630.7 I6b no. 663 cop. 8 NOTICE: Return or renew all Library Material*! The Minimum Fee for each Lost Book Is $50.00. The person charging this material is responsible for its return to the library from which it was withdrawn on or before the Latest Date stamped below. Theft, mutilation, and underlining of books r * h fe " o "' < !' d '* C ' P "' nary action and may result in dismissal from the University. To renew call Telephone Center, 333-8400 UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN ILL AT UR A t* L161 O-1096 r CHANGES IN SPATIAL GRAIN-PRICE PATTERNS In the United States and In the North Central Region 1946-1958 SEP 19 1960 North Central Regional Publication 107 Agricultural Experiment Stations of Alaska, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin, and the U. S. Depart- ment of Agriculture, cooperating Bulletin 663 UNIVERSITY OF ILLINOIS AGRICULTURAL EXPERIMENT STATION This manuscript was prepared for the North Central Re- gional Grain Marketing Committee NCM-19 by C. P. Schu' maier, formerly Assistant Professor of Agricultural Economics, University of Illinois, now with the Transportation and Facilities Research Division of the Agricultural Marketing Service, U. S. , Department of Agriculture. The members of the committee are as follows: Illinois C. P. Schumaier Indiana P. L. Farris Iowa Richard Phillips Kansas L. O. Sorenson Minnesota R. P. Dahl Missouri D. N. Harrington Nebraska C. J. Miller North Dakota F. R. Taylor Ohio J. W. Sharp South Dakota Loyd Glover Wisconsin H. H. Bakken U. S. Department of Agriculture Agricultural Marketing Service Nicholas Thuroczy Farmer Cooperative Service Francis Yeager Administrative Adviser C. Peairs Wilson (Kansas) 1O/\ CHANGES IN SPATIAL GRAIN-PRICE PATTERNS In the United States and In the North Central Region 1946-1958 CONTENTS U. S. Price, Production, and Acreage Trends Among Grains, 1 935-1 958 5 Price Relationships Among Regions 10 Price Differences Among States in the North Central Region 15 Price Changes Among Major Markets 20 Summary 29 Conclusions . . . 30 Illinois Agricultural Experiment Station Bulletin 663 Urbana, Illinois North Central Regional Publication 107 August, 1960 FOREWORD Long-term changes in grain production, use of grain and grain products, and transportation costs between regions, states, and markets should be reflected in proportionate changes in price relationships. One of the objectives of the North Central Regional Grain Marketing Committee project NCM-19, "Pricing and Trading Practices for Grain in the North Central Region," is to describe the spatial price patterns for grain and the changes that have taken place since 1946. Price relationships and trends are observed on several levels over a period of time. Four different areas are ex- amined: 1. Average prices in the United States for six grain crops. 2. Differences in prices among regions in the United States. 3. Differences in prices among selected states in the North Central Region. 4. Differences in prices among selected markets. The material is presented as a series of graphs comparing relative price movements. Agricultural Statistics and Grain Market News provided most of the basic data; limited data were taken from the Wall Street Journal. Since these publica- tions are readily available, the data for the figures are not reproduced in appendix tables. Although major emphasis was placed on the period from 1946 to 1957 (or 1958, when data were available), some of the analyses were carried back to 1936 to provide a longer period for comparison. U. S. PRICE, PRODUCTION, AND ACREAGE TRENDS AMONG GRAINS, 1935-1958 Price Trends Soybeans, wheat, and corn increased more in price from 1937-1939 to 1956-1958 than sorghum, oats, and barley. If 1935 is taken as the base, barley and oats increased more than corn and wheat. The percent increases in the U. S. season average prices for these crops are given below. Increase from Increase from Increase from 1937-1939 1956-1958 1935 to 1958 1938 to 1958 average average Soybeans 180 201 172 Wheat 109 209 155 Corn 76 124 134 Oats 126 148 124 Barley 137 134 108 Sorghum 81 143 107 All prices more than doubled from their late 1930 lows to 1956- 1958, and soybeans and wheat were more than 21/2 times their 1937- 1939 level. Sorghum has had the most variation since 1948 (Fig. 1). Grain prices show two distinct phases a rapid rise from 1938 to the 1947 high, and a decline since 1947, broken by the Korean War period (1950-1952). Selecting a base year for comparisons is difficult because of the wide range of conditions of supply and demand. For this reason, the 1937-1939 to 1956-1958 averages probably afford as good a comparison as any that can be devised for the long period. For the 1947-1958 period, wheat and soybean prices declined least from their 1947 highs (Fig. 1A). The feed grains had considerably greater declines, particularly corn and barley, which averaged only slightly over one-half their 1947 highs in 1958. Soybean prices have been supported by the rapidly rising demand for soybean meal and by government support of the vegetable oil market, and wheat has been supported by a large loan and disposal program. The feed grains have had government supports, but the percentage going into government programs has been small in relation to total production, and support levels have been reduced considerably since 1954. Substantial reductions in wheat-support rates were not undertaken until the 1958 crop. Production Trends The average price relationships between 1937-1939 and 1956-1958 suggest that wheat, corn, and soybean production should have increased ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, 320 , U.S. FARM PRICES WHEAT CORN 280 240 ! 200 160 120 80 40 OATS BARLEY SORGHUM (100 LB.) SOYBEANS - i i I i I i I i I i i I i i i I I 1 \ 1 L 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 U. S. farm prices of six grain crops, 1935-1958 (Fig. 1) at a faster rate since the late 1930's than oats, barley, and sorghum (Fig. 2). Transposing the data from Fig. 2 to logarithmic scale (Fig. 2A) shows that soybean and sorghum production increased at the most rapid rate, followed by corn at a somewhat slower rate. Wheat and oat production appear to have increased very little, at least since 1945. Although barley production fluctuated considerably from 1935 to 1943, average production from 1935 to 1953 was about 280 million bushels. Since 1953, annual production has averaged about 400 million bushels. Until 1953, the production trends of corn, oats, soybeans, and barley behaved largely as would be expected from the price-relationship changes between 1937-1939 and 1956-1958. Wheat production has re- sponded less than the price change would indicate and, since 1953, sorghum and barley have responded much more. Barley production and acreage increased rapidly between 1952 and 1956, and production in 1957 and 1958 exceeded the 1942 peak. Sorghum acreage and pro- duction increased from 4.6 million acres and 58 million bushels in 1935, to 16.7 million acres and 610 million bushels in 1958. The production of wheat, sorghum, and barley has probably been affected as much, both directly and indirectly, by acreage restrictions on wheat and cotton as by price relationships. In addition, sorghum has been replacing corn in the southwest. Part of the growth in sorghum, J960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS then, is substitution for corn, and does not represent a net gain in feed production except to the extent that sorghum is better adapted to southwest conditions than corn. Of the first three crops in volume of production corn, wheat, and oats only corn made a significant gain in production between 1938 and 1958. A record wheat crop was produced in 1958 in spite of tight controls that have cut acreage by one- fourth since 1938. This fact indicates a potential for much larger wheat production than we have actually had 400 300 - 1935 1939 1943 1947 1951 U. S. farm prices of six grain crops, 1935-1958 (log scale) 1955 1959 (Fig. 1A) ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, 1935 1937 1939 1941 1943 1945 1947 1949 1951 1953 1955 1957 1959 U. S. production of six grain crops, 1935-1958 (Fig. 2) since World War II. If it had not been for stringent acreage restric- tions, wheat production probably would have increased at the support prices in effect from 1952 to 1957. As it was, production decreased to near the 1938 level. Oat production went up slightly from 1935 to 1940, and has changed little since then. Acreage in 1958 was a little less than in the late 1930's. The fact that barley and sorghum prices were less favorable than wheat prices in 1956-1958 does not prevent land forced out of wheat and cotton from going into barley and sorghum if these are the best alternatives. The fact that big increases in barley and sorghum have come in periods of rapidly declining wheat and cotton acreage suggests a direct connection between these crops. Soybean acreage and production have increased steadily throughout the 20-year period from 2.9 million acres and 40 million bushels in 1935, to 23.9 million acres and 580 million bushels in 1958. Since the 1930's, the demand for soybean products has been as great as the growth in soybean production, if not greater. Consequently, soybean prices had a more favorable relation to other grain prices in the 1956- 1958 period than in the 1937-1939 period, despite large increases in production. 7960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 4,000 3,600 3,200 2,800 2,400 2,000 1,600 1,200 800 600 400 z 360 o -J 320 1 280 240 200 160 120 80 U.S. PRODUCTION WHEAT CORN OATS BARLEY SORGHUM SOYBEANS H I 1 I I I I I 1935 1939 1943 1947 1951 1955 1959 U. S. production of six grain crops, 1935-1958 (log scale) (Fig. 2A) 10 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, Acreage Trends Except for the war periods, corn acreage has decreased steadily from 1935 to 1957 (Fig. 3). But favorable price relationships have induced large enough yields to offset acreage decreases and increase total production. Increases in the price of sorghum were comparable to those for corn and soybeans up to 1950, but sorghum acreage and production appear to have been affected at least as much by changes in cotton and wheat acreages as by price relationships. Sorghum and barley acreages and production increased most when wheat and cotton acreages were cut, and often decreased when cotton and wheat acreages expanded. The introduction of acreage controls and price supports makes it impossible to explain changes in acreage and production of grains and soybeans on the basis of price relationships alone. Much acreage has been taken out of cotton, wheat, and corn, particularly from 1949 to 1957. Farmers usually cannot afford to let land lie idle. Barley, sor- ghum, and soybean acreage increased during this period, replacing acreage formerly devoted to other crops. The changes made in the feed-grain support programs in 1958 appear to have reversed the long downward trend in corn acreage, and may have been responsible for the decreases in barley and sorghum acreage. PRICE RELATIONSHIPS AMONG REGIONS Corn Corn prices among regions widened out from 1942 to 1946, and from 1949 to 1952 (Figs. 4 and 5). From 1947 to 1949, and from 1952 to 1954, price spreads narrowed. In 1955, contrary to usual behavior, the spread between regions widened in a period of record corn sup- plies and declining corn prices. Two significant changes in regional corn-price relationships relative to the United States average appear in Fig. 5. These are the increase in prices in the Western Region from 1946 to 1956, and the decrease in prices in the South Atlantic and South Central regions from 1952 to 1956. The price increase in the Western Region was probably due to a growing demand in a deficit area and to increased freight rates from surplus areas. By 1957, corn, sorghum, and barley production in the Western Region were more than double the 1943 to 1952 average, and corn prices were not as high as they had been in relation to other regions. Part of the decrease in corn prices in the South Atlantic and South Central regions may be due to expanded production of sorghum in the 7960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 11 100 90 80 70 060 < 50 2 240 30 20 X \ U.S. ACREAGE HARVESTED WHEAT CORN OATS BARLEY . . SORGHUM SOYBEANS \ ^ -x /-A /"x ' ^~s' V \<"-^ ^.^^.,^1 X^^^ 1 1 I 1935 1937 J I I i 1943 J I I L 1939 1945 1947 1949 1951 1953 1955 1957 J959 U. S. acreage harvested for six grain crops and cotton, 1935-1958 (Fig. 3) southwest. The increase in sorghum is reflected in decreasing corn production in Texas, Arkansas, and Louisiana. In addition, large areas in these regions are accessible to cheap barge transportation from the North Central Region, and, since 1946, barge-transportation rates have gone up much less than rail rates. The low prices in these two regions in 1955 correspond with the large corn crop that year. In 1957, corn production was about equal to the average of the preceding 10 years, and prices had approximately the same relationship to the U. S. aver- age as in 1946. Oats Oat prices seem to show more regional variation than either wheat or corn prices (Fig. 6). Oats are a bulky, low-value commodity, and over 80 percent of the crop is grown in the North Central Region. Since only a small percentage enters commercial trade, erratic regional price patterns could be expected. Using 1946 as a base price, differ- ences widened out in 1947, and again in 1951 and 1952. By 1955, oat prices had declined to between 75 and 80 percent of their 1946 levels, 12 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, but regional variations had narrowed to near 1946 levels. The only regional price-relationship change is a decrease in South Central and South Atlantic prices. This decrease may be due to increased produc- tion in these areas since 1951. Winter Wheat Since the North Central Region produces over half of the nation's winter wheat, prices in this region most closely parallel the national average price (Fig. 7). Taking 1946 as a base point, winter wheat prices in 1957 were somewhat higher in the Western and South Central (Texas, Oklahoma) regions and somewhat lower in the North Atlantic and South Atlantic regions in relation to the average United States price. The North Central and United States averages remained 4-40 + 35 - CORN PRICES WESTERN REGION NORTH CENTRAL REGION NORTH ATLANTIC REGION SOUTH ATLANTIC REGION SOUTH CENTRAL REGION -10 -15 -20 1936 1938 1940 1942 1944 1946 1948 1950 1952 1954 1956 1958 Differences between U. S. average price and regional corn prices, 1936-1958 (Fig. 4) J960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 13 WESTERN REGION NORTH CENTRAL REGION NORTH ATLANTIC REGION SOUTH ATLANTIC REGION SOUTH CENTRAL REGION UNITED STATES INDEX OF CORN PRICES 1946 1947 1948 1949 1950 1951 1952 Regional indexes of corn prices, 1946-1957 1953 1954 1955 1956 1957 (Fig. 5) 140 130 120 _ HO o 90 80 70 60 INDEX OF OAT PRICES WESTERN REGION NORTH CENTRAL REGION NORTH ATLANTIC REGION SOUTH ATLANTIC REGION SOUTH CENTRAL REGION UNITED STATES 1946 1947 1948 1949 1950 1951 1952 Regional indexes of oat prices, 1946-1957 1953 1954 1955 1956 1957 (Fig. 6) 14 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, WESTERN REGION NORTH CENTRAL REGION NORTH ATLANTIC REGION SOUTH ATLANTIC REGION SOUTH CENTRAL REGION UNITED STATES INDEX OF WINTER WHEAT PRICES 1946 1947 1948 1949 I960 1951 1952 1953 1954 1955 1956 1957 Regional indexes of winter wheat prices, 1946-1957 (Fig- 7) closely related because of the heavy weight the North Central Region carries in the United States average price. We may theorize that wheat growers in the states along the At- lantic seaboard are largely small-scale producers who did not bother to place wheat in the loan, while most of the larger growers in the South Central and Western regions did take advantage of the loan. Since an allowance is made in the average prices paid to farmers for unre- deemed loans, western prices would tend to be higher than eastern prices if a higher percent of the crop is placed in the loan. Soybeans No regional averages are given in Agricultural Statistics for soy- beans. In Fig. 8, 1946 is used as a base and Illinois prices as repre- sentative of the North Central Region to compare the relationship with selected southern and southeastern states. Prices in all of these states have declined relatively more since 1946 than those in Illinois. In part, this decline reflects a change from use of the soybean as a green manure crop in cotton fields to a commercial grain crop. In 1946, the South Carolina farm price was about $1.30 more than the Illinois price. J960J 140 130 120 110 7100 5? o> x 90 Ul Q 80 70 60 50. CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 15 INDEX OF SOYBEAN PRICES ILLINOIS NORTH CAROLINA SOUTH CAROLINA MISSISSIPPI ARKANSAS VIRGINIA "1946 1947 1948 1949 1950 1951 1952 1953 Indexes of soybean prices for six states, 1946-1957 1954 1955 1956 1957 (Fig. 8) But the spread has gradually narrowed and, since 1951, the South Carolina price has often been below that of Illinois. Somewhat similar price experiences have been noted in Mississippi, and to a lesser extent, in Arkansas, Virginia, and North Carolina. Since 1946, soybean pro- duction has increased much more rapidly in all of these states than in Illinois and the United States as a whole. PRICE DIFFERENCES AMONG STATES IN THE NORTH CENTRAL REGION Prices over the 11-year period 1946-1957, showed so much irregu- larity and variation that no trends could possibly be assigned. Con- sequently, the data were carried back to 1936 for the comparisons between states. Corn The average annual prices for seven states ( Illinois, Indiana, Iowa, Minnesota, Missouri, Nebraska, and Ohio) were plotted against the United States average (Fig. 9). From 1945 to 1955, corn prices in 16 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, Iowa and Nebraska increased in relation to the United States average. In Ohio and Indiana, prices decreased from 1950 to 1954. Since 1954, both of these trends have been reversed. Prices in the other three states show no discernible trends in rela- tion to the United States average. Both Iowa and Nebraska were subject to drouths in 1953, 1954, and 1955. In addition, CCC accumu- lations of corn are heaviest in the western corn belt. The reversal in price trends since 1955 makes it seem likely that prices were influenced more by these drouths and CCC accumulations of corn than by long- term shifts in production and consumption patterns. Iowa and Ne- braska prices have Come down, Indiana prices have become stabilized, and Ohio prices have increased relative to the United States average. Of more significance is the difference in spread in prices between years with large surpluses and years with short crops and stronger demand. The price spread narrows perceptibly in periods of large surpluses and lagging demand and widens with shorter crops and brisk demand. The narrowest spreads occurred in 1938-1939 and 1948-1949, both periods of large-scale CCC activity. The widest +15 ffi 4-5 -5 -10 -15 -20 3-25 -30 &y&v\ VXN v \: \\ - / CORN PRICES NEBRASKA ILLINOIS ""i MISSOURI INDIANA OHIO MINNESOTA IOWA UNITED STATES V. J 1936 1940 1942 1944 6 1948 1950 1952 1954 1956 1958 Differences between U. S. average price and corn prices in seven states, 1936-1957 (Fig. 9) J960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 17 spread occurred during and after World War II, 1943-1946, and during the Korean War, 1950-1951. During the early part of the period, prices in Minnesota, Nebraska, and Iowa were below those in the other states. From 1952 to 1955, Iowa and Nebraska prices gained with relation to those in other states. Since 1955, crops in the western corn belt have been more normal in size, and 1957 figures show that this area has lost most of its 1955 relative advantage. Nebraska, the farthest west of the corn-belt states, should benefit most directly from the higher corn prices in the Western Region, provided that the increases in the consuming Western Region are not offset by higher freight rates. At the same time, corn production in Indiana and Ohio has been increasing, making these states surplus the greater part of the year. This condition appears to have had the effect of reducing their prices in relation to the United States price from 1950 to 1954. Since 1954, Indiana and Ohio prices have recovered part of their relative loss. The wide variation in Minnesota and Nebraska prices is due partly to variations in quality. Over 85 percent of the 1951 corn received at Minneapolis graded No. 4 or lower. Shepherd and Richards compared corn prices in Nebraska, Iowa, and Ohio over an even longer period, from 1910 to 1956. 1 There was no indication of any long-term shift in the price relationships between these three states. Ohio prices averaged about 9 cents higher than Nebraska prices from 1910 to 1920, and about 11 cents higher from 1944 to 1954. Iowa prices averaged about 0.7 cent over Nebraska from 1910 to 1920, and about 1.4 cents over from 1944 to 1954. As a per- centage of the price of corn, the differences in the latter period are smaller than the differences in the earlier period; however, the demand for feed grain was very strong during most of the 1944 to 1954 period. A large part of the spatial difference in prices can be accounted for by transportation charges. When farm prices rise, relatively fixed trans- portation charges account for a smaller percentage of the price of corn. Oats Since oats and corn are substitutable feed grains, their prices would be expected to follow the same pattern. But oats did not vary as much as corn in cents per bushel because oats sell for less per bushel (Fig. 10). As a percent of average price, however, the variations for oats were usually as large as or larger than those for corn. The 1938 1 Shepherd, Geoffrey, and Richards, Allen. Effects of the federal program for corn and other grains on corn prices, feed grains production and livestock produc- tion. Iowa Agr. Exp. Sta. Res. Bui. 459. 277 p. 1958. 18 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 f August, NEBRASKA ILLINOIS MISSOURI INDIANA OHIO MINNESOTA IOWA UNITED STATES I i i i i I I I I I I I I I I I I L 1936 1946 1948 1956 1958 Differences between U. S. average price and oat prices in seven states, 1936- 1957 (Fig. 10) and 1939 spreads were narrower than those of 1936 and 1937, and the 1948 and 1949 spreads narrowed even more, both periods correspond- ing with narrowing spreads between state prices for corn. Price spreads widened in 1940 and 1947, and narrowed along with corn in 1953. The Minnesota price has been fairly consistent at about 5 cents under the national average. Average prices in Ohio, Illinois, and Indiana declined with relation to the national average from about 1944 to 1955, and increased for the following two years. The high Nebraska price in 1955 and 1956 appears to have been due to short crops in that state and in South Dakota. The total spread between the highest and lowest prices of the seven states has varied considerably during the 21-year period. The spread started out at at)out 10 cents, widened to 17 cents in the immediate postwar period, narrowed again to about 10 cents in 1953, and was 12 cents in 1956, and 15 cents in 1957. There is no evidence of any permanent widening of the spread between states in the North Central Region. Winter Wheat Fig. 11 shows prices for six states Ohio, Indiana, Illinois, Mis- souri, Kansas, and Nebraska. The most apparent trend here is the reversal of the prewar and wartime pattern since 1952. Kansas and Nebraska prices went above those in the other four states. Indiana, 7960J CHANGES IN SPATIAL GRAIN-PRICE PATTERNS 19 Ohio, and Illinois prices, which were usually above Kansas, Nebraska, and Missouri prices from 1936 to 1948, went below them. The 1952 date coincides with the beginning of the large postwar surpluses of wheat. Ohio, Illinois, and Indiana grow primarily soft wheat, and soft-wheat growers have had less tendency to take advantage of loan guarantees than western wheat growers. Other factors may have contributed to the lower prices east of the Mississippi. Soft-wheat production increased rapidly in the early 1950's, while production in the plains states was cut back by acreage allotments without the compensating increases in yields characteristic of states east of the Mississippi. Price spreads between the areas nar- rowed in 1955 and 1956. In 1957, Ohio prices went above those of Kansas and Nebraska, and Illinois and Indiana had prices as high as Kansas and higher than Nebraska. Some of the factors that con- tributed to the soft-wheat price decline helped strengthen relative prices again. Soft-wheat production decreased in 1956 and 1957 until it approached domestic demand, while the hard winter wheat grown in Kansas and Nebraska continued to build up surpluses in storage. NEBRASKA ILLINOIS MISSOURI INDIANA OHIO KANSAS UNITED STATES -20 1956 '1936 1938 1940 1942 1944 1946 1948 I960 1952 Differences between U. S. average price and winter wheat prices in six states, 1936-1957 (Fig. 11) 20 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 [August, Soybeans About 80 percent of the total soybean crop in the United States is grown in Ohio, Indiana, Illinois, Missouri, Iowa, and Minnesota (Fig. 12), with 25 to 30 percent grown in Illinois alone. Soybean prices are affected by both location and oil content. Minnesota soybeans char- acteristically contain about one less pound of oil per bushel than Illi- nois soybeans. Soybean prices in Illinois averaged highest of the six states in six of the 12 years from 1946 to 1957. Because of the large volume of Illinois soybeans, Illinois prices had the most stable relation to the United States average price. Ohio and Indiana were usually within 6 cents of Illinois. Iowa soybean prices for the 12 years probably average as high as Illinois, but the Iowa prices showed more variation (from 19 cents above to 6 cents below the United States average) than Illinois. Minnesota was lowest in six years and Missouri in five years of the 12-year period. No readily identifiable changes in price relationships among the six states have taken place since 1946. Soybean prices for the three states east of the Mississippi have been about 3i/i percent higher than prices for the three states west of the Mississippi for the past three years. PRICE CHANGES AMONG MAJOR MARKETS Corn Agricultural Statistics carries an annual calendar-year series on No. 3 corn prices at Chicago, Kansas City, Minneapolis, Omaha, and St. Louis, and on No. 2 corn prices at San Francisco (Figs. 13 and 14). Prices at the midwest markets have maintained a fairly small differential despite rising transportation costs, except that Minne- apolis differentials have gone from 3 to 4 cents under Chicago in the 1930's to 9 to 10 cents under since 1947 (Fig. 14). The San Francisco differential rose gradually from about 25 cents above Chicago in 1937 to 60 cents above in 1955. In 1957, probably as a result of large western field crops, San Francisco corn prices approached Chicago prices for the first time since 1945. This differential appears to be tied to transportation in most years. It tends to rise as a percent of the Chicago price when prices are low, and to fall when prices rise. The differential between San Francisco and Chicago tends to be higher when corn crops are short in the western corn belt, as they were in 1955. This trend lends support to the argument that the differential J960J CHANGES IN SPATIAL GRAIN- PRICE PATTERNS 21 cJ* 25 OHIO V) MISSOURI CD s" 5 IOWA MINNESOTA /-. /" \ A / \ ^"\ / X^\ .' L. .^^S^^^^s^^T /'A X^^^^ . 77r5^~ - y*^^ ^ * ^S- V 7C/^vV -'^ \ / v> \s V \, X K ^/ ^^ "^ - ^ \ / V V .25 - SOYBEAN PRICES .SB 1 1 1 1 1 l l i i i i Differences between U. S. average price and soybean prices in six states, 1946-1957 (Fig. 12) is closely related to transportation costs. In 1957, freight rates on corn from Kansas and Nebraska to San Francisco were about 70 cents a bushel. Rates from Iowa and Minnesota were about 75 cents, and from Illinois, about 85 cents. Rates have been increasing rapidly since 1945. In 1956, the rates from Kansas and Nebraska were approxi- mately 31 cents over their 1946 level, closely approximating the in- crease in price differential between Chicago and San Francisco be- tween 1946 and 1955. Grain Market News has a shorter series, dating from 1945-1946, based on crop-year data from Chicago, St. Louis, Kansas City, Omaha, Minneapolis, and Toledo (Fig. 15). St. Louis and Chicago prices are usually within 2 cents of each other, and the other terminals are under Chicago and St. Louis in most years. Minneapolis and Omaha are usually 8 to 10 cents under Chicago, and Kansas City and Toledo are usually 3 to 6 cents under. From 1950 to 1954, prices in Kansas City, St. Louis, and Omaha gained in relation to Chicago and Toledo, ap- parently as the result of short crops in the western corn belt. In 1956, with normal corn crops in the western corn belt, prices began to return to their usual relation to Chicago. Buffalo and Fort Worth prices, as reported in the Wall Street Journal, averaged 15 to 20 cents above Chicago for several years prior to 1958. The spread between the markets (except Buffalo and Fort Worth) on a crop-year basis has been within the 10- to 15-cent range in most 22 ILLINOIS BULLETIN 663; REGIONAL PUBLICATION 107 f August, 280 1935 1937 1939 1941 1943 1945 1947 1949 No. 3 yellow corn prices at six markets, 1935-1957 1951 1953 1955 1957 (Fig. 13) _/ puip "*?* I C/l ^^~^^ ^nlLAoU KANSAS CITY A MINNEAPOLIS / CD 50 OMAHA y K .30 ST. LOUIS /. , - SAN FRANCISCO (NO. 2 YELLOW) .- / \ ./^ ^/ '\^/ \ \ z hj ; '*' '\ / " ^ . ! \ - / / \ Lj" E a. \ I A \ 1 \ 1 \ * \> o 13 ^W^^?.?- "^^c,^r. -^ \ y /""F^^^ / ^r.--" / v s \ o -10 o \\lrn l\V//7 CORN Nt % or -30 u. |V // N0 - 3 YELLOW