Economic and Marketing Information
FOR
INDIANA
FARMERS
INFORMATION
Lafayette,  Indiana
May  20,   1948
Prepared   by  members  of the  Agricultural
Staff of  Purdue  University
THE LIVESTOCK AND FEED SITUATION
By
M. PAUL MITCHELL, Agricultural Economics
LIVESTOCK MARKETINGS during the last half of
1948 are expected to be substantially below a
year earlier. Erratic market prices for feed grains can
be expected to continue. Aside from new crop prospects, the chief factor influencing grain prices during
the next few weeks will be the amount of wheat
purchased by the government. With an average or
above average crop season, feeding margins are expected to become more favorable for livestock producers. If unfavorable crop conditions should develop, feed prices would be strengthened accordingly.
Developments in the markets since January 1 not
only have proved disappointing to Indiana farmers,
but may also have shaken the confidence of these
farmers in the future. An appraisal of the events
which have taken place since the harvests of 1947
shed some light on the situation.
The record U. S. wheat crop of 1.4 billion bushels
last year would have supplied the grain needed to
supplement the short corn crop if the relief needs of
western Europe had not received top priority for our
surplus wheat. Our wheat crop surplus of approximately 500 million bushels would have gone far in
making up the corn crop deficit of about 600 million
bushels.
The government wheat buying program for European recovery, supplemented by increased activity
on the part of speculators in our domestic markets,
resulted in lifting grain prices out of line with prices
of most other commodities. It is rather significant,
however, that as both corn and wheat prices have
fluctuated since last October, they have maintained
feed value relationships. Thus, wheat prices have not
advanced more than 15 per cent above corn prices,
which reflects the approximate difference in the value
per bushel of wheat above corn as feed.
Developments in recent months have eased the
price position of all grains as new crop prospects
have improved, especially in the southern hemisphere
and in Europe. The behavior of grain prices in the
months ahead is largely dependent upon government buying for relief,  and  new crop  prospects.
Corn and  Oats Stocks Small, Wheat Large
According to ihe April 1 government crop report,
the stocks of corn on farms, 849 million bushels, were
a third smaller than a year ago and about 25 per
cent smaller than the 1937-46 10-year average. Western corn belt states showed the greatest reduction. In
Indiana, stocks of corn were 25 per cent below a
year ago, but only 1 per cent below the 10-year
average.
Oats stocks on farms on April 1 were 23 per cent
below those of a year earlier and 4 per cent below
the 10-year average. Disappearance of oats during
the first quarter of 1948 was somewhat greater than
usual, indicating that farmers had depended upon
their oats crop to offset, at least in part, the shortage
of corn.
Wheat stocks on farms, however, showed a substantial increase over those of a year ago, and also
above the 10-year average. The estimates are 257
million in 1948, 140 million in 1947, and 196 million
as a 10-year average. Surplus wheat has unusual
significance this year, in that it could replace, under
present price relationships, part of the existing corn
deficit if it is not purchased by the government for the
European   Recovery  Program.
The early February revised quota of wheat purchases for ERP has been fully met or exceeded by
some 10 million bushels. However, new but unpredictable demands are made upon our wheat supply
as new crises arise in Europe. This may be expected
to continue at least until the new harvest in  Europe.
Crop  Prospects  a  Key To  Future  Prices
The pattern of corn and other feed prices are difficult to predict with so many uncertainties. Aside from
the government buying program and general inflationary tendencies, probably the most important price
factor arises from the short production of corn in
1947. Total production of corn last year was estimated at 2.4 billion bushels. This was 23 per cent below
the average  production  of the  preceding  five years