Economic and Marketing INFORMATION
FOR
INDIANA
FARMERS
Prepared  by Members of the Agricultural  Staff of Purdue   University,   Lafayette,   Indiana,  June  22,   1956
The Wheat Market Situation
HOW will you market your wheat
crop this  year?    Let's  take  a
look at the choices which you have.
1. You can sell at harvest at the
going market price. Of course prices
then are usually at the lowest point
of the season, but you avoid the risks
of storing the grain.
2. You can store on the farm.
I'sing this alternative you will incur
storage costs (Indiana farm storage
costs for wheat average 18-20 cents
per bushel for a 9 month period if
bins are presently available) and the
risks of contamination and excessive
loss are involved. You will retain the
advantage of any seasonal price increase, however.
3. You can take out a loan or purchase agreement (assuming you are
qualified) and retain the advantage
of a price increase. If the wheat is
stored on the farm under one of these
arrangements, storage costs and risks
remain a problem. If the wheat is
stored in a commercial warehouse,
storage costs can be accurately determined and the risks of contamination
would be shifted to the warehouseman. Commercial storage may be
only slightly higher than farm storage.
4. You can negotiate a contract
site with your local elevator in advance of harvest. You avoid the risk
°f lower prices and storage hazards,
°M you must arrange to settle a deficit if your production falls below
the contracted amount.
1956 Wheat Production
U. S. wheat production in 1956
J estimated at 923 million bushels,
2 percent less than the 1955 crop.
'670 million bushels of winter wheat,
by
W. S.  FARRIS, Agricultural Economics
and 252 million bushels of spring
wheat, based on June 1 conditions.)
Disappearance including export will
amount to nearly 900 million bushels.
Therefore, the production of wheat
this year in the United States will be
slightly in excess of domestic needs
and export for the year.
Indiana will produce approximately 31 million bushels of the new
wheat crop, down 8 percent from last
year. This production will be from
about the same acreage, with an estimated yield of 27 bushels per acre,
2 bushels less than last year's average yield for the state.
Figure 1. Wheat prices have
been running near loan level for
most of the last seven years.
*No. 2 Winter wheat at Kansas City (Chart
by United States Department of Agriculture).
Most Carryover Wheat C.C.C.
Controlled
Carryover stocks of wheat add to
this year's production to make up total supplies. On July 1 this year, the
carryover is expected to be slightly
over 1 billion bushels. Only about
55 million bushels will be "free"
wheat (wheat outside C.C.C. control ). The supply of free wheat will
not be short enough to cause unusual
price fluctuations, however.
The Export Market
The U. S. sells 200 to 300 million
bushels of wheat per year in the
world market. Of the "big four" exporting countries, the United States,
Canada, Argentina, and Australia,
only Argentina has a smaller supply
of wheat on hand for exporting than
a year earlier. About 2.1 billion
bushels of wheat were available for
export from these 4 countries on
April 1.
Prices to Fluctuate Below Loan Rate
With huge supplies of wheat, it appears that the level of prices will remain slightly below the support rate
of $2.04 to $2.13 per bushel for most
Indiana counties. This level of support rates can be raised if the announced national average of $2.00
per bushel is less than 82% percent
of parity on July 1.
Prices will vary from these announced levels due to local conditions. Storage for wheat may be temporarily short during the harvest season. Box car shortages may develop
in some areas. If weather permits the
wheat to be harvested in a relatively
short period in these areas, pressure
upon handling facilities may cause
local prices temporarily to drop substantially below the loan rate.
Another pressure that may develop
in the wheat market at harvest time
this year results from tighter sanitation requirements for the 1956 crop.
On July 1 the tolerances for insect
and rodent contamination will be reduced to half that of the previous
year. This restriction may cause
more farmers to sell wheat at harvest