THE~ 1949 OUTLOOK ISSUE

FOR RELEASE OCT.11.A.M.

BUREAU OF AGRICULTURAL ECONOMICS

UNITED STATES DEPARTMENT OF AGRICULTURE

WASHINGTON D. c. «R B. SEPTEMBER 1948

ApproTed by the Outlook and Situation Board, Ootober 4, 1948

Summary••••••••••••••••••••••••••••••••• Domestio De1118.nd for Farm Produota

in 1948 •••••••••••••••••••• Employment ••••••• ,.,,,,,,,,,,,,,,,,, Industrial Produot ion ••••••••••••••• Co~~odity Prioes•••••••••••••••••••• War.e R•tes,,,,,,,,,,,,,,,,,,,,,,,,,, Gross Natio•al Produot ••••••••••••••

Foreign Demand for Farm Product• in 1948,,,, ••••••••••••••••

Demand Prospects for 1949••••••••••••••• Farm Inoome •••••••••••••• ,,,,,,,,,,,,,,, LiTestoak and Meat •••••••••••••••••••••• Dairy Products ••••••••••••••••••••••••••

CONTENTS ·Par;o

l

' • 5 6 8 8

11 12 H 14: 16

Poultry and Eg~s·••••••••••••••••• Fats, Oils, and Oilseeds •••••••••• Corn and Other Feed••••••••••••••• Wheat, •• , • • , • , •••• , • , , •• , •• , •••••• Fr-uit ••••••••••••••••••••••••••••• Commercial Truck Crops•••••••••••• Potatoes and Sweetpotatoes •••••••• Dry Edible Beans and Pea a ••••••• · •• Cotton•••••••••••••••••••••••••••• Wool•••••••••••••••••••••••••••••• Tobacco••••••••••••••••••••••••••• Sugar••••••••••••••••••••••••••••• Forest Produots•••••••••••••••••••

SUMMARY

Pae;o

16 17 18 19 20 21 21 22 23 23 24 25 26

A stron~ demand for most farm products is expected i• 1949. If economic trends and government programa deTelop in accordance with current indications, prises to be receiTed by farmers and cash receipts from farm marketings ia 1949 may avera~e almost as high as 1m 19~8. However, farm productio~ costs are expeoted to remain hi~h and net incomes to farm operators are likely to be less than in 1948.

Present forces indicate, in total. a fairly stable leTel of economie activity in 1949. Substantial amounts of foreign aid and the growin~ rate of Government expenditures for defense afford oonsiderable assurance for a hir;h level of demand, at least :fbr the first half of next year, There is even a possibility that the impact of these expenditures on a ~enerally tight economy may cause some further price inflation. Fut any fUrther price actvances are likely to be principally in no.ar,ricultural commodities.

Demand prospects are more uncertain for the second half of 1949 when crop and liTestock marketings will be heavy. The major uncertainty pertains to the size of next year's expend­itures :fbr tr.e national defense and foreign aid. Although recent developements have ti,;htened the international sj.tuation, it is conceivable that they could change in such a way as to result in substantial cutbacks in these oro~rams. This could cause an appreciable weakening of the demand for farm products. But even under such a situation, it is unlikely that cash receipts from farm marketings for the year as a whole would be more than 10 percent below the 30 billioa dollars estimated for 19(8.

This uncertainty aside, however, no marked reductior, in consumer incanes and the domestic demand for farm products ~enerally, oan be foreseen for the immediate future. Ia adclition to the probable continued r.:rowth i!l federal ~oTennment expendi'b.lres for defense and related pro~rams, state and local government expenditur~s for construction of schools, streets and highways are also expanding rapidly and are likely to remain high next year. Shortages or seTeral major consumer ~oods, notably automobiles and housing. sti.ll exist despite hif:h level output in recent years. l::!orreTer, some easir,g in certain areas appears likely. Deferred demands haTe been largely met in textiles. shoes and some durable goods, Also, the exceptionally high rate of business expenditures for new plant and equipment in recent years indicates a stron~ ~ossibility fOr reduced outlays beginning sometime in 194-9.

SEPTEMBER 1948

ECONOMIC TRENDS AFFECTING AGRICULTURE

Item.

~ 135 181 169

278 Prit.::es pald" ln-1;,, &t;axe':J,,,,ol doo '23]. Pe.rity re.llO<JvOO '''""''OOO'J(<<"<C'J8 doo 120

Consumers 11 pr:io& 2_/ §/ 3 1935=39 8 Totalonooooooooaoaooooooooooo8 •100 8 159

Foodooooonoooooooooooooooao8 dOo 8 194 Nonfoodoooooooo"oo<,>oo 0 r,oor,8 d0,0 140

Income ~ ~

182 188 210 169 150

289 368

154

136 182 172

276 234 118

160 196 140

170 211 148

Nonagricultural payments ,Yo,'lBiL,dolo~l74"9 173o1 184o4 Income of industrial work= ?,1935=39 i

ers ~. o o ., ,, o ,, ,, , ,, , ",, ,, , ,, ;, =100 j 332 Fr.ctory payl"ollB y,, o ,, ,, o ,, ,, ,, "" 0 ', do" i 353 Weekly earnin~s of factory, ~

worke,.s '2/ l

All manufactur in go v ') o o o" "o o o o 9 Dollars l49o26 Durable goodSoooooooor,ooooo~ doo 352o47 Nondurable goodSoouovooo,,ooJ doo 845o87

Employment J 8

Total civilian 7/,,,ooo''''''"oooaMillionss58oO , Nonag;ricultu:re.l 'Yocuo•"oooo8 dOv 84'9o8

Agrioultunal !/"''""''"""""'"~ do,, g 8o3 Government fi nan ce { Fed o ) ~ 8

Income~ cash operatingooooooo8Milodolos3~909 Outgo~ cash operatingo'Hooooc,8 doo 83 9 431

333 353

49ol7 52o46 45o78

59,,6 50,,6

9,,0

349 369

5lo76 54o65 48o61

June

192 198 222 179 159

350 434

166

tfo 1 i

295 251 118

172 214 148

187o7

360 382

52o95 56o32 49o39

6lo3 5lo9

9o4

July

186 191 219 169 153

357 458

169

l~~ 301 251 120

174 217 150

l88o2

361 383

53o08 56o48 49o50

61o6 52o5

~

8 .August

190 196 221 176 159

169

293 251 117

174: 217

53,,86 57,83 49o 77

61o2 52o8

Net cash ~f',,income or outgo,8 do,J s+478 Annual data for the years~1~9~2~9~~~1'7~-a~pp~e~a~r-,~o~n~p~a~g-e~~~~~~~-r~~~~~=-~~~~ and .Price Situation, Sourcesz l/ Federal Reser-ve Boa::tdv oon·werted to 1935=39 base" y U o So Depto of Labot1

BLSo y U ,, S ,, D~pt, of Ag:Jt"lcultur-&~ BAE" to convert prices received and prices paid, interest and taxes~ to the 1935~39 base 9 multiply by o93110 and o78125 respeotivelyo y U o So Dept,, of Commerce revised figur&s emp~o7ing new conoeptsli seasonally adjusted • annual rate,, 2/ Uo So Depto of Laborv BLSo fY Consl)mersu price index fur moderate..,ill families in large citieso J./ Uo S" Depto of Corameroe~ Bureau of the Census,, y Uo s, Depto of Treasuryo Data for 1941 are on average monthly basiso

SEPTEMBER 1948 -3-

If t'bf-3 European recovery "rJrogrfJ.m is extended in line vrith the size of th<:J program originally discus sed, tho volume of U. L:. al!'ricultural exports in 1949 is not likely to be upprecie.bly different than m 1948, Foreign requirament s remain large despite marked improvnment in European crop production this year. E~Jen if further improvemt-nt shou1r1 oe-cur in 1949, some easing: in shipments of food gru.ms probably vrould be offset by incr·eased shipments of cotton o.nd tobacco, and of feed g:rr-1.ins to rebuild livestock numbers. Moreover, forei~n needs fur the most part are for c:::·ops for which supplies are more than adequate·fo:r doirJSstic needs.

On the basis of contir1ued high levels of consumer income and with agricul tura.l exports close to 1948 levels~ the !!''.mer a J. level of pr4 ces re­cebred by fa.rmero in 1949 would bo near that of 1948. Under tho impact of 1948 reJord crop production, a considerable docl:i.ne in crop prices ho.s occurr0d. PricGs of Illf)ny ma.j or crops heve fal h:n to or ure <•.pproaching suJ!port levels. However, th8 genr.:rul level of e . .(J'ricultur~::tl prices h'lS been relatively well mc.i.ntained by advancjng prices for livestock u.nd livestock products, which are in shorter supply ln 1948 than a yenr ugo.

Even if. crop product::.on in 1949 is hecvy, only minor doclmes in prices of the basic cropb (corn, whec.t; cotton, tobacco$ rice and peanuts) could occur under existing: price support legislation. Support levels for these 1949 crops may bP. slig-htly below 1948 levels as a result of 10\llrer prices for for.d and somrJ other commodi tk s purchased by fnrmers. Support levels for other crous, such as potatoes rmd fla:zse0d, could be set at lower levels then in 1948 under oxistin~ legislation. Tho record 1948 ferJd crops will be I'oflocted in Ltc~eases 1n supplios of livestock cmd livestock products with lower prices likely in the socvnd half of 1949. Moreover, expanding livestock operations would increnso tho outlets for feed grains •

Evon thoug;h crop production next year ls likely to be so!IK)what bolow tho 1948 record, increasinr livestock output may ma.intuin the total volumo of fa'rm marketings ot about the 19413 l"Jvol. Total cash receipts from farm me.rkotings nw.y be down slif:Chtly, primarily boccuse of lowor prices in tho second he.lf of the y"3nr. Re . ..~.lized net inco!IK) of fnrm operators is also likely to be lower in 1949 o.s production costs o.re expoctr:Jd to romD.in as hle~h o.s in 1948. Altf.ough fflod ccsts prob&.bly will be down, other importRnt oxpensos such as lebor costs, deprtJciation charges, intr?rfJSt Dnd te.x payments, ard motor-vohicl0 operP..tinr, costs 11re likely to increase.

&tronr-: consumer df1m.-md is expected to mo.i nto.in prices of meat animals 1n 1949 closo to tho 1948 level, but shc.rply jncroo.sod hog; mr~rkctings ex­pGctcd late in 1949 probably ifrill c~Jusr; p'"'rk pricos to drop more tlw.n ;:;uo.sono.lly. Dnmnnd for milk end do.iry uroduct.s wil1 also continue at high levels, with pricos averllP:in~aboutth) s·-rTi~ this year. Prices. of egf!.s o.re likely to a·;rl)rage o.lmost r.s hitrh in 194.9 ns in 1.948 but prices of ~hick<'ns,c..2!.oi.le_Ts rmd tur~. probr.bly will avon~P'O lo·tror next year, with most of tho docroe.so durinr the lo.tter moni:.hs of the yonr. The gonc,rQl lovf"ll of frtt-o.nd-oil pricos is likely to bo modr;rctoly lower during the ~on son just ·boginn::.ng- than in the proviou.; season, l~J ::-r,ely as u rosul t of lncrqo.sAd. domGstio pro.duotion. LIBRARY

APR 19 1950 DEPT. OF

AGRIC. ECON.

SBPTEMBER 1948 -4- '\• j

Chj(:>fly Els rt .rns).llt ()f the -large production, :f.'eed p'rices o.re expected .to A.vcrD.["O much lower i.n -194B.-1lt than in the po.s.t fr~0diri g' s8ason. · Pric0s of all feed groins o.re expected .to be close to the Gov(,r'nment support lewols thi!'l frJll end winter Rnd.to be unusually low .relative to live'stock pricos. Whoa~ prices are alsq HkAly to he close to support 'levels, ·with anoth9r increase in stocks. Consumur demand for fruit in 1949 probably v-ri.ll be about tho sn.me as in'] 948. HQwever, if production next yonr is larger than this yenr' s bGlow averar,e crop, prices will be somewhat lower. ~~~supplies in the U. s. a:ro expected to be ample next yonr. As authoriz0d by tho Agricul turul Act of 1948, the level of price-support for 1949-crop potu toes wi 11 J?robably be set low"r than the 90 percent of parit;r 'Ahi ch nppli;sto the 1948 crop. Domarrl for ~u_ck crop.~ through most of 1949 is expectod to ba ab.out as strong as in 1948. Prices received by fsrme>rs for fresh mork0t truck Grop_s probably will nvera.g:e lower bocause production is. likely to b0 larger.. Demrmd for dry edible banns in 1949 p1·obabJy wiJl he modorotely lovrer than in 1948, moinly boce.use of an ex .. pected r~duction in export dGm~nd.

VihHe domestic demfmd for cotton will probably be weak0r this season than. in the previous one, exports o.s likely to be larger than the

. vory lov.r level in the. 1"947-48 syason. World demr.nd for ~ is expected to continue strong-. Consumer drJmnnct ,for cign.re+tes during 1949 will continue high nnd export domr'nr'! for unmanufactured tobacco ·will be stronger. Dem:-1n"d, Fmd als? '?ricos, for forr1st· produ;t"S-are expected to ~ont.inue g-;n!rnlly stron~r,, although some d0cUne from the high J.evel in 1948 is likely.

THE DEMPJJD FOR 1-lill!l!l PRODTJC.TS IN 1948

Excoptionnlly hi<"'h deme:rol for food Find other farm products in recent years has stemmed from reco.rd consum~"'r incomes g~n-·rat8d by the postwar boom o.nd by ox.trrnne1y largo foroign needs. For. tr.reo years, employment and ws.r:es, production and nriccs h:J.ve b"'en incrensi:rcg: ln 1948, they comhiP.ed to produce th9 hi i,he st consum8r incomes end the hi~he st value of output (gross national product) in !history. As jndicated in table 1, tho gross national product in 1948 wn.s 3 times as large flS in 1935-39, with increased nhys icul output ( includ:ir, :c ar.ricu 1 turnl) and hip.:her prices contributi'nr almost equ~o.tlly to this trom..::ndous advaPce. Durinp.: th"l pnst yr:;ar, however, the 8 percent increase in value of the nat5.onal output was primr.rily due to risinf prices, ref1Acti!1g the infl&tionarj ·forces in the economy.

DOMESTIC DEHAHD IN 1948

Emplovmont

During 1947 and 1948, the domestic <.:lconomy has had pr8.ctica.lly full employm8nt • In the past yea'¥), a moderate incr~ase in t~e civilian. labor ~orce has boon absorbed wHhou.t difficult;. In Aurrust 1~~8, total. civilian o"llploymr.mt was more thnn 61 TJ1i~.lion p0rs·ons 1 nlmost a million. .a11.d a h-£>.lf over Au~Sust 1947 r·nd 15 miJ lion more .than in 1939. UrwmJ?loyment in August 1948 wes slirhtly below 2 rni1lion and has not ·boon far_from that lovel during most of thn postwar boom. Unemploymcmt of 2 million· is consider0d to be close to o.,minimum. F'or the most part, jt is m&de up of pArsons moving from one job to another.

SEPTI'~·:Bl~R 1948

'Ib.ble l.- Selt..:ctcd series of production, prices, Emp1o;ymcnt and incor.1e, 1935-:)9 averase, and l9L~6-l948

·-----------------· ------·----·-------------Base : ______ _gal c~da.!:_Xear: ______ _ I ten period

or unit 1935-39 • 1946 1( I 1948

)q.? ==--- ·----!......--- __ _.:____.:E:::.:Js::..:t::.!.~-.------.... ··--.. --~·-.--··- ·---..

Tot.:cl civll:i.::m cmf)1oy:ment y': Hillion unu;lploymcnt ~V · : Do,

Indus::.rial production ?:) Dm-::blc goods

~ 1935-39

]iJonci Fro.ble::; goods . :

ComrcJmc_rsr p:dcos (urban) 2,/: Foo(i : Nonfood -~

1/holcsale prices, all COll1ffiOcJ.i t:~ C S 2.}

Fc.rm proc1ucts Food products I\.11 cxcL farm ::;.nd food

Do. lb •

Do. Do. D:J.

1926 Do. Do. r:o.

Prices re;cd ved by farmers

Prices paid, int. & taxes PEl.rity price ratio

:Aug., 1909-:. :July 1914

1910-14

Fo.rm cash income, including Govcrnr.;.ent payments

Reahzod net income. of Bi1~ dol.:

f2.rm operators

Volumo of fc.rm :m.c."'.rketings

. DJ.·

1935-.39

. . .

Groc::s nat:i.oncJ. prociuct !±/ BlL doll): Personal· Gon :';•tr.tot.ion expdo : Ib •. · Gross ·})rlvatr:.: o•Y:lc:stic :.

invc stFsnt Bi1. dol,.: Nm. ccn :c;t l."Uc. tlon Do .. PJ."OdliccrE:'' (;u:::-abJ:c cqpt~ Do,

Net. fr~r(;ip:·l i.nvccc;tn18nt GovcrrurKn·t pu .. L"Ch"'.scs of

~oods_ ~.nd · ~cr_yiccs

. ..

Do.

107 128

84

8.5

4,3

100

84 .. 0 63,6.

1.2

.. ~4

11.8

PcrsomJ. '.t;~c.omo 4/ Do. • 67.2

55o2 2.3

170 192 165

139e3 159"6 128.0

121.1 148~9 130.? 109.5

233 193 121

25.6 ..

15,0

139

209.,3 14,.( .. 4

26.5 .8.9 .

12.8

4.8

-4~7

30.8

178.1

58.0 2.1

187 220 172

159.2 193~8 139.7

152.1 181.2 168<7 135~2

278 231' 120

30.5

17.9

143

231.6 164.8

30s0 11.7 17.8

.6

8.9

28,0-

195$2

59.4 1.8

192 225 176

172 210 149

167 190 178 150

291 250 llb

30.2

16.5

140

251 177

38 15 20

3

4

32

209

159 .. 2 173.6 189 J}

Disposc.blc pcrsond.J.. ::--r--- j_ns:o:ne _41_· ___ · __ .. -----·- ~ Do. : 6_.::::.6~. ::.2~·--....::..,~~-=---r-..::....!.~.:::__--=.L--l/ Bun<,u of th0 Census J.nd m,s. 2/ Federal Reserve Board, Bul" eau of Labor Statistics_ !±/United States Dep.-=tr.t::tent of Corm~wrce.

SEP'£LUBER 1948 .-6-:

All of the incr~nse in employmrmt sinoo pre,.mr ho.s occurred.off the f::rm. Agricu J.turnl emplo;r,nunt is mo ro the.n c. million smaller the.r.t before t hG 'I'.'IJ.f' c

Comp0 red with 1939, tho n,lmb'3r of .wrq~e and salo.'ry workers in manu­f'o.ctnrug has incro"l.sod ahout 6 million. with mr:>s~ of the go.in in thA du:rL,lo ,Q:oods industr:i.os. 'OthGr increas0s werot trr..do~ ~ million} snrvicos, L.5 million; f<:l<'l.ornli stRto e'nd loce.,l go.v<:H'nmontsp 1.5 .million; ~onstruc t:;i<..·n, l million;; trr:msportA.tion and publ~.o utili tie & 1 1 million • . Increases jn min:in~ ond finance W0re smnller.

In~!strio.l Production

Indnstrial procuction i3lso hns bner.1 mc.intai~1~n ot a hif\h, stoblo level dur]ng 1948. In Aup.ust, the F'edero.l Reserve Board' inde...;: of industrial pro­dJction vras 191 (1935-39=100) And is lih:ly to o:vE~rnr~e close to th8.t figurG for tho yAar as a wnole. Th.1.s vmuld b(') · slir,r tly o.bove the avora~r,e of 187 in ~947. Wh1.le tho current 10'Iel of tofrtl ntoduction i& considorii.bly below the war years vrhc'D armament production vras hr-Javily ~weip:hted in. the index, it is closo to penk outnut in view of sorr.e ·!l'GterlPl sho:rta[i'es. Compared with 1847, ull ifhre'J of too me.jor components:in tho ind~x (d'lrablo 1:1nd r.on ... dural;lo nvmufactur es And minornls) shO\'\I'Cd m1nor ge.~ns.

: . .

Prodt'.ction in tho durable goods rroup, 'which reflects output in such iNlustries as stool, mo.chin(~ry and buHdirw !lW.tor:iA.ls, has mor0 than doubled SlY'co prcv1ar.. ·rn fOmtJ fields, notobly st8ol o.nd •·utornobilos, production has not br.H.>!1 sufficient ~;o m .8t the hesvy dcmnrHis rosultJ.nt; ftom 'qa~timo restrictions on the production of civil ian "·o~ds. TLe non-clm·o'ble c;oods industries, which were relo.tively WGll rriaint>:ined durino; thP, vr~.r, hove been proclucinr; about throe-fourths more than before the yvar. Def'orren demands for this group of commoditi0s ho.ve largely b(:Hm met.~ Recently, production of' textiles and shoes hn.s _ berm trending· dovrnwe.rd. Hir.orol produ.c~ion (mnlnly coo.1. and oil) hG.s been roJ ~~t:i:J'ely st£• bJ.e at about 60 per cent nbovo prewar.

The Gen'n"-l.Prico Level, Des;.>ito ·the record peacetime uroduction clurir;g tht'J pr. st ·l.=-riroi'J YfJ'l -rs-;.tho unpr0coc:lentr/d d.ol110st'1c and foroign domnnd for most com."Uocliti8s ho.s b~;en gre8.t cmough to caus"3 priqos to advnnco throuc;h most of tre pr;riod. 1n f;he surrnnor of 1918, the g•mer8l pric0 level ·was tho hi,rhest .on record •. The Bureau of Lo.b.or &tntistfcs o.J.l-commodity index of wnolesP..le. prices in li.ur.ust 194.8 Wf.\8 169 (1926=100), '1') percent llbovo August 1917 and sl ip.'htly nboye the post World War I poc,.k of 167 ron.ched in Hoy 1920. Since June .lg46$ when m~my pri·ce controls. wore ended, this indo:x ;.:J.s o.d,.rr>.nced o.bou.t 50 porconte

Thn risn in prices hst spring after· the abrupt decline in F'ebrue.r.y of some commodities, largr;ly ngriculturr,l, rsfl~?bted 11 thir:J-round"we.gfl incref1.ses, the rr;dur:ti on 5.n income tn:xos and to some: r;xt,mt the outlook for lnrger oxp,;nrlitv.res f'or d"'Jfnns'o nr.d foreign n.id,· In· early ~0ptombor, there were indicn.tiolls i,hct thfJ mnjor price a<.lj"!J,:.d;me~lto to these fn.ctors ~r<d occurred.

SI!JPTEMBER 1948

Tabla 2.0!'Group indcx,es of' whol0sale prices, Aurnst 1947 find 194.8 (1926=100)

• $ Pt'Jrcont cha.nF!:O

, : ' .. ; 1 · ·August 1947

: . Connnodity group August 1948 from A.u!"ust 1947 • I : -Fuel ~nd 1ightin~ matcrinls 137 113 + 21

.t Metn.ls and motal producis 171 148 + 16 Bu il c1 ing rna t ,J :d:J.ls

J' 203 180 + 13

Chr;rrd Ct\l end allied products 132 118 + 12 Hon::;e f'u rnishine;s 145 130 + 12 Foods 190 172 + 10 ~'rLrrn products 191 182 + 5 Toxt:i.lo products 148 142 + 4 Hidas una leuther products 188 183 + 3

All

All

. other thnn t'G.rm ond food

. 153 136 + 12

coJ1Ul1.od i ties ~ 169 154 + 10

As shown in toble 2, price increP.scs have been gre11test during the past year in fuels 'lnc li~htinr materials, rnetnls nnd metal products and building mD.torin.ls. On the other hand, price ndvuncos in textile products, hides '111d ienthnr products hrwe been rel(1tively snwll.

A.griculturnl Prices. Agricultural vrices are umonp.: those showing relotively smo.ll mcroases over a yeor ngo. 'I'he record crop production this year, which is exPected tc total about 9 percent aboTa the pr8vious record in 1946, h11s be<m reflocted in·d.eclining crop prices. b:inoo Jr=munry, when tMse pricos wero ~er:erf1lly u.t record lo,·ols, Prices recoivGd by fnrm13r:; for crops hnva declined n.n rwor'l!?'e of 19 percF)nt. During January-September, prices of food grnins declined 31 perc!IDt, feed grnins and huy 30 percent, oil bearing crops 25 pcrcGnt EJnd cotton 6 pcrconto However, the genernl lovel of pricos received by frrm-)rs in September wets only 6 percent below Janu11ry, as prices of livestock o.ncl livestock products have ndwncod 5 pcrcr:mt. Similar off .. s0ts !lre shown in tho CoT'l.pnrison '!nth Snptcmhl7r A. yoo.r ago.

Compared with i:>rJptember 1947, prices recdved for crops were down 9 PG:rcont, with oll groups, except tobacco nnd fruits, shovd.ng declines. How· over, Prices of the livostock groups uverf'IE:ed 9 P•'.lrcont hi~=:h6r and the over­a11 level was sli.o>·htly nbove Septomher 1947. Gince prices of 'lUnny of the mu,jor farm crops o.re nt or n.ppronchinv suoport levels, further dovrnwnrd price o.djustm".lnts in tho g0nero.l lrwel on the br.~sis of tho current crops 11re 1:ikoly to be smoll. Stmplios of' livostock ~md its oroducts nrc~ smeller this yenr thon l11st, primn.rDy boco.use of the sm··ll 1947 corn crop, nnd domr-..nd continues exceptionally strong.

!J"ices Paid by lt'rormors. The ovrJrall level of prices pe.id by farmers for commodities, interfJSt e.nd tnxos ms been r•"Jlatively stnbl•' during recent months. Rising pricos for most items used in living r.nd in production he.vo be~n off'sot hy sharp deolinos in food· pricos. From ·Aug:us t to S ')ptember, thls index declined 1 point to 250 (1910-14.:100), o.nd wns 5 percent hie;hor the.n in September 1947. The purity rrtio in September--the· ratio •of" pr:1oee :received by farmers to pricos pnid for commodities, r:nd to.xos--wns ll6, compared with '120 o year n~o rtnd 84 in 1935-39.

&:i!JPTEM3F;R 19·18 .... 8.-:-· ....

'l'nble ;),-Group indcn::es of.pr~ . .ces~zooceive<l·b¥ fllrm.ers, .. Sept"'J!llb&r 194'7' Eti:ld 1948

__ -------·----·~_.2-'14"-100.),__ __ ----·-----------·•· .•• :.... '"... . . , .. ~ 1Per0f.lnt change

'September 1948: Eeptumber 1947 1 from Sept. 1947 $: I ·:

. , ... :Group

-- .. r: .. .-....;..... ......_.._-

l"0ed g;rn"ins :~;nd hA.y . f .• '"' -2·23•r 297 25 F'o oJ groins 223 278 20 Truck orops 150 179 16 on bearinr, crops 282 311 9 Cotton 250' 252 1 Fruits . 185 181 + 2 Tobn.cco 406 .. ·

352 + 15

All orops 231 254 9

M.Jr:t animnJ s 408 367 + 11 Dt·iry nro rlucts 302 :. £82 + 7 Poultry P.nd f1V-,g'S 253 246 + 3

All 1 ivt=:lstock e.nd p:r,o--: -...... ·ducts -· 343 315 + 9 .. . Crons f\Tl d livost-ock 290. 286 + . 1'' . . -

Urben Consumer Pric os. 1'he urb"l.n retn.il price level, as mensured by the BLS indf)-x of! consumer pri"ces, contj nued to mow·· up it1 August to. 175. ( 1935oo:39'=)00) from, 174 in JqJy. This· reprecents n rise of 9 percent over August 1947. In the past· yef'..r, retni 1 food orices rave incrr~o.s_ed 10 ?€Jrcent 11nd hori-food items 8 po rcent ,

Wo.g;e Rates~· ·Factory ·w'lp;e rP,tos grmPrA.lly'h'lve kept pace 'with the consumer ·.pr-ic(:) lov0I, in the pns t yflnr. From· July 1947 to July 1948, eve:rn11;e hourlY. "3e.rn:i:n.e;s in mo.nufncturin£; rost:l from $1.23 to.$J..:3,:S1 ft ~e.in of 8 pArc"3nt. A .latger 11;e:in occurred· in the building trados, but the increase in a.;rerag;l3 hourly otirnings.in r0tnil tro.de was relRtively small. So.far this year, ther' h··.s bo ·m little ~ht1Ylf.;8 in thtJ 0V(:1l"':l.("O hours worked per WOOko

F'?.rm wa"'o retos · r·.lso continuo on an uni/rend. In the summer· of 1948 1 they wr;r7 .7 per.cent a.bovl~ lar:t SU!111Tl'9r.

Gross Natj.on(ll Product. The .major forces c~ntributing to tHe current boom :')"1:.) i..!'ldieated··in 'thr~roo.'k:do'l.'ll.'! or the g:rosf r111tiona1 produ.ct ( tnble 1), ,Vt-,ich mc,nsures tho··tot11l no.ti o:r",l out~ut at prmmilinf" ni.e.rket J?rices.

1. :doot import~mt· hr.cs bnen the trc:Jmtmdous ·dom"nd for ~ll·types of goods nnd sorvices. 'rhis has berm tlue to hi;';h o::mo1oymr.m:t nnd steadHy '1diT8.noing· wnp:c r<ttes, deferred demnnd.s from the 1.'re.:r ye o.rs nnd the lclrgest individual holCi).ng::> ;or liqui.rl ·<:t<Jsds ,in· his t~ry,- .·. · ·

' ~ I ,o

!

s:mPrEMBER 1948 - 9 .,.

During 1946 and 1947, .constuner ,expenditures inc~~a.sed more tha.:n con­sumer incomes. ! This was pos.s ible p_a.r:t'ly throuzh th~ u.s e of pas~ savings , a reduction in the rate of savine:; 'from '-c·urrent moome' and throur;h a sharp in­-crease in consumer credit. In 194:8, th~. increase in consumer expenditures has been more mo.derate than in the'· previous 2 years and ha·s ··been less than the increase. in .:consumer incontes. l'his tendency towa!'d a more normal spending pattern indicat~~ 'tha~, in the aggreiate, supplies are o~ertaking demands at current prices!':, Never_theless, backlqgs of demarid for automobiles and hottsing are still large: ·.While the pr9porticin of consumer incom~s going for food in­creased during 1946' and 1947, it ~s be~ quite 'stable d~ring 1948.

rl • , .:

2. T·he ma.r~~d e:::cpansion ·in ptivate domestic inve~tment was another important factor.. 'In 1948, these expenditures viere ar1flos.t 5 times prewar. The boom in residential building is likely to set a recoid in 1948 of almost 1 million new· dwe~l.inr; units started compared V'Tith 850,0QO in 1947 and 937 ,ooo in the previous record year of 192'5. In recent months' however I the volume of navv starts has trended downviard.

Business capital outlays for plan~ and equipnent have continued at . excei:itionally 'hi:::;h levels in t948, and fu':t.;t!1er s\.~bsta:ntial gains· wer~ made in modernizirig and equipping the nation's ·industrial plant. In the. iast · two years, expenditures for new equipment ·have made 'un a lor"'O 1Jhnr.o :of' th;; totar· ,gross :q.ational product ·_than ever before. Business invem;orie.s 'also · contfnued to 'expand in 1948. ·

. 3. The large excess of .United States· export.s over. inpor,'ts has also beei('an impor~ant factor in the general domestic dem;and p.icture· ·(foreign· .. -.. demazid for f~rm products is discussed in a· following section). The n'et-foreign investment component of the gross national product in table l repre­sents on~y that par.t of the export surpl ua which .was not ·f'~nanc ed by U. S • Govei'lllll;en:t gran:f:;s. ··The latter expenditures are shown under. :the Gover:rf:ment component. .A lll:ore accurate a·ppr.aisal of curr~nt trends in ·u. s. foreign trade can be obtained from tab.le ~. ·

·' U.s. exports and the e=cport surplus (excess of exports-over imports) have trended dm·mward since the- second quarter of 1947. This' has- la-rgely reflected dollar shortages'in foreign. countries. In the second quarter of 1948, the annual rate of u. s. exports. was '17 billion .dollar.s ~· compared, with 19.8 billions in 19·4~ as a whole. The e~q~ort surplu_s;-was red\lced to 7 b_il­lion dolla~s compared yvit.h 11.3 billions last year •• · Compared with -194.7 the significant chanc;es in the first part of' 1948 have been a mod.erat-t::; increase in imports from abroad; a pronounced reduction in dollars obtained from the liquidation of foreign assets; and a lnrt;e reduction in the second quarter of U. S • Gover11lhent gra!n:~s and loans' to fore.igri 'uountries. The latter ~vas, aue partly to· the· exhaus'tibn~ of the British··:to'an, ·.a reduciiion in th,e use' of Inter~ aid· fu.~ds and ·_the slow start m~:d.e in g;etti.ng ECA underv.ray·. '· Hov!ever, existing apJ.?ropri.ations and, expanding e~cpenc~itures for the· s eve'ra'l foreign progrnlll:s.', indicrate a su.bsta:n1:ia1'. inc reuse ,in u. s. exports and the' export I. . I ' • ' • • 1 I f

surplus 'durint; :the rema'inder of' this year. · They may reach the levels bf t~e last h!ljt '9f · 1~47 ... '. ·rt i,s,~ .e.st1Jna;~~d :that 6 billion dollariS of. ll ~- 'S • .'aid . Wlll be utilized during :194S. · On this basis, u. s. exporls of goods and ::".:~-·.:·~· services this year may total about 18.3 billions, only 8 percent below 1947. U.S. imports, during the remainder of 1948, are likely to continue near the levels of the first half of the year.

SEPTEMBER 1948 - 10 -

Table· 4.- Financing of. United ·states exports of goods and services in specified poriods

(Billions of dollars) Heans of financing

u. s. :e~ports

of

U. .So : Sale of go],d ·: U. S. Other-: and short-and: Govt. sources

Period : goods ,:

and

imports of goods

and : long-term · : r,rants &: and :dollar assets loans to:bnlancin"

0

services by foreign foreign : Item countries :countri·es: (Net)

· mc3Nct. ). . ·: (Net) ~ :services:

------------------~ra--·~·~nrr~2--~--~tU~~~~~nu~~--1il~5~

~·

19.35-.39 ann. average :· 4.0 .3.4 1.1 ?:/(-) 0.1 (-) 0.4 1946 15.0 7.2 2.0 5.0 0.8

1947 1st qtr. (ann. rate) 19 • .3 8.1 4.8 5.2 1.2 2nd qtr. (ann. rate) 21.1 8.6 Lh6 7.9 Jrd qtr. (ann. rate) 19.2 8 • .3 .3.4 6.8 0.7 4th qtr. ·(ann. rate) 19.4 8~9 5.3 2.9 2.3

Year 19.8 8.5 4.5 5.7 1.1

1948 lst qtr. (.:1nn. rate) 17.8 10.0 1.2 2nd qtr. (ann. rate) 17.0 10.0 2.8

Est. year

11 5.2 1.4 Y. .3.4 0.8 21 6,0.

1/ Includes loans of U.s. dollars qy the International Bank and by the.Inter­national Honetary Fund. In 1947 these loans totaled 761 million dollars. In the first half of 1948 they wc.r-c at the annual rate of 626 million dollars. y Includes private loans and remittances to foreigners. · 2/ Includes no European recovery program funds since the advance of 1 bil~ion was authorized April 3, 1948. !±/Includes Oo8 'billion for E.C.A. grants and loans utilized and 2.6 billion for all other foreign grants and loans incl udi.ng Army supplies for civilians in occupied areas, China aid, Greek Turkish aid, etc. · 2/ Includes an estimate of the utilization during 1948 of 2,0 billion for the European recovery program and of 4.0 billion for all other U. s: Government foreign grants and loans.

4. The Gov8rnment component of tho gross national product, .which had declined in 1946 and 1947 increased substantially dur~ng 1948. State and· local Government expeniitur~Js for schools, streets and highways, as· well as other Government servi,cos have been on tho uptrend since the end of the war and in the first half of 1948 were at a rate a tout 20 perc;:ent higher than in 194 7 ns a whole. Federal Government expenditures arc increasing substantially as a·rcsult of the expanding defense and foreign aidprograms. It .. is estima.ted that fedcrnl expenditures during the year ending June .30, 1949 will be al:out 6 bil=!-ion dollars more thnn in the previous fiscal year" ·

FOREIGN DEMAL'lD FOR U. S • F.I\'FM .PROroCTS lN 1948

Dee:t-ite the coneideraole :improvement in the world food.eituation in 19118, fo:re~ gn req_uJ.rements of U. S. agricultural produc"~?e remain large, aJtfto·tgr. somewhat below 'tho record 19~7 level. As with total ex-por-r.o of go.;ds n·:d eervic~s, the value of ag+>icultural export~ in each of the first 2 n ,,·jrte:ra of· 1948 "rae lower than in any quarter of 194·r. Fo:r the second half o: 19!~8, an :tncreao{;cl Yolume of axporte · over the f:l.rst hl'll f i.e ~nc lcfl ted on -~he basis of l~rge ara.in end cotton crops in this country ar1d .tn~reasing

ut:li?ation of ECA a::1d other available foreign a1d funds. For 1948 as a whole, t!1e ~alue of agricultural ex:porta may total -,.4 billion dollars c0m­pared with 3,.9 bilJione 1n'19h7.

Table 5.-Value of eY.~~rts iu T.Jnitei States agricultural products in specified periods !/

"Period

~93'5-3~. Anm1al average 318 12~ 95 Y(8 273 ~947..

169 439 756 lst, quarter 93 317 2Pd, quer"ter 137 53 511 291 802 3rd, quarter 37 52 499 280 n9 4-':.h. quarter 84 73 417 293 710

To-tal 191J.7 h27 271 1,866 1,181 3,047

1948 J.st. '1uarter 122 40 416 236 653 2nd. qua::'tt:r 98 41 400 208 609

Rstimated. tota.l 191~8

748

1,071 1,038

919 882

3,911

859 78'5

(3,400)

!/ In postv1ar :period 1.iJclud~s lJl"lllJ" supply shi:pz!iente to foreign civ'tlians tii0Ccup1e .. area. g) Includes tril1".mings, scrap, ana stems, ]../ Def~.ned Fl.S the sum of Agric­ultural Crude Fnodetuffe (Economic Class 2) plus Agricultural Ha.uufactured Food­stuffs (.1!-:!conomic (;.!.ass 4). 4/ The- sum. of coJ.umns 1, 2, ami 5 :plus small values of agricultural no;•-foods not shmm separately,

As in the previous yea1· (oee table 5), grain shipmento rr~de up about 1-to.lf of the total value of a·gr:i c'ul tural exports in the fi:i.~st half of 194!3. A considerable increase in these shipments is underway in the second half. Larger ahi:pments of cotton and tobacco are also ir.dicated for ·~he remainder or' tho 'Y _o,o.r,

SE..P.rEMBE:R 1948

I

'

12 . I

DEMAND PR0..9PECTS FOR 1949 ''

Demand proAperts for 1949 reflect ~eaent unoe~ain~ie~ relating to the international eit~ and:ho fucure ~rends in those. segments of the ecoll()my- in \thich bac-klogs are. ~ing· m>rked off and J!Cii~•l!*'le.ton Jl'O'" grams are be ins completed. Nfn"~t'hele9s; t'.tie growing re.te of government ex~endituree for the nationa~ defense: gives some d~e of assurance for a high level of demand, at least 1n.the .. f1rst half of 1949.

' . The defense -program is affeo.ting the ·econ01113 in the se.cond half of

this year and will be & growing force in· the first half of 1949. A con· tinued high levol of ·ex~orts of industrial and agricultural commodities ::l.lso is assured for· the first half' of next yee:r' und.eir the foreign aid progra.me in operation. The grrn-Ting requirements for defense and foreign aid :mposed on an economy all·eady aperating close to capacity pose the poseibilit'T that further infle.tionary pressures may develop during this period. Even if eome easing occurs elsewhere .in the economy, overall activity and domestic demand for farm products in the first half' of 1949 are likely to b~ at least as high as in the iaat half of 1948•

Demand prosPects are more uncertain for the second half of 1949 when marketings from the new crops will be heavy. They depend to a large extent on the size of future appropriations for national defense and for foreign afd', Barring any substantial reduction from 1948 in th~ size of these a~~ropriations, no appreciable decline ih economic activity can be fore• seen. Under the ~rograms tentatively projected earlier'this year for 1949-50, some increase in appropriations for the national defense and only a slight decrease in foreicn aid a~propriations were indicated. New . appropriations of this size, along with expected carry-avera of several billions from this year's ap~ropriatiane, would prov~e a steadily increas­ing influence in the economy through the year. Furthermere, atete and local governmento are steadily incTeaeing their expenditures for schools, streets, and highways • This trend is likely to continue· U:PW'EI.r, d tbro!l~h 1949. 'Another element of strength for next year is the continued short­age in automobiles, production of which in 1949 is likely to be limited only by the materials avaiable to· the industry. While the downward trend in recent months in new cwelling starts suggests the posgib1l1ty that 1949 residential construction may be less than this year,· it is likely to continue to be a strons force in the e~~omy

On the l>asis .of current infot'lllB.tion, business expe:Dditures fo~ new plant, ·and' equt:pment, which have been very large in recent years, ~e likely ~o.turn down 1n 1949. Recen~ unoffical surveys indicate th~t a eubetaptially lower·level of expend,itures by manufacturing concerns 1~ ~n prospect. However, ·ex~ns1on progr'r-tma by publi.e utilities are far from / complete and should provide support in this sector. :Results qf an,offici~l surve_y will be available early in 1949'and will ·permit a ~eappra.i~al of these trends :i!n ce:p1i;te:l outlays. , . ,

During. 1948, a-weaken~ng ~ema~d (at the1current price level) for . textile prodtl~t-ts and shoes nas been noted. Some reduct1:rJ!!:,:~{~ production '•.i.Jl likely in these fields, in whi.ch de.ferred.-been met.

SEPI'flfBER 1948 - lJ ... -;:

These divergent trends, vdth some. W6akness in tho private sector being more or loss offset by expanding government outlays, will tend to produce a. stable overall level in 1949. Chances for price stability in 1949 appear to bo stronger·tJ:"l .. "l.n in previous years, pnrtly becr:~.use another year of high production has helped reduce deferred demands. The record fD.rm crops this year also indicate an oa.sing in inflationary forces. If furtht:r general price advances are avoided in the near future, waGe increases next spring are likely to be n10derate and may not be refiectc:d so readily in higher prices as in 1948.

' To the extent thil..t· consumer incomes arc maintained clo sc to this yen.r' s

level, the general level of agricultural prj_ccs in 1949 may be only slightly below· 1948. ·For mbst major crops) prices ha.vc declined, or arr; declining, to support levels. No significant further drop in the general level can occur for the current crop~ Even if crop production should again be large rwxt year, only minor overall adjustments would be possibl·- under the price support program scheduled to be in effect for the 194 9 cropso

. Lov·ver prices for fe0d and some other corrnnodi tio s purchased by farmers next year are likely to be reflected in a m.i_nor decline in support prices& Some strength in the crop price .. situation al~o is indicated by the hoJ.vy foreign demand and the expected increase in livestock op~.;rations Hhich ·1dll increase the out·lots for fc;;ed grains. Continued henvy foreign de:mands nre likely if the European 1'·3covery program is extended in line 'Hi th the pre sent program. vlhil.e some -easing in the demtmd for food· grains is likely if further improvr::ment occurs in European crop production, it rrill probccbly be offset by larg<::r exports of cotton and tobacco, and of feed grains to rebuild livestock numbers~

The major possibilities for price declihes are in the livestock and livestock products groupe The 1948 record corn crop will be roflactcd in increases in supplies in the second half of 1949e Consequently, prices received by farmers for this group are likely to average so.ncwhat lower in the second half of 1949 than in the first half.

While crop production in 1949 is likely to be oomewhat sma;Ller thnn this year• s record, increasing livestock output vdll probably r.1aintain the total volume of farm marketings at ~bout the same level as in 1948. Cash receipts from farm l'llD.rkctings may be qovm slie;htly. Realized net income of fnrm operators is also li::dy to be dovm from 1948 l€vols as production costs in 1949 are likely to be al:::out as high as this year.

·This rough .balance of economic forces projoctcd for 1949 could be upset by changes in the prvcarious int~rnntional situation. If a lorge increase in tho defense and foreign aid pr og:..·am be corr.D ~ necessary, in-, flationary forces are likely to be reinforced. On the other hand, substantial cut-backs in these progrm.1s oould result in a moderate drop in activity and a ifeakening demand for farm products in late 1949. Under the latter conditions, prices of livestock and livestock products, as a group, would. decline sub­stantially as consumer incomes recede. Nevertheless, incorre fron crops would be. fairly well maintainE:d by price supports and total reccipt.s from farm marketings ·in 1949 vrould probably not be dovm norc than 10 percent from 1948's high level.

SEPrENBER 1948 - 14 -

.... F AIU.f nrc OI.'IE, . I '

Next year on t}).E;J ~;h~le. 'i:~ . .iikoly to be ano~her "good year for farm incomes--but perhaps n0t as g:ood as oith~r this year or last year.

Farmers' gross incorp.e is _ieveling of~. Their produc·bion exponses are still on the upgrade; and net inqome has probo.bly pa.ssed its pea};. But while farmers·' realized net income may show a declin_e in 1049 1 it will probably remain hig~er than it was at any time before 1946.

Farmers' cash receipts from r!larketings in 1948 will probably total close to 30 billion dollars, or only slightly, below last year. Governmc~t pa;'lnenta to farmera, the value of productrS consur.1ed direotly in farm house­hold.s, and the rental value of farm dv,rellings have also shovm little chanc;e. So farmers' total gross income in }948 will-be close t'o last year's level oi' 34.7 billion dollars. ·

Almoct overy type of farm-production expense is hip;her this year~ however, and the toto.l of all expenses for the year &.s a >"Thole vrill probably be up by about 7 percent. Ls a result, reali~ed net incmne in J.:J48 may drop to lG .5 billion dollars 1 or 8 percent below 1947.

In 1949, farmers' cash receipts and total gross income are not ex­pected to decline very Jnuch from curren·b lcveJ.s. v·vi th production expenses likely to remain higi1, however, net income may s lido off noticeably for the second y13ar in a row. There is a lil:eU.hood of a decline in ·bhe prices paid by farmers i'or some conunodi·bies used in production. Feed prices will averace lowor. But with such important items ~13 ·taxes, labor c9sts, de­preciation chare;es, interest payments, and motor-vehicle operating costs likely to equal or exceed curren·b levelo in l£'49, total production expenses will pro1ably ue about as high.

'l'here will also be some further changef: in the distribution of fa m income among; the varj_ouil commodities and corr!C:lod.ity ~roups in 1940. Tota.l crop receipts this year wiD pro·oo.bly be a hout 5 percent lower than they were last year, but the total for livestock and livestock produc·bs will be up a little. A similar relationship scents Ul:ely in 1949. Receipts from many crops are expected to s hovv sOine d13cline; but livestock and livestock products may ~Je maintained generally near 1948 levels.

1rv•r: S T OC K AHD ~·,ffiA'I' S

Prices of meo.t and meat animals in 1949 are likely to continue far above war and prewar levels.

Total meat production v:rill be little cli.fferent from 1948, and the· 1949 average price for all meat~~ and meat ani:ilalo is expected to be about ·{:;he sa:-ae as this year if indnstrial a'}t:i.viby and 'Jonsumo1· income do not dccli:n,e signi­ficantly. However, sea..sonal changes in pricea ,.,ill occur, and the 1sharply · increased hog marketinf~·s exp0cted lo.te in ·191:1 probably ''Till cause pork ·and hog prices to drop more txn the;; normo.l.ly do at that ·time of year.·· Prioes of beef and beef cattle arc expected tn·remain relatively hie;her than prices of pork and hogs.

SEPTr.;HBER 1948 - 15-

Evf·n thouP.:h meat output in 1949 V~Till not be mt:.ch, if any, P.r"atP-r than in 1948, the year may mark the turning point in the current uowntrend. 'l'his is especially likely if corn and other feed crops are large next falL In 1948, the Nation 1 s inv-entory of meat animals has s!'lrunk for the fifth con::ecutive year.

Meat supplies next year vrill agai~ be lar~~?r than :pre,.ra.r.· but short relative to employment and incomes. Civilian consumption pee :person is P.xpected to be approximately 140 to 145 pounds pGm-pared with 145 pounds in. 1948,155 in 1847 and an averaf.'e qf,l(4,_:p9unds in l{j37-41.

The 1949 meat supplies w111 contain more pork and les~ beef than in 19h8. Because more o:f the cattle will be grain fed, ho,.rever., more of the beef ~rill be of the better P.;rades, Supplies of meB:t in both mid-summer and late fall are e:xpected to exceed those of this year. Pork :t:roduction probably v1j 11 increase more- +.han ur,ual late in thP- year as hor;s raised from the expected large gprin~ ~~~crop move to marYet.

Since total meut output "'ill be little different ne~t year. chan.o:es in prices of meats and meat animaJ.s will be due mainly to chan.9'es jn demand. A. contim1ed strone: consumPr demand would hold 1949 pricgs cj.ose to tnose of 191.~8. Howeve:'r, the .ce·tail value of meat in 1948 has been exceptionrtlly h1..,.h in rela­tion to incomes. If consumers 1 expenditures return to a pa·ttflrn more liJ.:e that of pre.,.rar years, meat-animal prices could weaken moderately in 1949. Even so 1 they would still be well above any ~ear except 1948.

Increased pork production will reEult from the lar~er pi~ crops expect~d ~1d from feeding to sli~htly heavier wei~hcs. The pi~ crop of ~his fall, which 'N"ill bC" marl:e ted next sprin.l'!: and summer, probably will. be E>omewhat lar.o;er than the fall ,p:i .rr crop of 1947. With abundant corn supplies and a ho~-corn ratio this fall that may be a record hi,gh, the pig crop next spd.nr; may be 15 to 20 percent lareer than the 1948 sprin£" crop. An incres.se of 17 r-Prcent would meet the ~oal of 60 million sprine pi~s announced by the Department of A~riculture. TPis \'!ould be lar~er than any sprin?; uie crop since 1943.

The year:- 1948 is the fourth in a row when marketin<>-s of cattle and calves toeethC"r with death losses exceeded ad~itions to herds throu~h births and imports. This increased current be~f supplies at the expense of future ~reduc­tion. The reductions have be~n ~reatest in heifers, steers, and youn~ stock. Cows othf'r than dairy co\'rs have not been reduced very much. A stron~ demand for beef, both current and prospectlvf", coupled 1r1ith lar<?,e feed supplies, is likely to result in more grain feedine of cattle this winter.

The lon~ decline in sheep numbers, ll'fhich began in 19h2, is continuina;. Th~ 1948 lamb crop was do.,.rn 8 percent from lust year. Many ewe!' are aP.:ain bE-in~ marketed this year. Wool prices in mid-1948 sho\'red their P:reatest strE'n,o:th since 1946, and may average well above support in 1949 because of strona; demand and premium prices for the finer ouallties.

The greatPst sinfl'le factor underlyin.o: the 19l~9 meat outlook is the bumper feed ~rain harvest of 1948. The bigfl'est corn crop in history is the base for record feC"d ?.rain supplies. The total supply of feed cor~cPntro.t~s, al t 1,ou,e:h short of 1942 in tonna~>;e, is the lar.a.;est ever relative to livestocl': numb~rs.

- 16 ~

DJ.IR.Y PRODTJC TS

P2 ices for milk and O.airy products in 1949 probably will average aboi.lt the same as this year. Demand will con1Jinue near 1948 levels since consumer incomes per person are likely to be about as large as in 1948, over-all dairy exports may increase slightly, and the United States population will be slJ.ghtly lareer. Production of milk is likely to be slightly greater than in 1W~8~

The number of cows is decliping for the fifth consecutive year. Farmers will have fewer cows in 1949 than ih any year since the early 19301 s and 12 or 13 percent fewer than at the 1944 peak. How·evcr, supplies of feed per animal unit will be a record. Dairy pr.oduct-feed nrice r elaM.cnships vfill be considtrably more favorable to farmers than in J/JL8. 'l"'his will resu.: t jn

heavier feedmg and the rate of output J?er cow in 1949 probably wlll exceed thls year's recurd o.f over 5,090 pounds. Total prl.lk output will be a little greater than the expected 117 bill:ton pounds for 194£~. Favorable dairy-product­feed prJ.ce relationships and proba.bly less attractive alt,~:cnative opportunities in the laRt half. of 1949 may bnl t the decline in milk cow numbers by the begin­ning of 1950.

Gas:h .±:arm recelp+,s from the sale of nulk 11nd dairy product:.; i.n l9L~9 r;robably will be little different from the /~-1/2 billion dollars of thi.s year, IBclines jn feed costs are likely to more th<:m offset any increases in other i terns used in dairy production, so that net income from dairying probably will be at least as great, and possi.bly somewhat great.er, than in 1948.

Production of milk on a per capita basis for 1949 will be the lov1est since the drought ye:ars of the 1930's except possibly 1948< ·E::~ports will be well above prewar although stiJ.l a small proportj.on uf total· production. "Per 'capita supplies of fluid miJ k, and manufactured dairy products -v1ill he near 1948 levels c:.nd, czcept for butter, well above any prewar year.

Bu-t,ter consumption this year will be about 10 pounds per person, al::out 40 percent below the prewar rate.. This has been partly offset by increased consumption of margarJ.ne from about 3 p0unds per person in prewar years to 6 pounds this year. Since the consllmption of fluid milk and cream .vv~ll be · large in 1949, and productj_on of milk in main butter areas will increase little if any, butt8r production and consumption Ylill. be low again next year.

IUUL1RY AHD EGGS

Prices of eggs are likely to average almost as hiGh in 1949 ao in 194fl. During the first two quarters, prices may be slightly higher, but :i.n tho last quarter somewhat lower, than during the sar!l3 period of 1948~ Support prices may approximate tho:=:;e in 1948. Purchases for support durine; the first half of 1949 may be smaller than in the sarr.e pr.riod this year s1.nce production probably will be dovm about 3 percent. By the fourth quarter of 1949, however, egg production may be running hieher than during the latter months of 1948, For the year as a nholo, output is expected to be atout the· G:?..le as in 19413.

SEPTEMBER 1948 - 1?-

F'a:r'IJ:f prices for chickens. broilers, and turkeys probably will average lower in 1949 than this year, with most of the decrease during the latter months of the year. More fayorable egg-feed price relation-ships d1iring. late 1948 and early ~949 are ?xpec~ed to result in ~ subst~ntial increase in the ntrnilier of farm ch~ckens r~~sed ~n 1949. Commerc~al bro~ler output may be o.bont A-S large in total as in 1948 •. The 1949 turkey crop r;tay · increase substantially because of record turkey pr~ces and lower feed pr~ces in late 1948.and early 1949 •.

Domestic demand for poultry products is likely to remain strong through most.of 1949. Consumer expenditures for eggs, chickens. and turkeys probably will be close to 1948 levels. Less than 4 percent of 1948 egg supplies and an insignificant percentage of poultry went to foreign outlets. Such outlets are likey to take smaller quantities in 1949-

With total supplies of eggs about the same in 1949 as in 1948 per capita consumption will be about the sAme. On the other hand, incre:~sed supplies of chicken and turkeys will nu1ke possible moderate increases in per capita consumption of those items.

F~TS, OILS, AND OILSEEDS

The general level of fat-Rnd-oil prices is likely to be moderately lower in the year beginning October 1948 than last yeart largely as a result of increased domestic production of fats and oils. In 1947-48!) the index of wholesale prices of 27 major fats and oils averaged 274 (193 5 --~luO), A.. -new peak, compared with 263 in 1946-47 and·~bout 150 during most of the war.

Total output of fats and oils from domestic materials in the year beginning October 1948 may be 3 to 4 percent larger than tha output of 9.9 billion pounds in 1947-48. Bwmper 1948 crops of oilseeds assure a material increase in production of vegetable oils in 1948-49. However, smaller st~cks of edible vegetable oils this fall than last will partly offset the increase.

Output of animal fats may decline slightly in 1948-49. The 1948 spring pig crop was 3 percent smaller than a year earlier, and the number of cattle on farms January 1, l949 is expected to be less than at the beginning of 1948. These factors probably will be partly offset by feeding of' hogs and cattle to heavier weights than in 1947-48, since the supply of feeds per animal unit in 1948-49 will be at a newbigh.

Imports of copra into the United States in 1949 probably will be larger than in 1948$ when they were reduced as a result of typhoon dnmnge to Philippine coconut groves in December 1947. Imports of palm oil also mA.y increase, since exports from the Netherlands Indies, the leading prewar ~our~e for the United States, are expected to expand in 1?49. European demand for fats and oils from the United States remains strong. -. Disappearance of fats and oils in the year beGinning October 1948 is ~lkely to increase, reflecting the rise in production. A moderate increase ls PTobable in consumption of food .fats and in use of oils i~ drying-oil products. Use of fats in soap may remain about the srune as in 1947-48.

SEPTEMBER 1948 .0.'' - ~oJ.- "(> '· ~ ·•• : .. -.. , '~~ • ; "f: \

Disap-peara~ce·~o'f 'fate ehd''oils· 1.h .ft:..~'ij'ty/ea:t': erndecl J·rri:ine;.:l948,·:,thrlabest 12-month P~f~~)d' 1"6~ which data _e.rel airf~ilaM.e i· toltal.ear about 70 -~o~ml.S per ,._. person (fat conten~); the ,same ab"·lpreliar·;·,-:'i>isa.ppea.ran:ce ·o:f' food· fats, at about 43 pourid~· ·per pettson (fa'ti c_ontent)'.--\ias· ·3' pounds tinder the' 1937.-41 : average,. bu~,use~o~ fat~ in nonfo~~ ~r~~U~te was'about 27 pounds per per~on, 3 pounds l;ibove prewar . · · · · · ' :. ~ ' . .-.: · .: ·

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Prices to growers for soybeans produced in 1948-~re· to be ~upported at $2~18 per bushel, 14 ce~ts per bushel above the support for the 1947 crop but more than $'1,00 below 'the'. eeaaon·:avler~ge ·:p:dee. ·Prices t9 farmers for soybeans 'W'ere n:ear the sup_po'rt;wheq·tne n1arket·:tng· season began in .. la-t;e September b1.1t probahly w lil ris'e 'J!A. ter. Tlle longer term· out'look fo-r. soy­beans remains favorable. ·, Mucl-:! ·re·s~E;trch work is b'elng done to. i;:m:prove· ·soy~ bean o:il for both edible and''<irying·oi~ 1uses. Arid a large :po~ntial·.export market for soybeans will exj.st aEf long ·a.s only small g_uantities of Manqhu-r'ian soybeans are available to Western Europe. · ·

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.. ';I'he. p:r;i~e ··of fla'xseed p:r-oduced in "194~ is being. s1.rpp~rt~d at $6.oo. -per bushel, Minneapolis' baai:s, the3' same· level as· for· the 191n crop. ·The large crop of 47.3 milHon bushels this yeal!' together with the ·carry:i:tl of ·7·.3 'mll­lion bushels, is at least ll+ milHon bushels larger than the probable quantity need.ed to supply domestic uses and to provide for. a normal carryout. Export allocat:J.ons of 2 million bu.shels of. flaxseed were announced in September, largely to' countries of Westetn'Europe ·ana to the Department· of the Army. AdCYitionn;l allocations of oilsee"ds, including flaxseed, are. UI}der conside.ration,

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Th~:·'re~o·rd. 1948 peanut crop of 2.3 billion pounds,.picked and thr~shed, is e.pproximately 1·.o billion polinds la.rger than· th9 quantity that w:l.ll be used c?mmercially ~n edibl~ products, used and lost on far.ms, and sold by farm~rs for ioc'al consumption.· Part of the excess 1.0 billion pounds will be crushed in the United· Si~ates, and part will li>e a'xported, 'largely for crush:tng· aqroad. In 194'7-48, when the peanut· Ca:'Op was somewhat· less than. that' 'e:x:pec'ted 'for 194-9-49, ·about 0 .4· 'billion -pounds -were crushed· 1n the United States and 0.5 ibHlion' pounds were exported. · . ·. ·.

Commercial use, of. peanuts in edible products has declined substantially s~nce .t~e war: ·n~ipg' tne war', peanuts and peanut butter were· eubstltuted for sbarpe foods; particularly ·cand.y and' ,jam, wh:l:ch have become :t?ela-tivea...~r · .abundant ag~in. In addition, the price of peanut~ to growers has been'main~

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-t;;atnecf at 90 percent· of· tp.e, -pa:tity price at ·the beg.lnriing of the market1.:hg. seasbn.' Ninety 'percent of''bhe parity price ·JUJ.y ,15, 1948 was ·10,8 dents ·;p~r pound compared with •10 ;0: cents a year earlier, · · · · · ·

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I • • CORN , ii.ND O~J~ ~~E~ I ~ , '

. . Phiefly as a' _resul~ of 't!ie, ina..rked ipcr.~.ase ~·~ · P.r~dticit..:ion of cql"n,' and other feeq. grains, feed prices al;'e 'expe,cte9-, .to average much .lc1Wer in 1'94$-49 than in 'the. _pa.st: feedlng season.. Pride:s. o:f neajJ,.y a.1.1 feeds haye 'decl:f.riet!~

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in recent months. Prices of oats, barley, and grain sorghums reached Govern~ ment ~UP.po;r.t .:l;$vf,'.1S ~:q P.)-16UB;t. . ,Co;on pl7i9.~~ J:lav.e been hie,11 :ip "r~_lation to most 0thei1 grains :thj s .;I?ast, f?wnme.r, b\1.~- na:v.e. dec.11n~d sb:arpl,v 'in. reoent w~eks ·

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The seasonal -deali:ne \Vill- b·e: ~ueh greater •... Pr1ces of "all feed grains .ape , o , ,_. ~ , 0 , ' ~ 1 o• I {I 1 1 ° ' I t, , 1 I • 1 l o

exp(fcted to ~ close to the G~~ertll!f~nt, S1.l.p-p.o~t ... levels tl1~~ f8:ll '•and winter and to be unusually low in relation· to 'lives-tock prices. ·:· ··

SEPTEMBER 1948 - 19 -

Fe~d supply prospects for the 1947-48 feeding season are about the best irt history. The total feed concentrate supply will be about 166 million tons, more than one-fifth larger than in 1948-48 and only a.little smaller than the record supply of 1942-43 when wheat feedings were the second largest of record. r.he total' feed supply will be the largest on record in relation to the number of livestock to be fed.

The total production of feed grains will be 8 percent above the previous record in 1946. Even with a small carry-over this year, the total feed grain supply also.is larger than in any other year. The very large production of feed grains in the Midwest will result in large sales.by farmers, particularly of corn,during·the coming year. This will substantially i~~rease the quantity available to deficit feed areas, for domestic food and industrial uses, and . · for exports. Even after allowing for liberal use of feed grains during the coming year, the carry-over of feed grains at the end of 1948-49 is expected to be the largest in recent years - probably around the high 1937-41 a~erage.

F~ports of the 4 feed grains, probably will total close to the 5 million tons of 1946-47, much larger than the ~xport of about 1.7 million tons in 1947-48. Much of the increase from 1947-48 will be in corn.

Near record supplies of byproduct feeds will again be available for live­stock feeding this year - probably close to the 19 million tons fed in 1947-48. Total high protein feed supplies are expected to be a little larger than last year's near reoord in relation to the number of livestock to be fed.

With large supplies of other feeds, less wheat is expected to be fed during the 1948-49 feeding year, probably the smallest amount since 1940-41.

The total hay supply for this year is the smallest since 1941, but it is near record in relation to the reduced n~ber of livestock on farms. The hay-supply situation varies widely by regions. Although supplies are ample in most sections of the country, in some areas, especially in the dairy region of the Midwest, and some of the range states hay supplies will be short this season·.

WHEAT With United States wheat supplies again v.ery large and disappearance

expected to be smaller in 1948-49, stocks next July l will increase for the second straight year. The supply of wheat in the United States in 1948-49 will provide about 730 million bushels for export and car~y-over. The crop is being moved rapidly into export but the total for the year hardly seems likely to amount to as much as last year. During the 1948-49 marketing year, the carry-over is likely to be increased from 195 million bushels on hand at the beginning of the season to around 275 million on July 1, 1949.

Farmers seeded 77.7 million acres of winter and spring wheat for the 1948 crop in spite of unfavorable drought conditions in the Southwest at seeding time. li farmers seeded this acreage for the 1949 crop and average yields were ob­tained, a crop of 1,165 million bushels would be produced, With domestic disappearance estimated at about 750 million bushe1s, 690 million bushels would be available for export and carry-over. If recovery abroad continues, it is e~pected that exports will be between 300 and 350 million bushels, which is ~Ubstantially below 1948-49. Exports of this size would lead to a further ncrease in stocks.

SEPTEMBER 1948 - "20 -

Under these·conditions, prices irl'l949-50 a~ain would be depressed to below loan levels in the heavy marketing seaso~, ~nd would average lower relative to the loan than they will in 1948-49. Furthermore, the loan level next year at 90 percent of parity is likely to be ~ese than this year, which was $2.00 at. the national farm level. ·tower prices 'tor feed grains, feedstuffs and other goods purchased by farmers may reduce the parity index sufficiently to bring the loan level down slightly •.

FRUIT Consumer deman~ for fruit in 1949 probably wiil be about the same as in

1948. nowever, if production in 1949·is·larger ~an this year's below average crop, prices will pe somewhat lower:· . . ' r' • "

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Export demand for fruit in '1949 is uncertain. 'Shortage of dollar ex­change 'and import policies of both Western- and· E.stern Hemisphere countries continue to limit fruit exports from the United States. Imports of bananas into the_Unit~d S~ates may increase further in 1949, moderately surpassing prewar volume. Shipment·s of canneP, pineapple from Hawaii are expected to be about as large next year as in 1948.

· Prices that growe~s will recei~e for the large 1948-49 citrus crop are expected to average near those for the 1947-48 crop. Production of citrus fruit in 1949-50 is expected to continue large and prices probably will be about as low a'S in 1947-48. · · ·~ · '•

New-crop grapefruit from Florida started to marke_t in volume in early September, the season beginning a few weeks· earlier than· 'that for the 1947-48 crop., By_ late Se~tember, movement of new-crop oranges was getting under way.

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Production of deciduous fruit in 1949 is likely to be moderately larger than in'l948. This 1arger production would result in prices somewhat lower than in 1948. This. year,· product;i.on of the maJor deciduous frui -t.s i-s about 9 percent· smaller· 'than in 1947. ' ·

Mainly because of smaller crops, prices that growers will receive for the 1948 crops of peaches, apples, and pears are expected to average higher than those for the 1947 crops. Prices for ·grapes and dried prunes may average a little higher ~h;an in 1947. But prices for cranb"erries.probably will average lower than in .1947, ·partly because of larger :production~

Total production of tree nuts in 1948 sets a new recqrd, 17 percent' larger than production in 1947. Partly because of increased ·output,· :pricea' are likeiy to ·average lower than in 1947. · · , . .

The 1948 pack of· frozen fruits probably will be slightly tb .moderately larger than the 1947 :pack, with increases in strawb.erries and fruit juices mo~e than offsettiUg any decreases in some other items. The '1948 :packs· of dri~d add canned fruits are expected to be smaller than the 1947 packs. A record. ·:pa_ck of c.i.'j:irus juices was canne'd .in the 1947-48 season and another lar~e :p~ck seems l~~ely in the season ah~ad.

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SEPTEMBER ~948 - 21-

The Government has announced:a:program through which it will purchase up to about 200,000 tons ·o'f the ,1948-·49 pack of dried fruit~ Such purchase's will be used to ·assist :in relief feeding in foreign countries and for school lunch·and institutional feeding in this country. About 275~000 tons of the 1947-48 pack were similarly purchased and distributed.

COMMERCIAL TRUCK CROPS

For Fresh Narket --- ------Demand for fresh m~rket trUe~ crops through most of 1949 is

expected to be about as strong a.s. in 1948. Prices received by farmers, howeveri probably will average slightly lower in most months of l9lt9 than in the same ~pnths of 1948, becaus~ production of most of these crops probably will be some~hat larger than in 1948.

Although demand for fresh vegetables will continue strong this fall; the prices growers will receive are expected to average moderately lower than in the same months of 1947 because of larger production• Early reports on cowmercial crops for fall marketlng indicate an output mqre than 20 percent larger than last fall and more than 10 percent larger than the 1937-46 average.. Crop prospects are below last fall only for green lima beans and lettuce~ but even these are about a third above average. CoTipared with last fall, crop prospects are relatively brightest for snap beans, cabbage, carrots~ cucumbers, and green peas.

fQ!: Processing

Consumer demand for commercially canned and frozen vegetables is expected to continue strong this fall and throughout most of 1949.

Combined stocks of canned snap beans, sweet corn, green peas, tomatoes, and tomato juice held by canners and wholesale distributors July 1.? 1948 were slightly smaller than a year earlier. Cold-storage holdings of frozen vegetables on September 1, 1948 were much smaller than a year earlier. Commercial canners and freezers of vegetables have scaled their 1948 packing operations in line with their stocks position and the rate at which their stocks have been moving into consumption. Consequently, packers will go into the 1949 season with only normal 'l'lorking stocks.

POTATOES AND SWEETPOTATOES

~ Consumer demand for 1949 crop potatoes is expected to~ be about as strong as it has been.for the 1948 crop. However, prices which tarme~s will receive for potatoes probably~ be substantially lower. This forecast is based on ~ne assumption that support prices for 1949-crop potatoes will be set lower .than the 90 percent of parit·y which, applies to the 1948 crop. Under Title I of the Agricultural Act of 1948, the mini~ level for price support of potatoes is reduced from 90 to 60 percent of parity.

Just what effec~ the prospect of lower prices may have upon farmers' intentio~s to plant is unknown. Acreage may not drop substantially until after lower prices have been experienced. ·Even then, much will depend upon what alternatives farmers may have.

SBPTE!.'lBER 1948

The large 1948 potato crop har- required pri-ce-support acttvi'by consider::ible sc.aie-. l!a·ny of the potatoes, pour;:ht for pric~ .. suppo:rt this are being 'converted into potato flour. This ou-tlet makes it p~ssible '~9 save most ·of ·the ·food.~v0..luo ·of the potatoes and conver·~s a pe:rish~ble prqduct to one which can be .stored mxccessfully for a muc.h longer time. · ,

... Demand for sweetpotatoes in ;nost of 1949 is expec·bed to be fully ·as

strong as in 1948.

The small 1948 crop of syveetpotatoos probo.bly will com .. "lland slightly higher prices on the average thdn ·those for the 1947 crop.; However, prices ma~,r drop to support levels tenp'oratily if fe.rmerG attempt· to move their crop to market too fost. at digging timq·. ·.

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DRY TID ~tri' BEAN$ A~rp j~~As ·· ' . I ' < ' .: • ~ _;, - , ' • • '

Demand for dry edible bean~ .·in 194~ prob~bJ.yvrill 'So moderat<;ly lower than in 1848, mainly because of a:n expected· re'ducti:on ~n e;:port demand.. During tho war :and early postvvar yoars, beans moved· readily into foreign outlots to supplement foreign production of beans and other foo\is.. With foreign pro~

·duction increased considerably above the lovr ley~ls at th'e end of tJW v;ar, horrev.er, foreign deFland for· beans from the United Ste.tes· probably will be considerably lower in 1949 than in lG48. Consumer demand for be!:)..ns in.the United:.States probably will bo 8.bout the sarr;e in 1949 as in 1S)4f3 .•. But.:w~th. lo·wer total dem.and, · grovror prices are likely to be somewhat lovrer ·for beans in 1949 than in 1948. ·

Prices recei vod by growers for 1948 .. crop beans may o.verar;e as much as 25 percent lower than the averace of ~12.10 per 100 pounds for the 1947. crop. Prices for 1947-crop beans were generally above support levels ... But w:i.fih the approach ·Of the 1948-49 marl:ei:linr; season·;. pPices decline\i, and in mid-September some varieties ·of nevr--crop bGans 1·rerf] ,sollinr; belovr suppqr,ts:• $upport .Prices for the 1948 crop :range from 07.70 to :;;:~.95 per 100 pounds for U. S. No. 1 beans, clean.ed·and bagged:, .. f.o.b.co1.Jntry shipping point. Those·.prices re­flect 90 pe·rcent o£' parii:iy as'of·,AuguGt·l5, 1Q48, and. because of.an ~ncroase in parity are about 6 percent higher than. supports for the 1947 crop. , The 1948 crop is estimated at ).9 ,4 111illion. bags, 10 ·per·cent largerr than the 1947 crop and 16 percent larr;er·~than the 1937-46 average •. About .3 million bags of the n~JV'r crop wi·ll. q~ aye.,ila ble for export o ·

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D0mand for dry· p~as in 1949 probr~bly will· .lie about th~ ·same c:i..s the. reduced demand of 1948. Foreign outlets are not expected to take more than··.itl. lfq:4:8, when considerably loss wo;re taken than durinG tho war and early postvrar years. Grovrer prices are likely to be moderately lovror .Jc}].rm those for the 1948 crop.

About p.5 million bags VlE;Jro·produced .. in l948,,-whichi.s.4.6 percent ltss :."tna:n;,.,in H:47 and 33 percent le9s than tho 183·7 .. 46. average. Reln.·tively small quanti ties will be a vaila.bl~:: for. o:;;:po:r·t·.-.: .:q.rovrer: pr~cos in rnid 7~ ep~em):le:r .. yrore slightly .a'Qcfve·: support.·, and: prices· for,~the entire crop probably vrill ave3l'age near the 05 • .61 per 100 pounds for. the 1947 crop·. . ·

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SEPTEMBER 1948 - 23 -

COT'r()N • '. J •

Domestic mill consumption d~op~ed from a peacetime record of 10 mil-lion bales .in the 1946-47 semson to 9.3 million ,bales d.u:ring the 1Jast season. The outlook for the current sel3.son is· tha\ ..:;onsu:qlpt-ion. wHl pro'babl.y be under last season. Exports of cot ton text ilea are expected to 1Je smaller. Deferred demands for textiles, resulting from the war should be considerably less intense beca.uee of res tacking Qf wardrobes a;nd tnv~ntoriee from the past 2 seas'cm.s • production of fabrics. · These factors, with increased rayon production, shoulq. cause smaller domestic cotton .consumption •

. Exports of raw cot+-on are expected to'increase considerably above last

season's 2.0 million bales, the lowest since the Civil \..Jar.. The ECA program together with low stocks of raw cotton in importing foreign countries and continued restoration of textile mills, are favorable factors for increased exports. Also, the rati.o of prices of American cotton to competitive foreign co·tton is more favorable for exports than for the past several sef1sons. The increase in e:x:,ports should offset the decrease in domestic mill. consumption so that total :disappearance w.ill be as large as or larger than for the past season.

Because. of. the laree 1948 domestic crop of 15.2 million bales and ~ 1/2 million ba,le increase in the carry-over, the total supply of cotton in the United States will exceed last season's by 25 percent. The carry-over a.t the end of the current season should be around 5 pr 6 million bales, or almost double the carry-over a~ the beginning of the season.

The average 10 spot market prices of 15/16" Middling cotton, which aver­aged above 37 _cents in the AprU-June period; declined to 31.03 cents on September 1. The average price on Sevcember 15 -was 31.38 cents • The average farm·price''in ,mid-September was 30.9h c:eats. Prices of cotton at the farm level fo;r- v~rioue grades a.nd staples are near or slightly b~low the loan level. Cone'iderable quantities of the 1948 cotton crop will ·ce placed under the loa:n pro_gr~m by farmers . ·

. ·Dome~~ic mill consumption in August, totaled 728,732. bales, compared with 627,393 bales in July 1 the lowest slnce July 1940, and 712,864 bale.s f'or August 19~7. Cotton textile exports .at· the end of July had declined 1/3 be­low exports a'l! the same qme last year. Exports of raw cotton for the month of July were 149,000. bales,. compared with 8~. ;ooo bales in July of the previou,a season.

WOOL

Wqrld demand for wool is expected- :to contiP-=:le strong during .the .. 1948-49 season.' World consumption dUr1.ng this p'eriod probably will .be .near the 1947-48 _level and is expec'ted to Elxceed world prC?duction, which is cu~­rently estimated at 3.8 billion pounds. ·As a result, a further reduction in .•rorld. ~tocks pJ:.obably will. take place. The high lev:ei of world. con~umption of Choice fine :WOOlS. already has res'utled in a marked decline in stocks of SUCh wools., · ·

Domestic demand ·ror wool te::::tiles 'is ~xpecte·d to conform. c·loeely. with the trend of 1n1ustr1al prod1,ction and personal income. If demand remains strong, Inill consumption of apparel woo+ during 1949 may be 850··950 million pounds, ~rease basis. This would be a reduction of from 5 to 15 percent from present p~~timaed.teds for 191~:1. Increas~d mili tarJ' requirements will tend to offset an ex-

ecltne in civilian a.emand.

SEPTEMBER 1948

Under the provisions of the Agricultural Act br. 1948, the price of wool during 191~9 will be supported ~t. the 1946 price support level, a'P,proximately 42.3 cents per pound. Rmrever ,. ae prices , ;i.n foreign markets for f'ine staple "t-rools are ex!)ected to remain at or near their present high levels, growers or such woola proba.bJ.~r will be able.•to otbain high"r prices through cUrect sale i,o mille and dealers than throuft.h the price support prosre.me ,

Ilnports of apparel wool probably will increas~ sl:!.ghtly during 1911-9. ~ Due to the higher reple.cement costa of foreign wools, United States stocks are betng absorbed rapidly. Indications'are that domestic production in 1949 may be al:!ghtly le~s. than in 19~~. pcmsequent;Ly) if mill cone~t:~On is ma.1~­ta.ined at tl-}e level anticipat~~ for 1949',, :manu~~~turers probabl~ w:~:!.:+. ha:ve to rely more heavily on fore:' gn· wools;· r ' • • , , . • •

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.. TOBACCO I

- .. Consumer demand for cig~rettes during 1949 is expected to continue hi~,

Some increase may be made in use of smoking tobacco, but chewing toacco con­sum:otton will probably be eHghtly lower in line with the long-time trend. Consumer demand for cigars and onuff in 1949 will probably equal or slirfttly exceed 191-t.S. Because of Economic Cooperat1.on Administration operatlons and the progress to,,rards economic _recovery in Europe, expor·c demand for unmanu­factured tobacco in 1949 rnay be stronger than in 1948. Cigfl.rette··type tobacco in 1949 will l:>e in stronger dome.nd than other ktnds, both domestically and abroad, because of the stead~.ly increasing use of cigarettes.

t.fore than three-fi:f:'ths of the 19!18 flue-cured orop has been marketed at prices substo.ntie.lly '1igher tha.n last year and averaging well above the support level. T'le stronc demand for flue-cured has stemmed mainly from the record prod.untion of c:!garettea, which ie ·expected to continue at a high 1eve dur:tng the year al-}ead. It ia pro'tiable... that the total manufacture of ci~ett

·'this year will be near 385 b:!.llion compared with .370 billion in 1947-. ., . Domest:!c consumpt:!on h'3.B accounted for a great :part. of ctgarette production, while exports, which account for 6 percent, have been running slightly above last year. Unma.nufactureC!. fl.ue-·cured is the principal export to~cco and·: during f:!.ecal 191.:.7-4!3, feJJ. 35 percent from t~e record of 1946-47. r Exports of flue-cured during 1948-49 are expected to be larger as ~he European . Recovery Program gains headway. The 1949 flue-~ured quota announoement :in late Auguat :i.ndica.ted that acreage allotments w:l.ll be about 5· percent larger than in 19~8. The Secretary of Agriculture has the author! ty to ~.ncrease the present announced quota up to 20 percent as ·late as March 1, 1949, if con­ditione should warrant any increase,

A firm demand is ~xpected for the Burley crop, which will go to auctions in late November or early December. The Burley loan rate is 5 per· cent higher than last year because p~ the ipcrease in pricea.pa1d by farmers over the past 12 months. Nex~, to fl~e-cured, Burley contributes the greatest

'vqlume of tobacco used in c~r~rettes .. The hig~ cigarette.. production will be ·strqpg factor in maint~iriing a l~rge d~sappearance of Burley. during 1948-49. 'Exports in 1947-l.t-8 are eetiiiiated at a'bout one-fourth lese than 1946-~7 but still triple prewar. Conaiderable quantitiea of Burley are also used in slllok .ins a~~. chewing toS:~co. l~ Js1• e~r,1~~~,d, t~t product:ton .. ~f smoking tobaocro

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SEPTEMBER 1948 - 25 -

1948 may reach 109 million pounds, about 4 million pounds above 1947. In 1949, smok:f.ng toacco production :J.s expected to show a small increase. The manufacture of chewing toeacco during 1948 may fall slightly below·the 98-1/2 million pounds produced last year. No substantial change in chewing tobacco production is expected in 1949.

Maryland tobacco finds ita greatest outlet in cigarettes and so may be expected to benefit from their conttnued high consumption. The auction season for the 1947 Maryland crop closed August 20. Prices averaged 41.6 cents --7.centa lese than in the previous season.

Domestic us~ of fire-cure~ is larg~ly in snuff, which for 1948 is esti­mated at 41 million pounds·,· 'about ~5 percent larger than 1947. Snuff con­sumption in 1949 is expected to be about the same as or a little higher than 1948. The dark air-cured ty~os are also used in chewing tobacco. Fire­cured and dnrk air-cured exports have been declining over the long term. The support levels for fire-cured and dark air-c~r~d are 5 percent higher than last· year because they are linked to the Burley loan rate. These latter ty~es are expected to bring prices close to the support level when they go to market late this year and in the early months of 1949.

The demand for most cigar tobacco is expected to be fairly strong. Pro­duction of domestic filler tobacco is near last year while binder is mod­erately lower. The level of price support for cigar types has also advanced in the past year due to the increase in ~arity prices. The average price received from most cigar types during the 1947 marketing year exceeded the support level by a substantial margin. Cigar consumption in 1948 is esti- , mated at around 5-3/4 million -almost 2 percent higher than 1947. Cigar consumption in 1949 is expected to equal or slightly exce~d that of 1948.

Total unmanufactured tobacco exports in 1948 are expected to be around 450 million pounds (declared vTe ight) compared wi t~1 506 million last year. Throush September 30, ECA authorizations for tobacco totaled approximately 33.3 million dolaars for about 79 million pounds.

SUGAR

Supplies of and demand for sugar ha·ve returned to. prewar ldvele. Prices of sugar are lower this year than last. It is estimated that sugar

consumption will be about 95 to 100 pounds per person for 1948, compared wit~ about 90 ~ounde in 1947 and an average of about 96 pounds in 1935-39.

Production of sugar in the 1947 48 crop year in areas normally supply­ing' the United States was the lareest on record. While production in 1948-49 is expected to be somewhat less, largely because of an anticipated reduction in the Cuban crop of one million tons from this year's record output, supplies will be over 25 percent larger thari t'1e 1935-39 average. Also the demand of other foreign countries for Cuban sucar may be reduced because of anticipated increases in production in importing countries.

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U. S, Department of Agriculture l'lashington 25, D. c.

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· .PPS-10/48·6200 PBRMIT NO. 1001

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Penalty for priva•be -'itS'·<3·:·to, a.void payment of postage $300

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• ·, .. . . ji'ORBS'r PHODUCT:S:

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'i . ~- . .Demand for foreat prod.uc.ta, .in 1949 ia · Gxpeoted t<!l continue Generally .. ;3trong. ap.d. _price1:1 _to ._r.emain hi{;h,. a:lthqugh sm'f.l.lil· decline from the ;t.94B level

is likely::-. A co:nt.in:ucd. ~1.~~h 1.ov~l '?'f c qnstrl,l.ct-iop.. aqti-v-i~y,. both for hous int; and non-r'eS·i~on·~ial· pu_rpos es, . S!hou~q su.s~?-in- :the majqr demands for lumber, and indirectly. for. ~a·;r.lor;s-.and stUlllJ??-ge. Req_u~re:tnents f-or.. sh.ippil1,g c;ontainers _and for factory pro¢tuc-t~ likewise sl').ould_ remai-n -?-P -high J!o'1Tel~. on- the ba1:1is of expected business activity and emplo,y"':.wn·t • During the past 3 years approxi­~te1y 6 billion board f·e~t have -be~m aridGd. t·o lU!llber stock:> 1:\.t·, mills and yards _'bpinging total stocks on hand. :t;o !lbO'L:IJ" 60 perce;nt of 'the p~·O"irar level. How­·o~er 1 de"l-lers o.re unlil:ely to oonJGinue, _:i,n.creac-ing -1wn.ber- .fJtocks in the ..t'.aco of curren·(; high price levels 1 and thif.\ •l'o.ctor I[lO.Y be. e;xpe_o,ted 'to ·result ·in. nn easine of the total demand for lumber.

Domestic production of lumber·in 1848 is estimated at approximately 38 billion board feet. With estimated imports of 1.8 billion feet, exports of nea-rly 0.9 billion i'e.e;q,, .• and Ja:n·allow~·nce 'for. additions ·to :·stocks, 1948 ·domestic consumption is ec.M.r.m.tud• at ·;'3-7 ,5 billion· board· fteat, the h5.e;hest level· since 1943. Thero.:is Httl.e H.kelihood ·bhat oxpeot'ed·docreases--.. d.n domest io dernancl·s. in 1949' will be·":o.ffs ot· hy expanded exports · in vievr of' dol­lar shortages in foreign countries.

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A roducti,on· -in ':demand for lumber .in 1940 pro'Qa.Q-ly. vrill ·Had to d:fpme docli!le. in pricos·; ·par--ticularly for tho poorer cotunon ·grades.; ·I.!arl::ets· far low auali ty stumpage,. mnall timb0r 1 ancl.less preferred speci01s w,ill :·b-e af·· .fect.ecl -moat advorsoly·.·. Produot'ion of luHb.er in 1949' :r.·m.~·b~ ·.samev.rhat-:lovror .than in .].948·, both as- a :result ·of an casing in pric'es o.nd ·~:he -oontimtted existcnco·.of. ouch factol"·s as .linited supply and hie;h cost 'r;;f ·ava·ilabl·c-. stumpac;o and high production costs.

Demand for pu1pvrood is expected to rc!'lain otrong and prices high in 1940 with liCtle or no ohane;e from the high levols of 1948. Continuod strong markets for veneer logs 1 usod in the manufacture of shippinG containers and I plywood, ond for minor products such as poles and piling, may ·also be expected•;