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
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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.