"Tf 6(»^**^ ^^ension Service in Agriculture and Home Economics 



University of Illinois College of Agriculture, Urbana 



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WEEKLY REVIEW AND FARM OUTLOOK LETTER 



By G. L. Jordan * 

 Professor, Agricultural Economics 

 (Prepared September 27) ''-^b 



Prices of grains and livestock, particularly well-finished steers, during the 

 past few weeks could easily leave the impression that the future of agriculture is ex- 

 tremely bright. In spite of the facts that war plants are closing down and that men 

 are being discharged in large numbers from the armed forces, there seems to be no de- 

 cline in the demand for food. How long will this situation continue? 



Prices of foodstuffs were not permitted to reflect the actual level of demand 

 during the war. The situation has not changed since V-J day. Retail prices of foods 

 are still low relative to the inc^^s of an unusually large fraction of consumers, and 

 an abnormally leirge backlog of savings is available to supplement current incomes. In 

 spite of lay-offs and strikes, it is likely that the demand for foodstuffs will be main- 

 tained at a high level during the reconversion period; that industrial activity will be 

 high enough after reconversion to maintain buying power at a high level compared with 

 prewar but considerably below the wartime level; and that private construction will be 

 resumed fast enough to help absorb the shock of the discontinuance of wartime construc- 

 tion. In addition, present indications point to a relatively large export outlet based 

 upon loans to foreign countries. Part of these exports will be agricultural products, 

 but exports of industrial products also provide employment and purchasing power for ag- 

 ricultural products. Sometime exports and domestic demand will decline. 



The relationship between prices of the various farm products will undoubtedly 

 change. Prices of products which rose most as a result of special wartime demands euid 

 limitations of the availability of competing products will decline most. Some prices 

 held down by ceilings may rise. The average pi^lce of all farm products is more likely 

 to decline than to rise during the next two or three years. Inflation is in the air, 

 but it is likely to be represented by rising costs of industrial goods, construction 

 materials euid wages, rather than In the prices of farms products. 



Already we are beginning to see the transition back toward prewar situations. 

 This transition will take place over a period of years, being delayed in some cases by 

 exceptionally favorable export outlets for some products. Wheat growers have been 

 given assurance by the Department of Agriculture that there would be no need to curtail 

 acreages below the current plantings for the next several years. They say that stocks 

 in this country and abroad have been reduced to moderate levels and export jdemand is so 

 high that outlets would continue to absorb wheat in queuitltles equal to the consunqption 

 figures this year for severals^nore seasons. They may be too optimistic. 



In contrast we have some indications that the soybean acreage cannot be main- 

 tained at present levels and bring current prices. The Department of Agriculture has 

 indicated that the armed forces have previously contracted for 32 percent of the cur- 

 rent peanut crop; that in the future the needs of the armed forces will not be a con- 

 sideration, and that a reduction in peanut acreage next year was predicted. This 

 suggests a marked easing in the oil situation and also suggests a reduction of soybean 

 acreetge next season. It is expected that flaxseed incentives will be abandoned next 

 year and that there will probably be a reduction of flaxseed acreage. Other farm prod- 

 ucts likely to suffer most within two years are cotton, wool and lard. The demand for 



meat, milk, cheese, fruits, vegetables and butter is expected to remain strong. 



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Cfooperative Extension Work in Agriculture and Home Economics: University of Illinois 

 College of Agriculture and the United States Department of Agriculture cooperating. 

 H, P. Rusk, Director. Acts approved by Congress May 8 and June 30, 19114- 



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