University of California College of Agriculture Agricultural Experiment Station Berkeley, California CALIFORNIA BARLEY AND WHEAT OUTLOOK, OCTOBER 1932 by E # ¥. Braun 1932 (10 pages) Contribution from the Giannini Foundation of Agricultural Economics Mimeographed Report No, 1? J A A. University of California College of Agriculture Agricultural Extension Service Berkeley, California CALIFORNIA BARLEY kW) WHEAT OUTLOOK October. 1932 E. W. Braun Contribution from the Giannini Foundation of Agricultural Economics // /XLO&Ti ft focal )C t ef/i i V* CALIFORNIA BARLEY AND WHEAT OUTLOOK £. W. Braun* Summary The price of barley in California this season (1932) is low relative to the lacal price of wheat and low relative to the price of barley in the principal grain Urtets of the middle west. Information now available indicates that the California carryover of barley into 1933 will be very large. Unless, therefore, the 1933 barley erop is unusually short the price of barley for 1933 in this state is likely to re- tain low relative to the local price of wheat and relative to barley in other markets. The situation this year arises from the fact that the California barley sup- fly is large as compared to its market outlets. Barley supplies in California were M per cent above normal at the beginning of the season. Barley exports of recent tilths indicate that the export volume for 1932-33 is likely to be materially above pM 105,000 ton volume exported last season; but it is doubtful whether the export ;f*Iume for this season will exceed 200,000 tons. During 1926-1930 exports averaged St, 000 tons. Requirements of barley for feed in this state are little if any above JMNRMtl. Hog numbers have increased but cattle numbers have decreased. A carryover of California barley into 1933 of approximately 3 or 4 times a t&rs&l amount is in prospect. If this proves to be the case a normal barley crop in of 737,000 tons from 1,050,000 acres would again bring supplies to approximate- ly 1,000,000 tons. A supply as large as this would almost certainly be accompanied mf local barley prices low relative to the local price of wheat and low relative to Wm price of barley in other markets. The price of wheat in California is determined by factors outside of the |ft*ie. Unless international trade in wheat improves or a strong speculative demand jtwtlops, no material change in price is to be expected. The wheat supply situation It the United States is somewhat less distressing from a price standpoint than a ||Swar ago, and a further reduction in winter wheat acreage for 1933 harvest in the j|ft»t plains section is in prospect. World supplies, however, are about the same as fir the past two years. A reduction in the world wheat acreage is not to be expect- If a general improvement in business conditions takes place throughout the flNfld, wheat prices are likely to be favorably affected by such improvement before |tt is reflected in the price of barley. California Barley Outlook The price of barley in California this year (1932) is low relative to the it of wheat in California markets, and is low relative to the orice of barley in grain markets of the middle west. The 3an Francisco price of feed barley has in It months ( June-Sept.) averaged 64 cents a hundred as compared with $1.05 a jpt«nsion Specialist Foundation. in Agricultural Economics and Associate on the Giannini Digitized by the Internet Archive in 2014 https://archive.org/details/californiabarley17brau 3. A study of the prioe of feed barley relative to the price of milling wheat •t San Francisco, as illustrated in figure 1, reveals that this relation is ap- parently greatly influenced by the supply of barley in California. Figure 1 Ratio of Barley Price to Wheat Price and California Barley Production Plus Carryover, and Ratio of Barley Acreage to Wheat Acreage in California 1919-1932 130 | 160 o j» 140 120 . , I i Ratio of to wh€ i 1 1 ■ i — — bar ley ac tat acreag r 1 " "" reage e i 3 -4 Section - B o a 1 u 1920 1922 1924 1926 1928 1930 1932 >ion A of the above diagram represents the price of barley expressed as a per cent of the price of wheat and the supply of California barley at the beginning of each season. ttetlon B represents the barley acreage of California expressed as a per cent of the wheat acreage; for example, in 1932 the barley acreage was equal to 200 per cent or twice that of wheat. Acreage adjustments warranted by price tend to take place in each of two years following. Acreage adjustment warranted by the low prices in 1925 and 1926 were not completed until 1928. Thus as complete an adjustment in acreage for harvest as is warranted by the present price relationship is not likely to occur in 1933. z hundred for milling wheat. When expressed as a ratio this is equal to 61 per cent, file average ratio since 1920 is 71 per cent. Average prices of feed barley and lllling wheat at San Francisco since 1920 are given in table 1. The San Francisco price of feed barley since June 1 ha6 averaged 4 cents under the price of feed barley at Minneapolis, whereas ordinarily the San Francisco price is considerably above the Minneapolis price. Generally the balance between California barley pro- duction on the one hand, and domestic feed requirements and export volume on the other, has been such as to place California on a deficit basis for feed barley. As a result the California price has tended to be above the price of barley in surplus areas. Occasionally domestic supplies have exceeded domestic requirements and ex- port demand. When this occurs the California price is placed on a surplus basis. k comparison of the San Francisco price and the Minneapolis price is given in table i. Table 1 Prices of Feed Barley and Milling Wheat at San Francisco and Feed Barley at Minneapolis. June-December Averages, 1920-1932 (dollars per hundred) June to December inclusive San Francisco Feed barley San Francisco Milling wheat San Francisco Price ratio barley to wheat Minneapolis Feed barley dollars dollars per cent dollars 1920 2.24 3.53 63 2,13 1921 1.24 2.00 62 1.14 1922 1.32 1.98 67 1.17 1923 1.39 1.86 75 1.23 1924 2.21 2.57 86 | 1.68 1925 1.52 2.74 I 54 ! 1.48 1926 1.24 2.32 53 1.34 1927 1.86 2.25 83 1.64 1928 1.58 2.15 74 1.47 1929 1.54 2.16 71 1.27 1930 1.04 1.60 65 1.03 1931 1.10 1.20 92 .97 1932 .64* _ . . . 1.05* ■ i - 61 .68* , i * Four months. June-September. Source of data: 1920-1930 Compiled from records of the San Francisco Grain Trade Association 1931-1932 Compiled from the Pacific Rural Press. Weekly issues. 4 California barley production, carryover, exports, and domestic use, beginning with tftl-22, is given in table 2. In seasons such as 1924 and 1931, when the supply of Iwrley was short, the price of barley nearly equalled the price of wheat. In 1924 II* price of feed barley from June to December, inclusive, averaged $2.21 a hundred ftp! the price of milling wheat averaged $2.57 a hundred, which when expressed as a fttio is equal to 86. In 1927 the ratio was 83 and in 1931 it was 92, or almost 9%aal to wheat. Table 2 California Barley Production, Carryover, Exports and Domestic Consumption 1921-22 - 1932-33 Production Crop- Carryover plus Exports Domestic year Production June 1 carryover July- June use 1.000 tons 1.000 tons 1.000 tons 1,000 tons 1.000 tons 1921-22 713 121 834 423 364 1922-23 826 47 873 377 458 1923-24 794 38 832 248 527 ! 1924-25 402 57 457 209 216 1925-26 781 32 813 314 369 1926-27 778 130 908 285 579 i 1927-28 656 44 700 200 476 1928-29 764 24 788 251 467 1929-30 699* 70 769 262 423 1930-31 788* 84 872 240 495 1931-32 330* 137 467 106 298 1932-33 948# 63 1,011 + See crop report of May 11, 1932. # See crop report of September 10, 1932. Bushels oonverted to tons at 41.65 bushels per ton. Sources of data: Production from California Crop Reports. Carryover from Grain Trade Association, San Francisco Chamber of Commerce. Exports from U. S. Dept. Commerce, Bur. Foreign and Domestic Commerce, San Francisco office. Bushels converted to tons at 41.66 bushels per ton. In seasons of large supplies of barley relative to requirements the price of ■prley is low relative to wheat. During the seasons of 1925 and 1926 the ratio was *vry low, 54 and 53 respectively. The crops were not unduly large but feed require- Ifclits had been reduced. Reduced feed requirements were occasioned by a 150,000 head fMaction in beef cattle numbers in California. This was partly due to the slaughter '•4a necessary by foot-and-mouth disease, and in part due to a beef-cycle decline in 1m£ cattle numbers. Numbers of hogs in California were also declining in 1925 and Hl$. Barley exports in 1925 and 1926 were above average but not sufficiently above ■Mtage to cause a shortage of feed barley. This season (1932) the price of barley at San Francisco is again low rela- Hv« to the price of wheat because California barley supplies exceed domestic feed f*|«irements and export demand. The price ratio has in recent months averaged 61 5. f#r cent. Following the harvest of the current year, supplies reached an unusually large volume of slightly over 1,000,000 tons, which Is 25 per cent above normal, fiiia large supply is a result of a very large crop of 948,000 tons, as compared with i five year 1926-1930 average of 737,000 tons. Carryover in the 1932 season amounted to 63,000 tons, which is approximately normal. Export volume of California malting barley, though much greater now than during the months immediately following England's abandonment of the gold standard** (see table 3), is still not equal to the volume exported during the same months of the period 1926-1930. In view of the low {rice of barley, it is probable that exports for 1932-33 may reach 200,000 tons. Itaftestic utilization for feed and seed during the five years 1926-1930 has averaged 418,000 tons. At present low prices it is probable that domestic utilization may ftach 500,000 tons. If this proves to be the case, approximately 700,000 tons will m disposed of, leaving a prospective carryover into 1933 of about 300,000 tons. Table 3 Barley Exports from San Francisco by Months Average 1926-1930 and Monthly since July, 1930 Month Average 1926-1930 1930-31 1931-32 1932-33 tons tons tons tons July 29,172 13,057 14,572 15,988 August 43,203 26,655 23,135 13,146 September 24,729 29,140 14,502 21,072* October 23,043 27 , 070 13 , 389 November 18,622 20,128 3,588 December 17,089 19,768 3,873 January 12,323 14,656 2,582 February 18,854 20,108 2,327 March 17,654 16,975 2,477 April 9,982 17,315 2,386 May 17,425 17,942 12,195 June 16,276 16,997 10,783 Total 248,372 239,811 105,809 * Preliminary. Source of data: U. S. Dept. of Commerce, Bur. of Foreign and Domestic Commerce. San Francisco Customs District. Mimeographed reports. Bushels converted to tons at 41.66 bushels per ton. If the acreage for the 1933 harvest is equal to the 1926-1930 average of ,1,050,000 aores and average yields are obtained, a harvest of about 737,000 tons 1»y be expected. With a large carryover this would again place supplies above 1,,000,000 tons, an amount almost certain to exceed the combined requirements of Uperts and domestic feed for another season. England abandoned the gold standard September 21, 1931; a portion of the October exports had been negotiated before that date. 6. It is unlikely that the price of barley at San Francisco will return to a normal relationship relative to local wheat prices, and relative to barley prices in other markets unless the California barley crop of 1933 is 550,000 tons or less. This estimate allows for a normal carryover of 70,000 tons. With average yields 750,000 acres will produce 550 t 000 tons. The California Cooperative Crop Reporting Service estimates that 1,246,000 acres were harvested in 1932. The average acreage during the past decade, excluding the very dry years of 1924 and 1931, was 1,050,000 Acres. The ratio of barley acreage to wheat acreage harvested in California indi- cates that when the price of barley goes to levels low relative to wheat in dalifornia, as it did in 1920 and 1921 and 1925 and 1926, acreage adjustment takes pace through a period of two years following. The ratio of California barley acreage to wheat acreage is given in table 4 and is shown in figure 1. Table 4 Barley and Wheat Acreage Harvested in California, and Ratio of Barley to Wheat Acreage, 1921-1932 Wheat Barley Ratio Year acreage acreage barley harvested harvested to wheat 1.000 acres 1.000 acres per cent 1921 557 1,188 210 1922 712 1,129 158 1923 748 1,095 147 1924 377 765 200 1925 603 1,050 174 1926 653 1,080 165 1927 812 994 122 1928 780 1,044 134 1929 633 1,066 167 1930 592 1,094 185 1931 456 320 182 1932 620 1,246 200 Source of data: California Cooperative Crop Reporting Service. Field Crop Reports. Prices of feed grains in midwestern markets are likely to be higher in 1933 ■M in 1932 because low prices will tend to reduce acreages planted to feed grains. Jtathermore, feed requirements in 1933 are likely to be greater than during the cur- Wmt year because of increased numbers of hogs. Low prices of feed grains this year in part due to factors arising from the depression and in part to large supplies 'Jfailable this year. The following table gives, the estimated production for 1932 JH corn, oats, barley, and wheat for the United States, as compared with the produc- tion of 1931 and a five year average, 1924-1928 (see table 5). In all except wheat ■I 1932 production is appreciably above 1931 and in the case of com and barley, H$S2 production is appreciably above the five year average. Prices of barley, corn, pft oats at midwestern markets, given in table 6, have declined to a third of the |ftl- 1928 level. Table 5 United States Production of Corn, Oats, and Barley in 1932 Compared With 1924-1928 Average and 1931 (millions of bushels) five year Production Sept saber Increase or Prop average 1931 estimate decrease 1924*1928 for 1932 over 1931 ||i I ttgBjl ml 11 ions millions millions Com 2,625 2 4 563 2 t 6S4 ♦ 291 Oats 1|277 1,112 1,245 + 133 Barley 219 198 303 ♦ 105 Source of data: U, S. Dept. Agr., Bur. Agr. Econ. September Crop Report, 1932. Table 6 Prices of Feed Grains in Eastern Markets (cents per bushel) Crop Season Market Average 1924*1928 1929-30 1930-31 1931-32 1932-33 cents cents cants C 011 % M : cents Barley §2 July- June Minneapolis 89 5S 47 48 31* Corn #3 Sept, -Aug. Chicago 91 88 65 35 S.|# Ottt #3 July- June Chicago 4? 44 23 18/ • July-August. # August average of Sept. Future, / July. 8ource of data: 1924-1931 U. S. Dept. Agr. Yearbook of Agriculture, 1932. 1932 Crops and Markets. Monthly issues. In view of current low prices of feed grains, it is likely that aoreages planted in 1933 will be decreased. The current low prices of feed grains are, how- mr, a stimulus to the increase of livestock numbers, particularly hogs. Hog timbers in the United States on January 1, 1932 were 4,800,000 above the low of Si, 374, 000 head in 1931. With price ratios still favorable to feeding, it is likely that hog numbers as of January 1, 1933 will show another increase. Unless business activity goes to lower levels, an improvement in feed grain prices at mid-west ■arkets in 1933 as compared with 1932 may therefore be expected, but an equal im- plement in the price of barley in California is not likely unless the 1933 barley trop in California is, -very short. California Wheat Outlodk California is dependent upon outside sources for approximately one-half of 111 wtseat supply.** Consequently the price movement of California wheat is determined |f conditions outside of the state to a much greater degree than is true in the case «f barley. A large proportion of the wheat brought into California comes from the Heir to Northwest; the price of California wheat, therefore, moves more closely fttUt the Portland price than it does with any other market in the United States, ■hrtlami in turn, because of its volume of white wheat exports to Europe, reflects ittmps in the world price of white wheat which is established at Liverpool. Annual i$irif# wheat prices at San Francisco, Portland, and Liverpool are given in table 7. Ipr the past ten years the San Francisco price has averaged 17 cents a hundred above Table 7 Wheat Prices at San Francisco, Portland, and Liverpool by Crop Years 1921-1932 (dollars per hundred) Portland Liverpool Crop— y«ar San Franc i ico lea tern Australian British I July- June Milling White White Parcels* dollars dol lars dollars j 1921-23 2.07 1.98 2.43 1 1183-24 1.87 1.72 2.12 *B # 0 '5** 2 » 30 2 . 63 2.97 2.98 : 1925-26 2.61 2,48 2.92 2.83 1 1926-27 3 * 3IS 2.80 2. 75 . 1927-28 2.34 2,20 2.67 2,57 I 1920— 2$ 2.11 1.95 2.13 | 1929-30 2. 12 1 . 93 £«>"t 2.17 j 1930-31 1 » 20 1.37 t 1931-32 1.22 .93 1* 05 x # 0 *b |^ 1932—33^ 1* OS *83 * Average price of all wheat sold at London and Liverpool. # July- Sept ember. Sources of data: San Francisco, 1921-1930 Compiled from Records of the San Francisco Grain Trade Association. 1931-1932 Compiled from Pacific Rural Press. Weekly issues. Portland, 1921-1932 Compiled from Portland Oregonian and the Commercial Review. Portland, Oregon. Liverpool, 1921-1922 International Yearbook of Agricultural Statistics 1924-25:380. 1925. 1923-1932 Food Research Institute. Wheat studies. Stanford University, Annual and Quarterly Reviews. ■ 8ee Braun, E. W. , Wheat, Series on California crops and prices, Calif. Agr, Exp. Sta, Bui. 502:8. 1930. The 1932 supply of wheat in the United Statea is materially less than in lf@l. According to reports of the United States Department of Agriculture, the -li® wheat production for the United States is placed at 715,000,000 bushels, which Is 179,000,000 bushels under that of last year and 114,000,000 bushels under the fttf year average 1924-1928. Domestic consumption for 1932-33 is estimated at #0,000,000 bushels. Carryover as of July 1, 1932 was 363,000,000 bushels as com- f prtd with 319,000,000 bushels in 1931. Any export volume, therefore, exceeding Ni,000 v 000 bushels will decrease carryover in 1933 as compared to 1932. Total wheat •* ports, including flour, for the season beginning July, 1930 were 149,000,000 Iftsftsls and for 1931 exports totaled 126,000,000 bushels. Total world wheat supplies are about the same as last year. Wheat produc- tion estimates for 1932 in the United States and Canada and the combined total of J H northern Hemisphere countries, with comparisons during recent years, are given | to table 8, The low prices of recent years have apparently tended to reduce : tttre&ge and production in the United States, but no reduotion in production is y^t different for the Northern Hemisphere as a whole. In the wheat importing countries | s $f Continental Europe wheat production is being stimulated by means of import duties tnd milling restrictions on foreign wheat. Probable future production in Russia is 1st at present predictable. Table 8 Wheat Production in 34 Northern Hemisphere Countries 1928-1932 (millions of bushels) F™" 1 1 "" IL J -* World 34 Northern excluding Herei sphere ftessla Year United States Canada countries and China mmmmmmmmmmmmmmmmmmmm m* millions millions millions millions 1928 926 5S7 3 , 309 3,999 1929 813 304 3 , Oil 3,562 850 421 3 , X4 ^ 3,821 8*94 304 3,101 3,749* 1932* 715 4 57 3,119 * Preliminary Souroes of data: World production--U. S. Dept. Agr. Yearbook of Agrioulture, 1932:585. 1932. Production in United States, Canada, and 34 Northern Hemisphere countries — U. S. Dept. Agr., Bur. Agr. Econ. World Wheat Prospects. Sept. 24, 1932. p. 4. Southern Hemisphere production of the crop soon to be harvested in iiatralia and Argentina is likewise estimated to be about the same as last year. 10. Wheat acreage in the United States is declining, as shown in table 9. Table 9 Winter Wheat Sown, and Winter and Spring Wheat Harvested in the United States, Average 1924-1928 and Annually 1928-1932 Winter wheat sown in fall Winter wheat harvested Spring wheat Including Durum harvested All wheat harvested l t 000 acres l ff 000 acre* 1,000 acres 1,000 acres ivtr&g • 1924-1928 43,469 3 S £ 20 t 0?8 55,663 1928*29 4 3 1 34 0 #O t SS0 4 0' X 62 | 671 1929-30 43 t 630 39 * 500 ^tf £ ^3 fS 1 1 1 3 S 1930*31 A% liQ 4 X # 3 63' 13 1 93 S 55 1 H99 1931-3S 4 0 i -It W §| 3 3 $ 34 ^ 22, 169 55,414 39 , 905* • August, 1932 intentions to plant. Beurces of data: 1924-1929 U. S. Dept. Agr., Yearbook of Agriculture, 1932:579. 1930-1932 U. S. Dept. Agr. , Bur. Agr, Econ. Crops and Markets. Ht report on intentions to plant winter wheat this fall indioates another reduction i* winter wheat acreage. Contraction in wheat acreage similar to that of the United States is not apparent in other important wheat producing countries. It would ap- ftsr, therefore, that unless international trade in wheat improves or an important •fteulative demand for wheat appears, no major change in the price of wheat in 1933 "•§ compared with 1932 is now to be expected. If a world wide improvement in busi* i.mm conditions occurs, it will stimulate international trade in wheat.