egg) for the
School lunch Program was discontinued after several weeks of operation on a
reduced scale. The purchase of frozen egg was discontinued earlier.
Broiler placements since early May have been fewer than last year, but
the cut has not been fully reflected in slaughter statistics; recent prices
have been near the lows of the year to date. At 15.7 cents per pound in mid-
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August, the U. S. average broiler price was 1.9 cents below August 1958.
Prices in the following weeks declined from mid-August, reflecting increasing
supplies of competing red meats, and the passing of peak seasonal demand for
Turkey supplies from the current record crop are increasing seasonally.
The 82 million turkeys being raised this year are 5 percent more than last
year's production. A Government purchase program which will divert some of the
crop to the School Lunch Program has been announced. Last year, 2' percent of
the crop was bought under a similar program. Current prices average lower
than last year; higher wholesale prices for heavy toms do not fully offset the
lower prices for other classes of turkeys.
FATS AND OILS
Record supplies of edible fats, oils, and oilseeds will be available in
the 1959-60 marketing year which begins October 1. Early September conditions
indicate the supplies of edible fats, oils and oilseeds in 1959-60 will exceed
the peak 13.0 billion pounds (oil equivalent) estimated for the year just
ending by about 10 percent. The prospective 27 percent rise in cottonseed oil
output will contribute a large part of the increase although lard production
is expected to be up around 11 percent. Soybean supplies probably will be
about as large as last year, as the increase in prospective carryover stocks
nearly offsets the slight decline in output.
The quantity of food fats available would permit substantially greater
exports in 1959-60 than the record 3.3 billion pounds estimated for 1958-59.
The 1959-60 outlook is for another banner year for U. S. exports of soybeans,
edible oils and lard. Soybean exports are expected to climb to a new h'gh
somewhat above the record 110 million bushels in 1958-59. Exports of soybean
and cottonseed oil also will be strong and probably won't differ greatly from
the record quantity shipped in 1958-59. Major importing areas, such as
Western Europe and Japan will continue to need to import large quantities of
edible oils and oilseeds as they probably will not be able to obtain increased
supplies from non-U. S. sources. Lard exports in 1959-60 are expected to be
somewhat higher than a year earlier as lower U. S. prices enhance our competi-
tive position in the world markets.
Farm prices of soybeans during the heavy harvesting season probably
will average somewhat below the $1.93 per bushel received last fall and around
the national support price of 'l.85 per bushel. If crusher and export demand
turns out as strong as now e:-pected soybean prices during 1959-60 may show
a fairly good seasonal rise as the trade will need to buy old-crop beans from
CCC later in the marketing year in order to satisfy their requirements.
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Prices to farmers for 1959 crop cottonseed are expected to average
about the 1959 CCC purchase price of $34 per ton, basis grade (100) but less
than last season's average of $43.80.
The 1959-60 flaxseed outlook has changed within two months from a
surplus position to one of relative tightness: As a result flaxseed prices
(No. 1 spot, Minneapolis) moved up from $2.95 per bushel on July 1, the be-
ginning of the new marketing year, to $3.45 in early September. Production
of 1959 crop flaxseed is estimated at 24 million bushels, more than a third
below last year and the smallest crop since 1946. The reduction reflects
smaller acreage and low yields.
A flaxseed crop this size would be less than domestic requirements.
While carryover stocks July 1 were substantial recent strong export demand has
reduced CCC and commercial stocks to a point where the situation has become
relatively tight. With Canada's crop down somewhat and world demand strong,
U. S. prices to farmers will average well above the 1959 support price of
$2.38 per bushel and the $2.69 received last year.
Growing conditions continued generally favorable for feed crops over
most of the United States into early September, and another record feed grain
supply is in prospect for 1959-60. The 166-million-ton crop of feed grains
indicated on September 1 would be 5 percent above last year's record and more
than a fourth above the 1953-57 average. The carryover of feed grains into
1959-60 is expected to be up around 15 percent over the 59 million tons in
1958-59 even though total disappearance has been at a record level. Domestic
use in 1958-59 is estimated to be about 11 percent over 1957-58 and exports
about a fourth higher.
The total 1959-60 supply of feed concentrates, including feed grains,
byproduct feeds and wheat and rye to be fed to livestock is estimated at
263 million tons, 7 percent over 1958-59. Although domestic use and exports
are expected to continue heavy in 1959-60, some further increase in the total
feed grain carryover is in prospect at the close of the 1959-60 season.
Larger stocks of corn are in prospect, but a substantial reduction in oats
stocks and some decline in barley stocks appears likely.
The 1959-60 corn supply is now estimated at 5,933 million bushels,
662 million more than in 1958-59. The oats supply, on the other hand, is down
16 percent and the barley supply 5 percent. The sorghum grain supply is ex-
pected to be up 15 percent to 1,066 million bushels, exceeding either oats
or barley in total tonnage for the first time.
The 1959-60 hay supply is 8 percent smaller than last year, but is above
average in relation to the number of livestock to be fed. Hay crops and pastures
have been average or better over much of the country, except in areas of the
northernn Great Plains and areas of the liortheast and West where drought has
Feed grain prices have been a little lower this summer than last, re-
flecting prospects for another big harvest and a lower level of prices of
livestock and livestock products. Oat prices have been higher than normal
relative to other feed grains this summer because of the short crop, and
probably will continue so during the 1959-60 marketing year. In mid-August
prices received for feed grain and prices paid by farmers for all feed pur-
chased averaged 2 to 3 percent lower than a year earlier. Prices of corn and
sorghum grain are expected to decline seasonally this fall, with sorghum grain
averaging lower relative to corn than in 1958-59.
Wholesale prices of high-protein feeds declined from July to August and
averaged about 11 percent lower in August than a year earlier. The greatest
decline was in meat meal and tankage prices, although soybean meal and cotton-
seed meal also were somewhat lower. The price of linseed meal, on the other
hand, is about a fourth higher.
Wheat prices generally are not as much below the effective support as
is usual at this time of the year and some types are above the support. The
relative strength reflects extensive withholding of wheat from market.
Through July, 108 million bushels of 1959-crop wheat had been placed under the
price support programs. This is about the same as the 107 million bushels
of the much larger 1958 crop placed under support by July 25, 1958. Most of
the 1959-crop wheat under support was in Kansas, Texas and Oklahoma, where the
harvest was 10 days to two weeks ahead of a year earlier.
On September 17, the price per bushel of No. 2 Hard Red Winter, ordinary
protein, at Kansas City at $1.96 was 6 cents under the effective loan (announced
loan of $2.11 less 9 cents for storage), while prices of hard wheat proteins
(13 percent) are above the effective loan. On the same date, the price of
No. 2 Soft Red Winter at St. Louis at $1.95 was 7 cents below the effective
support level; No. 1 Soft White at Portland at $1.94 was at the effective
support level, and the price of No. 1 Dark Northern Spring at Minneapolis at
42.12 was 2 cents above the effective support level, reflecting the reduced
spring wheat crop.
The total wheat supply for the marketing year which began July 1, 1959,
was estimated at 2,401 million bushels, a record high. It exceeded the pre-
vious peak of last year by 50 million bushels, or 2 percent, and 1957-58 by
530 million bushels, or 28 percent. A 45 percent increase in the carryover
from last year more than offsets the reduction in the crop.
Supply this year consists of the carryover July 1, 1959 of 1,277 million
bushels, the crop estimated as of September 1 at 1,116 million and an allowance
for imports of about 8 million bushels, mostly of feeding quality wheat.
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Domestic disappearance in 1959-60 is estimated at about 626 million
bushels, slightly below last year, leaving about 1,775 million bushels for
export during the marketing year and carryover July 1, 1960. Assuming ex-
ports of about 410 million bushels, which is moderately smaller than the
443 million exported in 1958-59, the carryover July 1, 1960 would total about
1,365 million bushels. This compares with 1,277 million bushels this year
and 881 million on July 1, 1958.
Grower prices for most deciduous fruits on the fresh markets during
late summer averaged somewhat under a year earlier because of large produc-
tion. This price relationship probably will continue during early fall. The
increased supplies of California Valencia oranges this summer also have brought
lower auction prices than in 1958, when supplies were light and prices were
unusually high. Stimulated by hot weather demand, auction prices for lemons
increased during August and in early September averaged considerably above a
Supplies of pears, grapes and cranberries are expected to be somewhat
larger this fall than a year earlier. But supplies of apples are expected to
be smaller. Supplies of each fruit are always seasonally large in late summer
and early fall, when harvest runs heavy. Although supplies of oranges and
grapefruit were seasonally light during summer, they will increase during early
fall as harvest of the new crops gets underway in Florida and other States.
As of early September, prospects for the new citrus crops were generally
favorable. The first official forecast of the 1959-60 citrus crop will be
made in October.
Although growing conditions for 1959-crop deciduous fruits were generally
favorable during August and early September, hot weather in some areas hastened
maturity and reduced prospective production somewhat. All deciduous fruits
remaining for harvest showed some decline in prospects during August. As of
September 1, prospects were for a record 1959 crop of cranberries, 8 percent
larger than the 1958 crop. Among deciduous crops marketed heavily during
fall, production of pears is up 8 percent over 1958, and of grapes up 2 per-
cent, but that of apples is down 7 percent. Total production of deciduous
fruits in 1959 is expected to be about 2 percent larger than in 1958 and 6 per-
cent above the 1948-57 average. Tree nut production is expected to total 2 per-
cent over 1958 and 5 percent above average.
Available figures for 1959 packs of processed deciduous fruits in
California, the first reported, indicate for this State a large increase in
canned apricots over the light 1958 pack, a substantial increase in output of
brined cherries, but a considerable drop in canned sweet cherries. Production
of dried prunes is expected to be about l times the light tonnage in 1958.
Among processed citrus, Florida packers' stocks of most canned single-strength
- 19 -
citrus juices on September 5 were considerably larger than a year earlier.
Stocks of canned orange juice were up only a little. Stocks of frozen orange
concentrate from the record 1958-59 pack were up sharply. With retail prices
of the latter a little lower than last summer, movement has continued good.
For Fresh Market
Supplies of vegetables for fresh market sale this fall are expected to
be materially smaller than both those of a year earlier and the 1949-57 aver-
age. Early estimates of crops that usually account for about four-fifths of
total fall tonnage indicate an aggregate production of these crops about an
eighth smaller than both last year and average. Of the crops for which
estimates are available in September, materially smaller crops of early fall
cabbage, celery, lettuce and tomatoes, and of early and late fall carrots are
in prospect this year than last. Slightly to moderately smaller crops are
expected for early fall snap beans, cauliflower and spinach, and late fall
celery. Production of early fall cucumbers promises to be slightly larger
than last year. If supplies of fresh market vegetables are about in line
with early indications, prices received by growers are likely to average some-
what above the levels of last fall.
Carryover stocks of canned vegetables at the beginning of the current
marketing season were somewhat larger than a year earlier, and production of
a number of vegetables for processing is expected to be larger than last year.
Prospective production of sweet corn is up 24 percent, and snap beans up
6 percent. Indications are that the production of spinach for processing will
also be substantially larger than the small crop of 1958.
However, larger beginning stocks and increased production of some crops
are expected to be about offset by a 5 percent reduction in output of green
peas, a 14 percent cut in tonnage of tomatoes, and probably a substantial cut
in cucumbers for pickles. Thus, total supplies of canned vegetables in the
current marketing season are likely to be about the same as the heavy supplies
of last season. Both the pack of frozen vegetables and total supply for the
season are expected to be at least moderately above last season and substan-
tially above average.
POTATOES AND SWEETPOTATOES
Supplies of potatoes during fall and winter are expected to be materi-
ally smaller than the burdensome supplies of a year earlier. There will be
less overlap of marketing from the slightly smaller late summer crop, and
indications are that the fall crop will be down from last year. Prospective
- 20 -
production for fall harvest, at 170 million hundredweight is 7 percent smaller
than last year, but about one-tenth above the 1949-57 average. Indicated
production is down 8 percent from a year earlier in the Eastern States, down
6 percent in the Central and 7 percent in the Western States. Despite the
cutback from last year the 1959 fall crop is about a tenth above the 1949-57
average and somewhat larger than normal trade needs. For the week ended
September 12, f.o.b. shipping point prices of U. S. No. 1 Russets, washed, at
Yakima Valley, Washington, averaged $2.28 per hundredweight, about 40 cents
above the low level of a year earlier. F.o.b. prices at New York shipping
points averaged about 60 cents per hundredweight above a year ago.
Supplies of sweetpotatoes in the 1959-60 marketing season promise to
be a little larger than those of last season. In the week ended September
12, prices of U. S. No. 1, uncured, Puerto Rican type sweetpotatoes at
Southwest Louisiana shipping points averaged $2.38 per 50-pound crate com-
pared with $2.49 a year ago. Prices will be at their seasonal low during the
next two months.
DRY BEANS AND PEAS
Early September reports indicate a 1959 dry beans crop of 19.1 million
hundredweight. This is slightly above last year, and 16 percent above the
1949-57 average. Prospective production of dry peas at 4.2 million hundred-
weight is about 70 percent larger than last years' small crop and almost a
third above average.
If present production prospects materialize, supplies of dry beans in
the 1959-60 marketing season will be slightly larger than those of the current
season. Price support rates are substantially lower, and barring another
season of strong export demand, prices received by growers for dry beans are
expected to average substantially below those of the previous season. The
larger supplies of dry field peas are expected to move at prices materially
below those of the 1958-59 season.
Market prices for cotton declined during the first half of September.
On September 17 the average 14 spot market price for Middling 1-inch cotton
was 31-77 cents per pound. The average price in August was 31.95 cents
per pound and on September 17, 1958 the average 14 spot market price was
34.65 cents. The average price received by farmers in mid-August for upland
cotton was 33.28 cents per pound, .06 cents above a year earlier but below
the mid-July price of 34.05 cents per pound.
The supply of cotton in the 1959-60 season is estimated at about
23.7 million bales, 3.4 million above 1958-59 and the largest since 1956-57.
The increase in supply is being caused primarily by an increase in the crop.
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.hI- 1959 crop is estimated at 14.6 million running bales (14.7 million bales
at 500 pounds), the largest crop since 1553 and 3.2 million above a year
earlier. Ginnings through September 1 were a little larger than the 1.0 mil-
lion bales, ginned through September 1, 1958.
Total disappearance may increase as much as the increase in the supply.
Total domestic mill consumption during the 1959-60 season is expected to be
considerably higher than during 1958-59. Exports during 1959-60 also are
c..;.-cted to be well above the 2.8 million for 1958-59. Consumption during
August totaled 712,000 bales and the daily average rate was 35,600 bales.
'ti,-se figures compare with about 638,767 and 31,938 per day, respectively,
during August 1958.
The 1959-60 Australian wool marketing season bcrgan with auctions in
Brisbane and Melbourne on August 24, followed by auctions the week of August 31
ui Sidnci-y and Adelaide. The opening prices were 15 to 20 percent above those
l.~-n auctions closed for the 1958-59 season in June. These prices held rela-
tively steady during the first week, and weakened only slightly during the
second week of auctions. These opening prices were slightly higher than the
0 percent t increase expected by the wool trade. Demand at the opening auctions
",is good as buyers from Japan and Europe bought most of the offerings. The
-" j of the Union of South Africa markets during the first week of
September was firm with prices averaging 7.5 to 10 percent above the close of
IMost of the major world markets have been inactive, waiting for the
opening of the Australian auctions. The available stocks in most of the ex-
iorting countries are small or inadequate for active trading until the 1959-60
c~ip moves to market. In the meantime, most bu;:.crs and manufacturers have
Lhi ir orders covered with available supplies and are playing a waiting game
Lc L-aterine if the prices will hold firm in the Australian auctions. If
til Australian auctions hold firm, prices in other world markets can be ex-
p eced to advance to relatively higher levels than in the past few months.
i- ;.tic wool prices at Boston held steady from mid-July through the
i'.lr: o'r i.L`.ber with only nominal amounts of wool moving. For the week
cnzing Sc -,c; .j:r 11 prices of territory and fleece wools, clean basis, were
5 to 2, ,en-:. per pound or 13 to 2'f percent above Sep-,e:mTibr 1I'58.
.aver:.-_ price received by dornec.ic growers for shorn wool dur1::g
) ly v4a) s 4. ee1ti: per purid, 4. ..'r.e basis, ,.-_.irred with l, .I cents
I. J-Ly 1>'9. This :ais 17 percent 3-::7?Ghr than the price of 37.9 cents re-
Par.a le: trh the increased consumption of wool on a worldiiid,- basis
has beenn the increase in cor. w..tion in the United States. During January-
Ju iy 1 ;), tO.iltL domestic milJ consumption was 255.2 million pounds, scoured
bacin, s percent more than the snae period a year ago.
- 22 -
- 23 -
Mill use of apparel wool during January-July 1959 totaled 159.2 million
pounds, scoured basis, 30 percent more than a year ago. Total mill consumption
of carpet wool continued at the highest levels since 1950. During the first
7 months of this year, 96.0 million pounds, scoured basis, 70 percent more than
the same period a year ago, were used.
Reflecting the greatly increased rate of mill use, total imports for
consumption during January-July 1959 were 192.2 million pounds, clean content,
or about double those of the same period a year ago. Dutiable imports totaled
66.0 million pounds compared to 39.5 million pounds last year; duty-free imports
totaled 126.2 million pounds compared to 57.0 million pounds.
About half of the 1959 flue-cured crop was marketed by mid-September.
The marketing season is finished in Georgia-Florida and nearing the end in tnr
South Carolina-Border North Carolina Belt. In the Georgia-Florida markets,
prices averaged a little above the 1958 season average and higher than in any
previous season. In the Border Belt through mid-September, prices averaged
4 percent above 1958 and also set a new record. Auctions are now in full swing
in the Eastern North Carolina Belt and in the Old and Middle Belts in Il-rth
Carolina and Virginia. Thus far, prices except those in the Old Belt have
averaged above those in the comparable period of last season. For all Belts
combined through mid-September, the price average was 59.2 cents per pound
compared with 57.2 cents per pound in the comparable period of 1958. Placements
under Government loan through mid-September totaled about 20 million pounds,
about 3 percent of market deliveries. This is considerably less than during the
comparable period of 1958 when the quantity going under loan amounted to 11 per-
cent of marketing.
The 1959 flue-cured crop estimated as of September 1 at 1,136 million
pounds is 5 percent larger than last year's harvesting. Carryover on July 1
at 2,210 million pounds was 4 percent below a year earlier. The 1959-60 total
supply-carryover plus this year's crop--is one percent below 1958-59.
Cigarette output during the first 7 months of 1959 was 4.7 percent
ahead of the same period of 1958. Cigar and cigarillo output ran 9.6 percent
ahead of January-July 1958. Manufacture of smoking tobacco for pipes and roll-
your-own cigarettes during January-July 1959 fell off 2.7 percent and output of
snuff was down 1.2 percent from a year earlier; the manufacture of chewing
declined a little less than 1 percent.
Exports of unmanufactured tobacco during January-July 1959 totaled
176 million pounds (export weight)--a tenth lower than in the same months of
1958. Exports of tobacco will increase seasonally during the months ahead as
large volume shipments are made from the new crop of flue-cured, the major
As of September 1, burley production was indicated to be 499 million
pounds, 7 percent above last year's crop. Carryover of burley on October 1
probably will be about 4 percent lower than a year ago. Total supply of burley
for the 1959-60 marketing year is estimated at about one percent below 1958-59.
UNIVERSITY OF FLORIDA
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U. S. Department of Agriculture
Washington 25, D. C.
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