THE UNIVERSITY OF ILLINOIS LIBRARY person charging for -""^ JAN 1 5 199' 4AN282C 032WM L161-0-1096 Supply and Marketing of SOYBEANS and SOYBEAN PRODUCTS By C. L. STEWART W. L. BURLISON L. J. NORTON and O. L. WHALIN UNIVERSITY OF ILLINOIS AGRICULTURAL EXPERIMENT STATION Bulletin 386 FOREWORD FEW PRODUCTS of the farm have increased in economic im- portance so rapidly in recent years as have soybeans. This growing interest has been reflected in the attention that has been given to the various aspects of the crop by the Agricultural Ex-- periment Station of the University of Illinois. Its place in cropping plans, its use as a feed for livestock, and the cost of producing the crop have all been under investigation for some years. The purpose of the present study has been to examine the sup- ply situation with respect to both soybeans and soybean products, the present and potential markets for soybeans, the means anoT methods by which they are marketed, their economic characteristics in relation to improvements in marketing, and the influence of vari- ous factors on the prices paid for them. Various state and federal agencies, as well as private enter- prises and individuals, have given helpful information and assist- ance: namely, the Illinois Crop Reporting Service (a cooperative enterprise of the Illinois State Department of Agriculture and the U. S. Department of Agriculture), the Bureau of Agricultural Eco- nomics of the U. S. Department of Agriculture, the Bureau of the Census and the Bureau of Foreign and Domestic Commerce of the U. S. Department of Commerce, the U. S. Tariff Commission, prac- tically all crushers of soybeans in the United States, and many handlers, manufacturers, producers, and consumers. The information herein presented it is believed will be useful, not only as a basis for understanding the economic developments affecting soybeans in recent years, but also as a means of deter- mining the tendencies which will count heavily in the future in establishing the place of this crop in the agriculture of the state. // "// Director CONTENTS PACK INTRODUCTION 429 THE SUPPLY OF SOYBEANS AND SOYBEAN PRODUCTS 432 Domestic Production of Soybeans 433 Production of Soybeans in Illinois 443 Soybean Varieties in Illinois 446 Costs and Returns in Producing Soybeans 448 Imports of Soybeans and Soybean Products 453 Import Duties Levied on Soybeans and Soybean Products 454 Supply of Soybean Oil and Competing Oils and Fats 455 CONSUMPTION OF SOYBEANS AND SOYBEAN PRODUCTS 459 Disposition of the Domestic Crop 459 Utilization as Beans 460 Utilization of Soybean Oil Meal 462 Utilization of Soybean Oil 463 Methods of Processing Soybeans for Consumption 467 Competition From Other Oils 469 Distribution of Gathered Soybeans by Uses 473 PRACTICES IN MARKETING SOYBEANS AND SOYBEAN PRODUCTS 475 Sources of Market Information 477 Time of Movement 478 Varieties Marketed in Different Sections of Illinois 481 Selling Soybeans for Seed 482 Selling Soybeans for Industrial Uses 486 Selling Soybean Oil and Oil Meal 491 ELEMENTS OF COST IN MARKETING SOYBEANS 493 Marketing Mill Beans 493 Processing Beans 498 Marketing Seed Beans 499 Exporting Beans 500 THE INSPECTION SYSTEM AND SOYBEAN GRADES 503 SPECIAL CONSIDERATIONS APPLYING TO THE VALUATION OF SOYBEANS AND SOYBEAN PRODUCTS 507 Use- Values of Soybeans and Soybean Products in Feeding 507 Derivative Products as Factors in the Market Valuation of Soybeans. . . 509 PRICES OF SOYBEANS AND SOYBEAN PRODUCTS 510 Prices of Seed Beans 510 Prices of Soybean Oil 519 Prices of Soybean Oil Meal 524 Use as Affected by Prices 526 PAGE MEETING THE PRICE RISKS IN MARKETING 528 INTERNATIONAL TRADE IN SOYBEANS AND SOYBEAN PRODUCTS 530 PLACE OF SOYBEANS IN ILLINOIS FARMING 534 SUMMARY 537 LITERATURE CITED 541 SOURCES OF DATA.. .543 ACKNOWLEDGMENT For special assistance rendered in the securing of data for this study the authors make acknowledgment to L. F. Rickey, formerly Associate in Grain Marketing Technology, Department of Agronomy ; to R. C. Ross, Assistant Chief in Farm Organization and Management; and to Shison C. Lee and Ranbir Singh, Research Assistants in Agricultural Economics. For helpful outlines of cer- tain materials the authors are indebted to a committee of which P. A. Eke, formerly Instructor in Economics ; J. J. Pieper, Asso- ciate Chief in Crop Production ; and J. C. Hackleman, Chief in Crops Extension, were members in 1923-24. Additional assistance from the latter two members is also acknowledged along with simi- larly valuable help from other specialists in various departments of the Station, particularly in Agronomy, Animal Husbandry, Dairy Husbandry, and Farm Organization and Management. Urbana, Illinois December, 1932 Publications in the Bulletin series report the results of investigations made by or sponsored by the Experiment Station Supply and Marketing of Soybeans and Soybean Products By C. L. STEWART, W. L. BURLISON, L. J. NORTON, and O. L. WHALIN* OYBEAN PRODUCTION in the United States has become cen- (tered largely in Illinois, tho the degree of concentration is not so marked as in certain regions of foreign production. In several districts in Manchuria, the most important foreign center of produc- tion, soybeans occupy between 40 and 65 percent of the cultivated area (Fig. 1). In Illinois, even including the acreage of soybeans grown with other crops, the latest United States Census showed only one county, Christian, in which the proportion of harvested crop land in soybeans was as high as 11 percent. In eight Illinois counties, b how- ever, over 40 percent of the farms reported some soybeans produced in 1929; in Macoupin county over 55 percent reported soybean production. Thus the soybean has become a major crop on many Illinois farms, and tho it cannot yet be recognized as a major crop in the state, it is of outstanding importance among the secondary crops of Illinois and may be expected to attain major rank in some districts soon. Estimating the soybean hay crop at the average December value per ton for tame hay, the total Illinois crop had an average value in the 1928-1931 period of nearly $8,400,000 annually (Table 1). This average annual value of soybeans for the four years was surpassed by corn, which was valued at $181,962,000; by oats, $48,209,000; by all hay, exclusive of soybean hay, $39,390,000; and by wheat, $27,643,000 (Fig. 2). During this period the value of the soybean crop in Illinois was practically equal to the entire fruit crop and was greater than any other noncereal crop. The value of gathered beans in 1931 was nearly 40 percent of the estimated value of the total soybean crop in Illinois ; while the value of gathered beans in 1930 equaled 65 percent of the total estimated C. L. STEWART, Department of Agricultural Economics; W. L. BURLISON, Denartment of Agronomy; L. J. NORTON, Department of Agricultural Economics; and O. L. WHALIN, formerly in Department of Agricultural Economics. b The percentages in these eight counties were as follows: Bond, 42.8; Champaign, 42.5; Christian, $0.7; Cumberland, 40.4; Fayette, 40.6; Macoupin, 55. 2; Montgomery, 42.8; and Piatt, 43.4. The number of counties in other states haying more than 40 percent of the farms reporting soybeans was as follows: Indiana, 1; Louisiana, 4; Missouri, 1; North Caro- lina, 12; and Virginia, 11. Of the 37 counties all but 10 were in southern states. 429 430 BULLETIN- No. 386 [December, value of the crop. The value of the soybean hay crop has always been greater than that of the gathered beans except in 1929 and 1930. Since 1922 the supply of gathered beans has been such as to re- quire an outlet increasingly larger than that supplied by the local de- PERCENTAGE | [NO INFORMATION | IUNDER 10* [ | IPX AND UNDER 20X | Y12OS AND UNDER 3OX [i$jj%X>* AND UNDER 40X (^|40X AND UNDER 50% mSOX AND UNDER 60 X m&OS AND UNDER 70X OUTER MONQOLI HOPE \/ DAIREN f GULF OF PEIPING FIG. 1. PERCENTAGE OF CULTIVATED ACREAGE IN SOYBEANS IN MANCHURIA AND IN ADJACENT PROVINCES OF INNER MONGOLIA, 1929 The production of soybeans in Asia is concentrated in Japan, Korea, and two regions in the eastern part of China, the more important of which includes the three provinces of Manchuria and some adjacent portions of Inner Mon- golia. In Manchuria in 1930 there were thirteen districts in which over 40 percent of the crop land was devoted to soybeans, the highest proportion being 65 percent. The proportions for the three Manchurian provinces as units were as follows: Kirin (eastern), 33.2 percent; Hailungkiang (northern), 30.7 per- cent; and Liaoning (southern), 22 percent. The three Manchurian provinces cover an area of about 364,000 square miles, or 93 percent as large an area as low^, Missouri, Illinois, Indiana, Ohio, Michigan, and Wisconsin combined. Soybeans from Manchuria have been ex- ported largely by way of Harbin and Mukden to Dairen on the Liaotung pen- insula. In terms of value, soybeans have accounted for more than one-fourth of all Manchurian exports, soybean cake for nearly one-fourth, and soybean oil for about one-tenth, a total of 55 to 60 percent. 1932} SUPPLY AND MARKETING OF SOYBEANS TABLE 1. VALUE OF THE SOYBEAN CROP IN ILLINOIS, 1928-1931 431 Year Total value Value of hay Value of beans 1928 $ 7 487 170 $3 745 170 $3 742 000 1929 8 426 350 3 556 350 4 870 000 1930 10 888 800 4 034 800 6 854 000 1931 6 700 500 4 581 500 2 119 000 Average $ 8 375 705 $3 979 455 $4 396 250 mand for seed. Lower prices have increased the supplies available to more distant seed users, to crushers, and others, but the demand has not become sufficiently strong to maintain prices at levels that prevailed when the local seed demand absorbed all available supplies. ^SOYBEANS ALL OTHER CROPS- 96 FIG. 2. AVERAGE ACREAGE AND VALUE OF SOYBEANS COMPARED ON A PER- CENTAGE BASIS WITH SELECTED HARVESTED CROPS, ILLINOIS, 1929-1931 The acreage devoted to soybeans in Illinois averaged 3.2 percent of the total land in crops in the three-year period 1929-1931 and was surpassed by corn, oats, tame hay except soybean hay, and all wheat in the order named. During the same period the aggregate value of the soybean crop of the state represented 3.1 percent of all crops and was surpassed by corn, oats, tame hay, and wheat. The average gross value of $15.13 an acre for soybeans was sur- passed only by corn at $17.41 an acre and was followed by tame hay at $13.84, all wheat at $13.46, and oats at $9.98 an acre. In response to the need for an outlet for the increased supply of soybeans in Illinois, oil-extracting mills have been developed at various points. Soybean cake or its pulverized product, meal, resulting from the crushing process, has been utilized recently as a protein ingredient of mixed feeds. Manufacturers of such feeds have become important users of these products. More than 45 percent of the 1928-1931 crops of gathered soybeans produced in Illinois have been utilized by the crushing and feed manufacturing industries. Soybean products have become the objects of considerable domestic and international trade, entering into competition with many oil-bear- 432 BULLETIN No. 386 [December, ing and high-protein products from the corn, cotton, and flaxseed belts of the United States as well as from other countries. To the trade in vegetable oils and animal fats soybeans are of special importance. THE SUPPLY OF SOYBEANS AND SOYBEAN PRODUCTS Soybeans are now grown principally in Manchuria and eastern central China, in Japan, Korea, and the United States, and to some extent in northern India, Indo-China, and the Malayan Islands. The crop is grown to a limited extent in Italy, France, southern Russia, Hungary, Hawaii, Egypt, South Af- rica, and in a few coun- tries of South America. 14 * Table 2 shows the pro- duction of soybeans for the more important coun- tries of the world. FIG. 3. SOYBEAN PLANT AT Two STAGES OF GROWTH The soybean (Sofa max), a summer leguminous annual, is shown at the left as the plant appears when the beans are ready for harvest. The pods arc from 1 to 2Vi inches long and contain from 2 to 4 seeds. The stems, leaves, and seed pods are covered with short reddish-brown or gray hairs. The root tubercles are large and abundant. The picture at the right shows the plant at the time of active growth, or at about the flowering stage. The flowers are small and inconspicuous, either white or purple, and are clustered in the axils of the leaves. The stems are branched, rather woody, and grow from 2 to 3Vi feet or more in height. *These numbers refer to literature citations on pages 541 and 542. J932] SUPPLY AND MARKETING OF SOYBEANS 433 Previous to 1908 the trade in soybeans was confined almost alto- gether to oriental countries, particularly to China and Japan. Since then the usefulness of the soybean has been more generally appreciated in other countries and an important international trade has developed. TABLE 2. SOYBEAN PRODUCTION IN SELECTED COUNTRIES, AVERAGE 1909-1913, ANNUAL 1920-1931 (Tons of 2.000 pounds) Year Manchuria Korea Dutch East Indies* Japan United States b Total for five reporting countries 1909-1913 499 119 533 239 1920 3 862 000 735 784 112 193 655 785 68 340 5 434 102 1921 1 950 000 718 590 108 930 636 000 84 450 3 497 970 1922 3 272 000 693 510 115 740 558 720 129 870 4 769 840 1923 2 666 000 712 800 107 220 527 340 196 230 4 209 590 1924 . 2 780 000 561 690 106 080 412 740 170 400 4 030 910 1925 3 500 000 708 270 117 990 554 190 153 060 5 033 510 1926 4 050 000 668 280 110 160 375 360 195 510 5 399 310 1927 4 900 000 729 000 119 130 501 120 223 770 6 473 020 1928 5 334 000 585 210 129 079 457 161 260 640 6 766 090 1929 5 351 000 613 012 117 505 407 745 260 100 6 749 362 1930 5 807 000 689 671 134 040 465 944 359 250 7 455 905 1931 6 349 000 634 644 447 510 7 431 154 Native crop. b Figures for 1924 and later are for production from acreage actually harvested for beans rather than for potential production. "Four-year average 1910-1913. It is interesting to note that the soybean is one of the oldest crops grown by man. It was described in a Chinese book on materia medico, "Ben Tsao Gang Mu," written by Emperor Shen-Nung about 4,800 years ago. 18 * In China and Japan the soybean has been of prime im- portance since ancient times, and in value and variety of uses is the most outstanding legume grown in these countries. 13 * Domestic Production of Soybeans Introduced into the United States in 1804, 14 * the soybean has be- come a crop of importance only within the last fifteen years. Certain well-defined characteristics seem to account for its rapid development in the United States in this time and particularly in the southeastern and corn-belt states during the last ten years. Some of the more im- portant reasons cited for this popularity are the following: 7 * 1. The soybean is rich in protein. 2. It is the richest nitrogenous roughage adapted to most farms. 3. It is suited to many uses and relished by most livestock. 4. If properly handled, it furnishes a satisfactory substitute for oats in the cropping system, and is a good emergency hay crop. 5. It is adapted to a wide range of soil types. 6. Being a legume, it has merit as a soil builder if used properly. 7. It ranks well as a cash crop. 8. It fits well into rotations. 434 BULLETIN No. 386 [December, Before 1917 fewer than 500,000 acres of soybeans were grown in this country, including acreages on which soybeans were grown alone as well as acreages on which they were grown interplanted with other crops. For the period 1917 to 1924 records of soybean production in the United States are somewhat scattered and fragmentary, but from 1924 to the present date statistics seem to be reasonably trust- worthy. Soybeans have been grown on between 4 and 5 percent of the farms of the United States, according to the Census returns for 1924 and 1929. Farms reporting soybeans Census Total Percent of year all farms 1929 302 842 4.8 1924.. 283 284 4.4 Acres of soybeans Gathered grown alone beans, "Total AcTeT" bushels per farm 1 962 000 10 8 661 188 1 376 000 8 5 190 000 The East North-Central group of states was the leading group in soybean production in 1929 (Table 3). About 28 percent of the soy- bean-producing farms of the country were located in that area, and 57 percent of the gathered beans of the country were reported from the farms of this area. According to the 1930 Census, the three states showing the largest proportion of farms reporting soybeans in 1929 were Delaware, 22.3 percent; Indiana, 17.1 percent; and Illinois, 16.9 percent. California, Nevada, and Washington reported practically no soybean production. TABLE 3. SOYBEAN PRODUCTION IN THE UNITED STATES, BY GEOGRAPHIC DIVISIONS, 1929 Geographic division Farms reporting soybeans Acres planted with soybeans Beans gathered (bushels) Total Percent of all farms in area Total Per report- ing farm Grown alone With other crops* State groups New England 556 3 476 85 390 44 398 73 350 68 562 26 804 244 62 302 842 .4 1.0 8.8 4.0 6.9 6.5 2.4 .1 (") 4.8 5 335 17 925 939 451 544 868 648 009 456 420 296 849 1 821 301 2 910 979 10 5 11 12 9 7 11 7 5 10 5 051 15 484 793 285 370 004 326 456 368 383 80 863 1 753 270 1 961 549 284 2 441 146 166 174 864 321 553 88 037 215 986 68 31 949 430 704 14 805 4 977 439 1 334 510 1 702 709 292 383 323 327 15 223 88 8 661 188 Middle Atlantic East North-Central West North-Central South Atlantic East South-Central West South-Central Mountain Pacific. Total U. S For method of reducing interplanted crop acreages to solid equivalent acreages, see Table 5, footnote. b Less than .05 percent. 1932} SUPPLY AND MARKETING OF SOYBEANS 435 Of the seventeen western states there were only two, Colorado and New Mexico, in which there was even one county where as many as 2 to 3 percent of the farms reported soybeans. Probably not all the soybeans produced in the western areas, particularly in areas of orchard production in California, were completely enumerated. PERCENTAGE FARMS REPORTING I I NONE OVER & UNDER 2 2 i UNDER 6 6 & UNDER 14 14 & UNDER 30 30 & UNDER 62 62 & OVER FIG. 4. PERCENTAGE OF FARMS IN THE PRINCIPAL SOYBEAN PRODUCING AREAS IN THE UNITED STATES GROWING SOYBEANS, BY COUNTIES, 1929 Nearly all the soybeans grown in the United States in 1909 were found in the southern states. By 1919 there had been a fairly uniform development in the area east of the Mississippi river and in the first tier of states west of it, as measured by the percentage of farms growing the crop. At that time soybeans had considerable prominence in New England and in Texas, Oklahoma, New Mexico, Arizona, Colorado, Utah, Idaho, and Montana. By 1924 the soybean acreage had decreased in the New England states, in New York, and in the area west of Meridian 97. The most important change between 1924 and 1929 was the increased concentration in the areas already developed by 1924. 436 BULLETIN No. 386 [December, Analysis by counties of that part of the United States east of Meridian 100, which runs thru the North Dakota-Texas tier of states, shows that the proportion of farms reporting the growing of soybeans in 1929 was comparatively large in three major areas and very small in many areas, even in the humid eastern half of the country (Fig. 4). In the coastal plains of North Carolina and Virginia, where soybeans are raised for seed and crushing purposes, over half the farms in - 100 ACRES = 1.000 ACRES = 10.000 ACRES FIG. 5. ACREAGE OF SOYBEANS GROWN ALONE IN PRINCIPAL SOYBEAN PRODUCING AREAS IN THE UNITED STATES, BY COUNTIES, 1929 A map showing the acreage of soybeans grown alone does not give a repre- sentative impression for the southern states in that the main part of the crop grown in the South is planted with a row of beans alternating with a row of some other crop. The crop is seldom interplanted in this manner in the corn-belt states. The extreme concentration of acreage of soybeans grown alone in local areas in Missouri, Illinois, and Indiana in 1929 is to be especially noted. 1V32] Sui-i'i.Y AND MARKETING OK SOYBEANS 437 several counties were reported as growing soybeans and in two counties the proportion of farms reporting soybean production was between 80 and 90 percent. In a crescent area crossing Iowa, Missouri, Illinois, 100 ACRES - 1.000 ACRES - IO.OOO ACRES FIG. 6. ACREAGE OF SOYBEANS GROWN ALONE IN PRINCIPAL SOYBEAN PRODUCING AREAS IN THE UNITED STATES, by COUNTIES, 1924 The acreage of soybeans grown alone in 1924 did not differ greatly from the acreage of 1929 except that in 1924 there was less acreage in the important regions of soybean production and the concentrated area did not extend quite so far to the south and southwest as in 1929. and Indiana where soybeans are produced for crushing, for seed, and for hay three counties, one in Missouri and two in Illinois, reported between 50 and 60 percent of the farms growing this crop. In the Tennessee river valley in Tennessee, Alabama, and Georgia soybean hay has been produced on a considerable proportion of the farms, the 438 BULLETIN No. 386 [December, highest percentages of reporting farms, between 30 and 40, being found in three counties in Tennessee and three in Alabama. Between 1924 and 1929 there was an increase in the proportion of farms reporting soybeans in the Ozark highlands of southern Missouri and northern Arkansas, in northeastern Oklahoma, and in Louisiana. Regional differences similar to those described above are shown also in the acreage planted to soybeans, particularly to soybeans grown 1.000 BUSHELS - 10.000 BUSHELS - IOO.OOO BUSHELS FIG. 7. PRODUCTION OF GATHERED SOYBEANS IN PRINCIPAL SOYBEAN PRODUCING AREAS IN THE UNITED STATES, BY COUNTIES, 1929 No state gathered as much as 50,000 bushels of soybeans in 1909. Two states, Virginia and North Carolina, produced more than 100,000 bushels in 1919, and the latter approached 500,000 bushels. By 1924 four states, Illinois, North Carolina, Missouri, and Indiana, produced more than 500,000 bushels and two states, Illinois and North Carolina, more than 1,000,000 bushels each. By 1929 Iowa had reached a production of 500,000 bushels, Indiana 1,000,000 bushels, and Illinois, 3,250,000 bushels. 1932] SUPPLY AND MARKETING OF SOYBEANS 439 alone (Figs. 5 and 6). Between 1924 and 1929 the acreage of soybeans per farm showed a marked increase in nearly all parts of the country. The production of soybeans gathered as beans in 1929 is shown by Fig. 7 to have been concentrated in the heart of the lowa-Missouri- Illinois-Indiana area and in the coastal-plain counties of North Caro- lina and Virginia to a much greater degree than was the acreage. CO ui 4 I 10 D ffl z 2 NORTH CAROLINA OHIO- ILLINOIS INDIANA 1924 25 26 1931 FIG. 8. PRODUCTION OF GATHERED SOYBEANS IN Six LEADING STATES, 1924-1931 CROPS Illinois and Indiana arc rapidly becoming the leading source of commercial soybeans, while the soybean producers of Missouri and Ohio are turning more definitely to hay as the major product. North Carolina has produced hay and seed for a long time, and production has remained rather stable compared with most states. Production in Iowa has reached a point where commercial sup- plies of soybeans arc becoming more plentiful. In 1924 twenty-two states produced the bulk of soybeans in the United States. The total production of gathered beans was slightly above 5 million bushels. From 1924 to 1931 inclusive production trebled, figures for 1931 indicating a total of nearly 15 million bushels of gathered beans. In 1924 Illinois ranked first in soybean production, with North Carolina second, Missouri third, and Indiana fourth. The 1931 rating was as follows: Illinois, Indiana, North Carolina, and Missouri. 440 BULLETIN No. 386 [December, TABLE 4. PRODUCTION OF GATHERED SOYBEANS IN SELECTED STATES AND IN THE UNITED STATES, 1922-1931 (Thousands of bushels) State 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 Ohio. . . 465 800 195 165 247 350 555 317 294 560 Ind.. . 240 644 653 400 529 884 1 000 1 380 1 806 3 062 Ill 812 1 288 1 380 1 431 1 750 2 392 3 069 3 247 5 712 6 055 Mich. . 41 66 19 20 22 16 30 18 20 24 Wis 77 32 72 18 11 10 25 22 23 20 Iowa 132 119 120 140 300 276 357 578 858 578 Mo 165 840 656 672 830 1 092 1 288 737 741 1 080 Kans 46 77 80 72 82 36 60 108 Del 29 154 110 105 140 224 270 216 156 364 Md.. . 80 122 69 75 50 36 44 60 32 94 Va 208 285 180 143 195 196 182 262 135 280 W. Va.. 15 15 42 38 52 48 29 11 7 12 N. C. . 1 600 2 125 1 160 1 348 1 378 1 410 1 380 1 053 1 261 1 498 s. c 33 60 60 90 80 80 50 47 84 95 Ga 37 77 126 60 84 42 30 69 110 142 Ky 78 84 40 42 32 24 23 78 60 94 Tenn 54 63 80 60 100 72 145 104 144 165 Ala 155 225 28 35 20 16 18 41 84 115 Miss 96 116 56 90 63 78 120 78 60 225 Ark 30 30 25 24 17 70 52 116 La 12 16 40 60 51 72 53 190 220 170 Okla 28 32 24 45 52 56 56 60 Other states 4 13 U.S 4 333 7 144 5 190 5 131 6 063 7 459 8 819 8 670 11 975 14 917 TABLE 5. TOTAL EQUIVALENT SOLID ACREAGE* OF SOYBEANS GROWN IN SELECTED STATES AND IN THE UNITED STATES, 1922-1930 (Thousands of acres) State 1922 1923 1924 1925 1926 1927 1928 1929 1930 Ohio 90 128 89 69 105 142 166 180 179 113 172 217 157 195 218 294 331 402 169 272 358 330 388 465 497 544 719 12 14 11 12 12 10 12 10 8 48 48 25 16 12 11 18 11 10 22 29 60 53 56 75 65 86 103 Missouri 53 149 208 192 296 369 407 436 463 10 12 12 9 13 18 30 Delaware 6 14 17 14 17 24 25 27 28 Maryland 18 24 39 38 43 42 41 38 41 63 73 107 116 122 128 121 115 117 West Virginia 7 1 37 33 54 40 32 31 19 North Carolina 225 260 215 246 295 304 326 370 478 South Carolina 10 21 29 60 67 60 44 45 76 12 32 71 90 72 83 59 76 106 Kentucky 65 65 50 57 60 48 85 94 86 154 157 200 170 261 335 305 329 339 Alabama 113 106 112 134 105 113 58 69 82 Mississippi 43 45 80 103 110 186 123 140 134 28 37 43 65 64 90 83 3 8 30 36 37 50 62 134 158 10 12 13 25 35 61 84 New York 3 3 3 New Jersey 1 1 1 9 8 9 United States 1 226 1 618 2 003 1 987 2 375 2 802 2 865 3 247 3 758 Total equivalent solid acreage is derived by adding (1) the acreage cut for hay, (2) the acreage harvested for beans, and (3) a computed portion of the acreage in which soybeans have been inter- planted with other crops. In Missouri 20 acres of soybeans interplanted with other crops are computed as equivalent to 1 acre of solid planting; in Illinois, Indiana, Iowa, Michigan, and Wisconsin, the proportion is 10 to 1; in Maryland and Virginia the proportion is 5 to 1; in Delaware 4 to 1; in Virginia 3 to 1; in Arkansas, Georgia* Kentucky, Louisiana, North Carolina, Oklahoma, South Carolina, and Tennessee 2 to 1; in Alabama and Mississippi 3 to 5. Potential production represents the product of acreage and estimated yield of matured beans. 1932] SUPPLY AND MARKETING OF SOYBEANS 441 Table 4 shows the production of gathered beans in 22 selected states and in the United States from 1922 to 1931. Fig. 8 represents production of gathered beans in the six leading states from 1924 to 1931. Remarkable increases are to be noted. 700 600 500 400 300 200 100 1922 '24 '25 '26 '27 '28 '29 1930 FIG. 9. TOTAL EQUIVALENT SOLID ACREAGE OF SOYBEANS IN FIVE LEADING STATES, 1922-1930 CROPS Illinois, Indiana, North Carolina, and Missouri have been the four leading states in total soybean acreage as well as in production of gathered beans since 1922. Tennessee grows a large acreage but the volume of beans gathered is not so large. The prominent position of Missouri and North Carolina in soybean acreage is partly the result of increase in hay acreage in these states since 1925. Previous to 1925 the total acreage" of soybeans in the United States fluctuated rather noticeably, but from that year to 1931 the variation has been less marked. Since 1922 the acreage has trebled, reaching 3,758,000 acres in 1930, with an approximate increase of 10 percent for 1931. The more rapid increase has occurred in the corn-belt states, particularly in Illinois, Missouri, and Indiana (Table 5 and Fig. 9). '"Total acreage" as used here means total acreage expressed as the equiva- lent of solid acreage. Sec footnote to Table 5 for further explanation. 442 BULLETIN No. 386 [December, The acre-yield of gathered soybeans in the United States has fluc- tuated considerably from season to season, but apparently less than the yield of most other standard crops. Available statistics indicate that the fluctuation is somewhat less than formerly, as a result of the use of superior varieties and the employment of better cultural prac- tices. In North Carolina, Virginia, and Maryland, the trend in acre- yield has been downward in the last decade and a half, while in Illinois and Indiana it has been distinctly upward (Table 6). TABLE 6. YIELD PER ACRE OF GATHERED SOYBEANS IN SELECTED STATES AND IN THE UNITED STATES, 1922-1931 (Bushels per acre) State 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 Aver- age 1922- 26 Aver- age 1927- 31 Ohio IS 16 13 15 13 10 15 15.1 14 20 14.4 14.8 Ind 12 14 9.9 10 12.6 13 14 5 15 14 17.8 11.7 14.9 111 12.5 14 12 13.5 12.5 13 16 5 17 17 17.5 12.9 16.2 Mich 10.2 11 9.7 10 11 8 15 9 10 12 10.4 10.8 Wis 11 g 9 9 11 10 12 5 11 11.5 10 9.6 11 Iowa 22 17 12 14 15 12 17 17 16.5 17 16 15.9 Mo 11 12 9.5 10.5 10 10.5 12.5 11 9.5 12 10.6 11.1 Kans 11.5 9.6 10 12 10.2 9 7.5 9 10.4 9.5 Del 14 3 15.4 11 15 14 16 18 9 6 14 13.9 12.6 Md 16 17.5 11.5 12.5 12.5 12 14.8 12 6.5 13.5 14 11.8 Va 16 19 12 11 13 14 13 12.5 7.5 14 14.2 12.2 W. Va 15 15 x 14 12.5 13 16 14.5 11 7 12 13.9 12.1 N. C 16 17 14.5 14.5 13 15 11.5 13.5 13 14 15 13.4 S. C... 11 12 5 4.5 4 5 5.5 11.8 10.5 9.5 7.3 8.5 Ga 12.2 11 7 5 6 6 6 9.8 10 9.5 8.2 8.3 Ky 13 14 g 7 g 8 7.8 13 10 13.5 10 10.5 Tenn 9 9 8 7.5 8.3 g 6.3 6.5 8 7.5 8.4 7.3 Ala 8.6 9 7 7.5 5 5.2 6 13.8 12 11.5 7.4 9.7 Miss 12 14.5 7 10 7 6.5 10 13 10 15 10.1 10.9 Ark. . 6 5 5 4 8.4 14 10.5 14.5 5.3 10.3 La 12.1 16 8 10 8.5 9 5.3 10 10.5 10.6 10.9 9.1 Okla 7 8 6 7.5 7.5 8 8 10 7 8.2 u. s 13.8 14.5 10.9 11.6 11.4 12 13.4 14.1 13.9 15.6 12.4 13.8 The acreage of gathered soybeans in the United States has more than doubled since 1925, the most rapid development occurring since 1928. The latter period was one of increasing use of soybeans in industries. The soybean acreage cut for hay increased from 1,181,000 acres in 1925 to 2,100,000 in 1930. The largest hay sections are located in Illinois, Missouri, Tennessee, and Indiana. Expansion of the hay acreage appears to precede the marked development of bean production in most areas, and reaches an approximate maximum earlier. The practice of seeding soybeans with other crops is largely con- fined to the southern states, notably North Carolina, Tennessee, Louisi- ana, Mississippi, South Carolina, and Arkansas. The corn-belt states 1932} SUPPLY AND MARKETING OF SOYBEANS 443 have increased their acreage grown for hay and beans in a greater ratio than the acreage seeded with corn. In the more important hog- producing sections, however, there is a considerable area devoted to soybeans in corn. In the United States as a whole the acreage of soy- beans grown with other crops and harvested with livestock has shown little increase during the last four years. Production of Soybeans in Illinois Few soybeans were grown in Illinois previous to 1890, when J. C. Utter of Mt. Carmel, Wabash county, began the production of this crop. Frank Hurrelbrink of Taylorville, Christian county, known be- cause of his work with the Hurrelbrink variety of soybean, started his work in 1897. He has grown soybeans continuously since that time, experimenting with many varieties. C. A. Rowe and his father, of Jacksonville, Morgan county, grew soybeans about 1899. Somewhat earlier than this the late Ralph Allen of Delavan, Tazewell county, became interested in soybeans and fur- nished seed beans to Illinois farmers as well as to interested persons in other states, in Hawaii, and in Alaska. C. L. Meharry of Attica, Indiana, who owns a large tract of land near Tolono, Champaign county, Illinois, has been an active soybean grower since 1909. The year following the Meharry venture, John T. Smith, also near Tolono, began to grow soybeans on a very limited scale, and in 1921 undertook active production. During the last decade soybeans have become an increasingly popular crop on Illinois farms. Illinois farmers produce and market more soybeans "than do farm- ers of any other state (Tables 4 and 5). Acreage may be given first consideration as an index of production. In acreage devoted to soy- beans for all purposes Illinois has stood first among the states be- ginning with 1923 and continuing to date. The acreage of soybeans gathered for beans and that cut for hay" have both been important in Illinois since 1922 (Table 7). In soybean acreage devoted to hay during the five-year period 1926-1930 Illinois averaged highest, altho surpassed by Missouri in 1927 and 1928. Indiana, North Carolina, and By "soybeans harvested for hay" is meant soybeans cut with leaves and pods on, with no intention of separating them for seed. In harvesting for beans the crop may be harvested without cutting, as when picked by hand or when row harvesters are used, these machines being common in the southern states, or harvested by cutting and threshing, as is more prevalent in the corn belt. Some methods of cutting and harvesting result in the removal of the threshed straw from the field for possible use in feeding or otherwise. When the com- bine is used, the threshed straw is frequently returned to the field as the com- bine operates. 444 BULLETIN No. 386 [December, Missouri, the states coming nearest to Illinois in acreage gathered for beans during 1930 and 1931, fell below Illinois by 46, 70, and 75 percent respectively. Of the total acreage of soybeans cut for hay in the United States in 1929 and 1930, Illinois had 16 percent. The corresponding figure for gathered beans was 36 percent." In production from acreage gathered for beans, as well as in the amount of such acreage, Illinois has stood first among the states since 1924. Of the entire amount of beans gathered in the United States in 1930 and 1931, nearly 44 per- cent was in Illinois (Table 4, page 440). TABLE 7. PROPORTION OF SOYBEAN ACREAGE GATHERED FOR BEANS, CUT FOR HAY, AND INTERPLANTED WITH OTHER CROPS, ILLINOIS, 1922-1931 Year Gathered for beans Cut for hay Interplanted with other crops 1922 percl. 38.5 perct. 41.4 percl. 20.1 1923 33.8 50.4 15.8 1924 32.1 55.9 12.0 1925 32.1 55.8 12.1 1926 36.1 54.1 9.8 1927 39.6 52.7 7.7 1928 37.4 55.7 6.9 1929 43.5 55.0 1.5 1930 55.7 42.6 1.7 1931 44.3 54.4 1.3 In 1931 the proportion of crop land in Illinois that was planted in soybeans (expressing the acreage of soybeans in terms of equivalent of solidly planted acreage) was 3.7 percent, or more than four times the proportion for the country as a whole. Other important legume crops in Illinois included the clovers, alfalfa, and cowpeas. In the use of land the leading rival to soybeans among the legumes in 1931 was sweet clover, which occupied 4 percent of the total crop area. The relative prominence of soybeans among the other legume crops on an acreage basis has increased in Illinois since 1922, the first year for which the statistics needed for comparison are available. Over this period all legume crops have increased in importance. Roughly, sweet clover occupied six times as much of the crop land in Illinois in 1931 as in 1922, while the corresponding increase for soybeans was five. Comparable figures for the United States as a whole are not available for sweet clover, which has been of much less importance in most states than in Illinois. As for soybeans, it is certain that the nation as a whole has shown a less marked interest in this crop than has been shown in Illinois. 'See source of data for Table 4, page 543. 1932] SUPPLY AND MARKETING OF SOYBEANS 445 Soybeans are grown to some extent in every county in Illinois. In order to visualize the variations in the production of different counties, it is suggested that the reader examine not only the Illinois section of Fig. 4 (p. 435) but also Fig. 10, showing both acreage and produc- tion in the nine crop reporting districts of Illinois. While the produc- tion of gathered beans is somewhat more concentrated than that of beans cut for hay, it will be observed that every district shows the pro- duction of this crop for both purposes. 3I.667ACRES 48.8% GATHERED 5l.2r.HAY /-55.2X GATHERED FIG. 10. ACREAGE, YIELD, AND PRODUCTION OF SOYBEANS IN ILLINOIS, BY CROP REPORTING DISTRICTS, AVERAGE OF 1929-1931 CROPS The proportion of the soybean acreage that was cut for hay for the three- year period 1929-1931 ranged from 82.6 percent in the Dixon district (1) to 33.3 percent in the Champaign district (6). Hay production has been much more important in the northern and southern thirds of the state than in the central third. Average production of gathered beans was greatest in the Springfield district (4a), followed by the Champaign and Mattoon districts (6 and 6a), each producing more than a million bushels of beans. In the Champaign district acreage was less than in the Mattoon district, but the high average yield of 19.5 bushels an acre, compared with 16.2 bushels for the Mattoon district, ac- counted for the greater production. 446 BULLETIN No. 386 [December, TABLE 8. PRODUCTION OF SOYBEANS IN TWELVE LEADING PRODUCING COUNTIES OF ILLINOIS, WITH RANK BY YEARS, 1929-1931 Average Rank Name production 1931 1930 1929 Christian bu. 692 200 1 1 1 Champaign 534 700 2 2 2 Piatt 333 300 3 4 3 Moultrie 317 500 4 3 4 Douglas 253 600 6 5 6 Macoupin 250 600 5 6 9 Macon 237 000 7 7 5 Shelby 194 100 9 8 8 Sangamon 189 500 8 9 10 Hancock 172 000 10 11 7 160 700 11 10 12 Edgar 145 500 12 12 14 Certain counties in Illinois which have been notable for bean pro- duction thru the last decade are shown in Table 8. Soybean Varieties in Illinois Since the soybean is a relatively new crop in the corn belt, con- siderable experimentation with a number of varieties has been carried on both by farmers and by the agricultural experiment stations. It is not surprising, therefore, that rather frequent changes have occurred in the varieties grown in different districts in the state (Table 9). Because of the wide variation in soil and climatic conditions within the state, a large number of varieties of soybeans will probably continue to be planted. Varieties of outstanding promise recommended by the Illinois Station in 1923 6 * were Manchu and Virginia, and in 1929 Illini, Dun- field, and Mansoy. With the increasing amount of soybeans available for industrial use, more attention is being given to color because of the preference of crushers for yellow beans. The trend in use of varieties in Illinois in 1931 may be summarized as follows: Varieties gaining Varieties holding favor own Illini Manchu Dunneld Mansoy Laredo Ebony Virginia Ilsoy Peking Black Eyebrow Wilson V Hurrelbrink Varieties losing favor Haberlandt Mammoth Yellow Hamilton (Ohio 9035) I to San A. K. Midwest SUPPLY AND MARKETING OF SOYBEANS 447 |i il!iI a Hlllli .* 1 jjj.2. n j2 1 >> M rt S V e o Illlllll |1|| Ag M S X c .2 JS 1 1 11 ^!H 5 IIJ*I 111 Mattoon (6a) Il : | ilUjlii 2u>cu2x O J3 3 G P ^ it S| c i o 3 a Lli 5 * "O O '" r^ iftll , P Crop reporting districts 'if ! CQ w ! 11* C flJ_CM .2 C r* S & *o c * o W "3 o> ^ ^ u f ^ o lilillll^lll Si>SswSS^. f 00 i-f|f fc, if ll^llljll w| yi< 2aa P. z, y < c > i? liiliHli 8 Js o Midwest 3 - 2 3 81 ss | 3 5"" o i fllUN S25 >Sl!a -3 "l . - 03 w i-2 ?J 2 ? u ^ -r H B b ft ; a) $ B E & ^7; . r: oe s o w -c ^TS , J3 rt op Si c 450 BULLETIN No. 386 [December, when the land charge was figured at 5 percent on a valuation of $176 an acre, and ranged from $25.25 in 1922 to $28.91 in 1928. The acre- return varied with yields, prices secured, and uses made of roughage. The average return was $26.57 an acre, of which $22.77 represented income from sales and inventories of grain, and $3.80, the value of; straw and pasture. Total returns from beans and straw varied from $19.27 in 1926, when the yield was 13.5 bushels an acre, to $37.40 in 1929, when the yield was 24.6 bushels. FIG. 11. A FIELD OF SOYBEANS HARVESTED WITH A BINDER On some farms in the corn-belt states soybeans are cut with a binder and threshed with a regular grain thresher. This method makes the straw available for feeding. For the ten-year period 1921-1930 the returns from soybeans, in- cluding seed and mill beans and straw, lacked 17 cents an acre of being sufficient to pay growing and harvesting costs and taxes and interest on the land. During five of these years returns were less than the com- puted costs, the largest loss being $6.58 an acre in 1926. Of the five remaining years in which returns exceeded the computed costs, 1929 showed the largest difference, $9.86 an acre. For the first seven years, 1921-1927, of this period the annual returns fell short of the computed costs by an average of $1.28 an acre, but during the last three years they exceeded computed costs by an average of $2.43 an acre. Except for 1930, when the soybeans were sold at a dollar a bushel, returns in excess of computed costs were realized in each year when the yield exceeded 16 bushels an acre. With the very favorable prices frequently realized for seed beans in the earlier years of the period and the better established commercial outlets in the later years, the monetary returns were apparently sufficient to lead to a marked expansion in production even tho returns in excess of computed costs were not consistently realized. 1932\ SUPPLY AND MARKETING OF SOYBEANS 451 The years 1928 and 1929 merit particular mention in this respect. With favorable seasons both years the yields exceeded those of any previous year. Under the contract price inaugurated in 1928 mill beans averaged about $1.20 a bushel to the grower. Seed prices averaged about $1.75. Under such conditions the crop was very profitable. In 1929, a year in which high yields continued, the price of mill beans ranged from $1.40 to $1.50 a bushel, and seed beans from $1.50 to $2. The net returns in these two years were significant factors in the ex- pansion of acreage. FIG. 12. HARVESTING SOYBEANS WITH A COMBINE The combined harvester and thresher, or combine, has made great headway since 1927 as a means of harvesting the soybean crop, especially in Illinois. This method of harvesting has usually been less expensive than the use of both binders and threshing machines. Central Illinois. A more exhaustive study of enterprise costs made on a larger number of farms in 1928 and 1929 showed acre-costs and acre-yields for a large area of central Illinois to be similar to the costs and yields cited for Champaign and Piatt counties. The returns were greater for these years because a larger proportion of the beans were disposed of for seed purposes at higher than milling prices. Beans harvested with a combine (Fig. 12) during these two years were pro- duced at somewhat lower acre-cost, but no feed value was realized from the straw ; hence the net cost per bushel and the net returns per acre were about the same as for the threshed beans. Soybeans cut for hay in central Illinois during these years returned only 75 cents an acre in excess of computed costs. This small excess, even with yields averaging as much as 2.16 tons an acre, shows the effect of unusually heavy costs for ground preparation and cultivation for an annual crop that is cut for hay. The average cost per ton, costs 452 BULLETIN No. 386 [December, being computed on the basis indicated on page 450, was $11.89 for the two years. A similar study for the same years, 1928 and 1929, in the Mont- gomery county area gave costs and returns on poorer soils belonging to the brownish gray and grayish brown groups. The threshed beans, with an average yield of 12 bushels an acre, were produced at a com- puted net cost of $1.34 a bushel, while the combined beans, with a yield of 19.9 bushels, had a computed net cost of $1.05. The difference in yield was due principally to differences in soil fertility, the combined beans having been grown on the more productive land. In this area the beans, whether threshed or combined, returned an excess over computed costs, but the soybean hay, averaging 1.43 tons an acre, re- turned $2.62 an acre less than the computed costs. Cost records prior to 1926 covering limited acreages in other parts of southern Illinois show that with the low yields the returns in most cases failed to equal computed costs. Indiana Survey. A survey made in central Indiana in 1923 and 1924 indicated an average cost of $1.39 a bushel for growing the crop and $1.46 for growing and marketing (Table 10). The average yield was 14 bushels an acre. Sixty-two percent of the farms had a profit on gathered beans. Eleven percent of these farms showing a profit produced their beans at a cost of less than a dollar a bushel ; nearly 28 percent produced them for less than $1.25 ; 50 percent for less than $1.50, and nearly 66 percent for less than $1.75. For soybean hay, of which the average yield was 1.71 tons an acre, the computed cost per ton was $12.05, which was $2.24 an acre, or $1.31 a ton more than the returns. On 34 percent of these farms returns exceeded computed costs. Summary for Illinois Areas. In the Champaign-Piatt area, the re- turns on gathered soybeans above operating expenses and taxes, dis- regarding land values, averaged $8.63 an acre for the years 1921-1930. For certain shorter periods, however, the corresponding returns for gathered soybeans in the various Illinois areas were as follows: central Illinois, threshed $17.58 and combined $18.51 ; Montgomery county, threshed $6.91 and combined $15.14. For soybeans cut for hay, the two- and three-year averages were $8.54 and $9.36 an acre respectively for central Illinois and $1.49 and $2.18 for Montgomery county. For the year 1931 production costs declined considerably as the result of lower seed prices, lower rates for man and horse labor, and lower charges for machinery used in harvesting. This was particularly true for beans harvested with combines. Using the land charges indi- SUPPLY AND MARKETING OF SOYBEANS 453 cated on page 449, the 1931 acre-cost of producing the crop on a group of Champaign and Piatt county farms was $24.31 for beans harvested with binder and thresher and $19.19 when the crop was combined, the yield in each case approximating 25 bushels an acre. Valuing the crop at 29 cents a bushel, the prevailing price at harvest time, the loss on the combined beans was $11.49 an acre and on the beans harvested with binder and thresher, $15.72. Disregarding the land charge, and figuring only operating costs and taxes, the combined beans were pro- duced at a loss of $2.69 an acre and the beans harvested with binder and thresher at a loss of $6.92 an acre. With the exception of land charges, the acre-costs for soybeans in 1932 are likely to parallel rather closely those for 1931. The land values used in calculating the costs of producing soybeans during the period 1921-1931 were those prevailing in 1928 and 1929. In calculating costs of production for 1932, adjustments in land charges should be made corresponding to the decline in land values since 1929. When costs and prices shall again become stabilized, the profitableness of the crop will again be determined largely by the ability of the indi- vidual farmer to keep production costs at a minimum, to obtain high yields, and to sell at the best current prices. Imports of Soybeans and Soybean Products Imports of soybeans and soybean products into the United States have not been extensive, with the exception of imports of oil during the World War. Nevertheless the amounts imported have represented sufficiently large proportions of the total supply to have an effect on the market. Soybeans. The amount of soybeans imported into the United States has been fairly constant from year to year, but at no time sig- nificant. The range for the ten years 1922-1931 was from about 59,000 bushels in 1922 to over 72,000 bushels in 1929 (Table 11). In 1931 the amount of beans imported returned to the 1922 figure. Soybean Oil Meal and Cake. For a considerable period beginning in 1915, imports of soybean oil meal and cake were somewhat irregular (Table 11). Upward trends seemed apparent, however, from 1925 until 1930, when tariff duties were levied on these two products for the first time. Imports reached approximately 86,000 tons in 1929; while for 1931 they represented only about 20,000 tons, which is the amount of meal obtainable from about 825,000 bushels of beans. Soybean Oil. Imports of soybean oil into the United States were greatly stimulated during the World War, when there was a shortage 454 BULLETIN No. 386 [December, of all vegetable oils and when some of the normal outlets in Europe were closed. Imports in 1918 reached a total of nearly 336 million pounds (Table 11). Since that time they have declined irregularly but continually. The first marked drop occurred in 1921, when the emer- gency tariff measure of that year took effect. Yearly variations from TABLE 11. IMPORTS OF SOYBEAN OIL, SOYBEAN OIL MEAL AND CAKE, AND SOYBEANS, UNITED STATES, 1915-1931 Calendar year Soybean oil Soybean oil meal and cake Soybeans 1915 Ibs. 21 335 000 tons 2 988 ft*. 63 964 1916 145 4O9 000 5 234 50 067 1917 264 926 000 2 880 89 067 1918 335 984 000 39 23 883 1919 195 808 000 8 494 72 813 1920 112 214 000 12 236 52 281 1921 17 283 000 5 318 65 770 1922 17 294 000 2 142 58 947 1923 41 679 000 15 612 60 804 1924 9 125 000 23 542 69 735 1925 19 493 000 13 901 63 532 1926 30 712 000 21 434 62 127 1927 14 915 000 26 976 69 819 1928 13 116 000 48 405 70 929 1929 19 489 000 85 928 72 286 1930 8 348 000 56 813 64 198 1931 4 416 000 19 810 59 000 1921 to 1930 have been influenced most markedly by variations in pro- duction. As the increased tariff duties of 1930 became effective, further reduction in imports became apparent. Imports for 1931 dropped to 4,416,000 pounds, or to less than 1.3 percent of the 1918 figure. The 1931 imports were equivalent to an amount obtainable from about 570,000 bushels of beans. Import Duties Levied on Soybeans and Soybean Products Prior to the tariff act of 1909, United States tariff duties affected neither imported soybeans nor soybean products except in so far as the schedule on chemicals, oils, and paints was applicable to the oil. The first mention of soybean oil as such was made in the 1909 tariff meas- ure, which placed it on the free list. Soybean oil continued on the free list under the act of 1913. The emergency tariff act of 1921 was the first to place a duty on any soybean product. A duty of 2.67 cents a pound (20 cents a gallon) was placed on the oil, which immediately shut out the greater portion of the soybean oil imports (Table 11). The tariff bill enacted the following year reduced the duty on soy- bean oil to 2.5 cents a pound (18.75 cents a gallon) and levied a duty of 30 cents a bushel on soybeans. 1932} SUPPLY AND MARKETING OF SOYBEANS 455 TABLE 12. DUTIES LEVIED ON SOYBEAN OIL, SOYBEAN OIL MEAL AND CAKE, AND SOYBEANS UNDER RECENT TARIFF ACTS, UNITED STATES, 1909-1930 Year of tariff Oil Oil meal and cake Beans 1909 Free list Free list Free list 1913 Free list Free list Free list 1921 20c per gal. (2.67c per Ib.) Free list Free list 1922 2.5c per Ib. (18.75c per gal.) J^c perlb. (30c per bu.) 1930 3.5c per Ib. (26 25c per gal ) $1 20 per bu. Not less than 45 percent ad valorem. The change in duties in the 1922 act was not reflected in any notice- able change in importations. The tariff act passed in 1930 increased the duty on soybean oil to 3.5 cents a pound and on soybeans to $1.20 a bushel. Soybean oil meal and cake were taken from the free list and given a duty of $6 a ton (Table 12). After the act became effective, importation of all soybean products, including oil meal, cake, and oil, declined. Supply of Soybean Oil and Competing Oils and Fats Production. The total production of all vegetable oils and animal fats in the United States showed relatively little annual fluctua- tion from 1912 to 1930. Following the close of the World War and until 1927 production increased gradually, but since 1927 the trend has been downward. In 1931 the total production exclusive of butter TABLE 13. DOMESTIC PRODUCTION OF SOYBEAN OIL AND OTHER VEGETABLE OILS FROM DOMESTIC MATERIALS, UNITED STATES, 1912-1931 (Thousands of pounds) Calendar year Cottonseed oil* Peanut oil* Olive oil Corn oil* Linseed oilb Soybean oil Total vege- table oil 1912. 435 401 456 966 72 832 510 097 2 019 752 1914 789 777 11 006 1 128 91 810 296 905 2 190 626 1916 492 430 28 534 1 462 109 963 251 746 884 135 1917 343 849 50 499 963 118 021 154 921 668 253 1918 283 823 95 934 618 111 065 238 487 729 927 1919. 429 948 87 607 439 97 400 119 971 735 365 1920 142 671 13 085 643 98 619 193 322 448 340 1921 1 277 300 33 234 974 87 481 141 421 540 410 1922 . ... 934 627 22 644 585 111 508 176 477 751 246 592 1923 1924 973 753 1 154 434 5 359 6 691 574 1 509 111 343 117 065 297 401 549 648 1 404 950 389 834 830 297 1925 510 802 15 156 532 104 153 411 908 2 520 2 045 071 1926 764 318 10 644 1 383 120 041 354 743 2 646 2 253 775 1927 806 757 10 590 858 117 441 448 728 3 088 2 387 462 1928 1929. 460 407 581 631 12 439 16 131 1 438 1 003 124 327 133 680 366 3O4 312 858 4 716 11 009 1 969 631 2 056 312 1930 1931 616 102 417 226 25 495 13 730 2 184 1 509 120 747 113 145 393 307 203 613 14 387 39 129 2 172 222 1 788 352 Crude oil only. K)il equivalent of domestic seed production less exports. 456 BULLETIN No. 386 o 2 s PQ H > s o < 60 >' 5 * ^ ^ * ^W)(NC?(Nr-v*O^^*X i .- be S59I _ e > """ O-"Xt-'*)'OXW-"'J'^rmwO'! O O 3> O > rTtXOr-OmfS^~2Q "OO^Mr-OX J-SM6 ^vo-^ * ~i c**" ^3 -^ *Of*5^^^*XioOM X^O S OO^ - COO 1 ! O -75 (N^^-^10^^ -"u D jQ r -* ' - V. C r C ^ C 3 c^ ?"9 , v r ocox l^ CD^KI "".N^iii, O i. ? 1932} SUPPLY AND MARKETING OF SOYBEANS 457 fat was slightly above 4.5 billion pounds, approximately three-fifths of this amount representing animal fats and fish oils and two-fifths vegetable oils. Production of cottonseed oil, which has averaged about 1.5 billion pounds annually, has been more important than that of any other vege- table oil (Table 13). Next in order have been linseed oil and corn oil. The production of soybean oil, tho of minor importance, has increased rapidly since 1928. In 1930 production was more than 14 million pounds, and in 1931 almost treble that amount. Production of the other important oils has been fairly stable during the last five years. Net Imports. Since 1917 there has been a gradual increase in net imports of oils and fats into the United States. This increase has been due largely to the increased imports of coconut oil and copra. (Copra is the dried meat of the coconut and contains from 60 to 65 percent of its weight in oil, depending on the method used in drying it.) Coconut oil and copra represented slightly more than two-fifths of the total net imports of vegetable oils in 1930 (Table 14). Net imports of all these oils in that year amounted to over 1 billion 650 million pounds ; coconut oil and copra over 703 million pounds; palm oil, including palm kernel oil, approximately 316 million pounds; and linseed oil, including linseed oil equivalent of flax seed, over 236 million pounds. Net imports of soybean oil dropped to 4 million pounds in 1931. Total net imports of all oils and fats have been slightly more than one-third of the United States production. Exports. Exports of vegetable oils, including reexports, have been small since the readjustments which followed the World War (Table 15). In 1930 exports of leading vegetable oils represented less than TABLE 15. EXPORTS OF SOYBEAN OIL AND FIVE OTHER LEADING VEGETABLE OILS UNITED STATES, 1919-1931 (Thousands of pounds) Year Soybean Cottonseed Coconut Linseed Corn Peanut 1019. . . 27 715 193 133 118 612 11 266 6 452 4 342 1920 43 512 184 754 25 695 5 366 12 059 1 425 1921 1 944 252 549 7 498 3 512 4 400 1 708 1922 2 458 75 303 12 972 2 703 5 733 963 1923 1 356 49 608 16 562 3 013 4 361 203 1924 2 264 43 343 17 961 2 387 3 679 39 1925 520 62 415 17 901 2 487 3 847 1926 . 1 567 40 901 15 952 2 567 1 324 1927 6 629 67 982 26 275 2 525 310 898 1928 7 994 51 702 31 184 1 965 337 42 1929 8 098 26 075 30 871 2 208 315 103 1930 5 479 29 193 26 904 1 592 613 7 702 1931 . . 5 448 23 539 19 201 1 094 776 13 299 Second six months of 1919 only. 458 BULLETIN No. 386 [December, one-twentieth of the net imports of all vegetable oils. Soybean oil exported in 1930 amounted to over half as much as was imported. During 1931, however, soybean oil exports were more than equal to imports. Export-Import Balance. Statistics for 1912 and 1914 indicate that the total amount of vegetable oils, animal fats exclusive of butterfat, and fish oils exported from the United States exceeded the amount imported (Table 16). From 1916 to 1931, however, imports have TABLE 16. TOTAL PRODUCTION, IMPORTS, EXPORTS, AND NET BALANCE OF VEGE- TABLE OILS AND ANIMAL FATS, EXCLUSIVE OF BUTTERFAT BUT INCLUSIVE OF FISH OILS, UNITED STATES, 1912-1931 (Thousands of pounds) Year. Domestic vegetable oil production Domestic animal fat production* Total oil and fat production 1 Importation of fats and oils Exportation of fats and oils Net import or ex- port balance of all fats and oils 1912... 2 019 750 2 130 626 1 884 135 1 668 253 1 729 927 1 735 365 1 448 340 1 540 410 1 246 592 1 389 834 1 830 297 2 045 071 2 253 775 2 427 462 1 910 910 2 056 312 2 172 222 1 788 352 2 178 750 2 280 484 2 728 125 2 252 161 2 755 886 2 822 314 2 868 285 3 010 888 3 371 085 3 969 423 3 833 056 3 247 580 3 413 032 3 416 378 3 613 603 3 343 510 3 052 894 3 075 926 4 198 500 4 411 110 4 612 260 3 920 414 4 485 813 4 557 679 4 316 625 4 551 298 4 617 677 5 359 257 5 663 353 5 292 651 5 666 807 5 843 840 5 524 513 5 399 822 5 225 116 4 864 278 512 645 535 206 807 244 1 056 144 1 444 782 1 151 314 1 235 300 788 030 122 550 389 605 235 191 385 724 648 780 605 931 1 639 860 2 202 066 1 848 868 1 741 428 1 163 792 867 578 849 849 624 769 843 777 1 269 836 1 016 733 1 387 101 1 167 457 1 365 071 1 286 456 1 032 258 1 009 680 1 015 904 1 063 128 1 112 058 928 438 859 462 Ex. 651 147 Ex. 332 372 Ex. 42 605 Im. 431 375 I ni. 601 005 Ex. 118 522 Im. 218 567 Ex. 599 071 Ex. 44 907 Im. 24 534 Ex. 51 265 Im. 353 466 Im. 639 100 Im. 590 027 Im. 576 732 Im. 1 090 008 Im. 920 430 Im. 881 966 1914 1916 1917 1918 . 1919 1920 1921 . . 1922 1923 1924 1925 1926 1927 . 1928 1929 1930 1931 Exclusive of butterfat. which represents about 2.1 billion pounds annually. shown a marked tendency to exceed exports, even tho readjustments incident to the ending of the World War and to the imposition of import duties on oils in 1921 cut down the use of imported oils. Fol- lowing the 1930 tariff act there was a further decline in the importa- tion of vegetable oils, but imports still remained higher than exports. From 1916 to 1920 inclusive the imports of soybean oil averaged 205 million pounds, or one-fifth of the combined net imports of all vegetable oils. For the five-year period ending with 1931 this amount declined to 14.5 million pounds. The net import balance of all fats and oils increased from more than 350 million pounds in 1925 to nearly 1.1 billion pounds in 1929. A decrease was shown for 1930 and 1931, when the import balance stood at about 900 million pounds. 1932\ SUPPLY AND MARKETING OF SOYBEANS 459 CONSUMPTION OF SOYBEANS AND SOYBEAN PRODUCTS Disposition of the Domestic Crop The demand for soybeans is determined by three main uses: seed, livestock feed, and crushing. At all times the demand for these pur- poses in the United States as a whole is distinct from the demand for farm uses, which do not relate primarily to the gathered beans. The disposal of the 1915 soybean crop indicates the typical dis- position when the crop was of distinctly minor importance (Table 17). In that year more than half the soybean acreage in the United States TABLE 17. USE OF SOYBEANS, BY ACREAGE, UNITED STATES, 1915, 1929, AND 1930 CROPS 1 Use Percentage of entire crop acreage 1915 crop (equivalent solid acreage unknown) Hay 52 Grazed . ... 15 Plowed under 4 Beans (bushels gathered unknown) Seed 18.2 Human food .9 Feed. ... 9.9 1929 crop (equivalent to 3,245.000 solid acres) Hay . 56 Grazed 16 Beans (8.670,000 bushels) Seed 12 9 Feed . . 7 1930 crop (equivalent to 3,758,000 solid acres) Hay 56 Grazed 14 Beans (11.975,000 bushels) Seed 10.5 Crushed or ground 11.5 Feed 8.0 was cut for hay, 15 percent more was fed without being threshed or shelled, and only 29 percent was harvested for beans. About one-third of the gathered beans was fed to livestock and two-thirds was utilized for seed purposes. Previous to 1929 the production of soybeans in the United States was influenced largely by the ever-increasing acreage and consequent active demand for seed. Beginning with 1929 the absorption of soy- beans by the mills has been a potent factor influencing production. The 1929 and 1930 soybean crops averaged the equivalent of 3,500,000 solid acres. This acreage was disposed of in the following ways: cut for 460 BULLETIN No. 386 [December, hay, 56 percent; grazed, 15 percent; harvested for beans, 29 percent. Products derived from soybeans grown in the United States are many. The following list of such products actually being placed on the market in the United States and Canada at the present time was com- piled from letters received during the latter part of 1931 by the De- partment of Agronomy of the Illinois Station from more than a] hundred manufacturing consumers of soybeans and soybean products. This list has grown rapidly during the past year, and does not pretend to be complete. COMMODITIES IN WHICH SOYBEANS OR SOYBEAN PRODUCTS ARE USED* Soybean flour Soybean meal flour Refined edible soybean oil Soybean salad oil Chocolate bars (30% soy- bean flour) Cocoa (up to 60% soybean flour) Sausages (up to 50% soy- bean flour) Bread (7J^% soybean flour) Rolls (10% soybean flour) Macaroni (20% soybean flour) Soybean muffins Soybean cookies Soybean doughnuts Cake or meal Commercial feed Dairy feed Dairy chow Hog chow Poultry chow Paint Varnish Enamels Oilcloth Linoleum Food Products Vegetable shortening Infant foods Diabetic foods Oleomargarine Lard substitutes Filled sweets Soybean sprouts Soybean cheese Soybean milk Soybean buns Soybean ice cream Soya Cream Biscuits La Choy Soy Sauce Soyolk (flour) Soy Biscuits Soy Flour Vi-Zoy Feed Products Dog chow Chicken chowder Steer fatena Calf chow Lay chow Rabbit chow Industrial Products Printer's ink Glycerine Celluloid Lauxtex plastic wall coat Lauxein waterproof soybean glue Utilization as Beans Lektizoy Zoy Soup Zoybeans (cooked beans] Bacon and Zoy Beans Zoy Bouillon Soy Bean Biscuit Casein Gluten Flour No-fat Mayonnaize Fat less Spread Fluffo Canadian Products Milqo (soy milk) Vi-tone (chocolate) Soya Flour Soyex-Malt-Cocoa Drink Soyex Macaroni 34% protein chow chow 24% protein chow chow Chick startena Chicken fatena Olelene Grainola Lauxein emulsifier Soap Core binders Rubber substitutes The portion of the 1930 soybean crop harvested for beans in the United States represented approximately 30 percent of the total crop "This list includes a number of products for which only trade names are available. 1932\ SUPPLY AND MARKETING OF SOYBEANS 461 and yielded 11,975,000 bushels of beans. These beans were utilized for crushing purposes, for seed, for feed, and for human food. About 42 percent of the total was crushed; 34 percent was used for seed; 23 percent was fed to livestock without having the oil removed, and less than 2 percent was used for human food (see Table 22, page 473). Seed. The amount as well as the proportion of all beans used for seed has always been important. Since the total acreage of soybeans has been expanding rapidly during the last decade, and since seed for the entire acreage grown must come from the 30 percent harvested for beans, this requirement has accounted for approximately one-third of the gathered beans. Feed. The soybean crop is first of all a feed crop. An average of about 56 percent of the 1929 and 1930 crop acreages was cut for hay; about 15 percent was grazed or harvested by livestock, and about 30 percent of the amount gathered for beans was fed to livestock. Thus about 80 percent of the crop was utilized for feed. The hay serves as a satisfactory roughage for most classes of livestock, comparing favorably with other legumes per pound con- sumed. 21 * There is a greater waste of soybeans, however, because a considerable amount of the woody stems is left uneaten. The area of soybeans pastured or hogged down has been on the decline since 1920. Except for emergency purposes other crops are more suitable for this purpose, at least in the corn belt. The amount of harvested soybeans fed to livestock has not shown much increase in the last five years. Reasons generally cited have been the danger of soft pork and too oily lard from hogs and lack of suf- ficient relish by most other classes of livestock to give maximum gains. The feeding of a small portion of beans to breeding animals for the purpose of balancing rations has been satisfactory and has helped to provide cheap and economical rations. Food. The soybean has long been considered an essential part of the diet of the people of Manchuria, and other parts of China, Japan, and the East Indies. With the recently developing importance of the crop in the commerce of both Europe and the United States and the very recent expansion of production in the important soybean- producing areas of the United States, more attention is being given to soybeans and soybean products as human foods. As a food the soybean is unique. It is recognized as the most nearly perfect vegetable substitute for meat grown. 9 * It contains about 40' percent protein, 20 percent fat, and the important vitamins A, B, and D. The yield of protein from soybeans, weight for weight, is ap- 462 BULLETIN No. 386 [December, proximately twice that of meat; four times that of eggs, wheat and other cereals; five or six times that of bread; twice that of lima and navy beans, walnuts, filberts, and most other nuts ; and twelve times that of milk. The consumption of soybeans in the form of such products as soybean milk, soy chocolate, and soy sauce has increased appreciably since 1930. The use of soybeans for confectionery products is grow- ing rapidly. Cooked beans are utilized for table use in various forms. Little use as a green bean for seasonal consumption or for canning has developed in the United States altho this use is important in the orient. Utilization of Soybean Oil Meal Soybean oil meal is now being more generally recognized as a protein supplement than it was formerly, with the high quality of the protein it furnishes becoming more widely established. When the production of oil meal was greater than local consumption, the surplus was absorbed for a time by a few large manufacturers of mixed feeds. The large crushings from the 1930 soybean crop caused soybean oil meal stocks to accumulate. This accumulation was finally liquidated thru the activities of the manufacturers of mixed feeds, and thru de- cided reduction in price. The farmers of the corn belt, where most of the crushing took place, did not, before 1931, use a large amount of the meal because of the high price in comparison with cottonseed meal. The situation in regard to the 1931 crop developed somewhat dif- ferently in that more effort was made to sell soybean oil meal to feeders adjacent to the mills thru pricing it on a competitive basis with cottonseed meal. The actual amounts of soybean oil meal consumed in the United States have not been large compared with the total amount of protein concentrates used. The average consumption for the 1928, 1929, and 1930 crops was about 90,000 tons, compared with approximately 4 million tons of cottonseed meal and linseed meal. The domestic pro- duction of soybean oil meal since 1930 has increased sufficiently to offset the decrease in imports (Table 18). The domestic utilization of soybean oil meal has been largely in mixed feeds, the bulk of it going into dairy rations. Since 1930 more attention has been given to its use in special feeds such as poultry chows, dog chows, and rabbit feeds. Crushers have also begun to cul- tivate the local feeding trade, where the product is used largely to balance rations in dairy and beef -cattle feeding, and to a less extent for hogs, sheep, and poultry feeding. Most of the recent importations 1932} SUPPLY AND MARKETING OF SOYBEANS 463 of cake have been received on the Pacific coast, where soybean cake is used for feeding dairy and beef cattle, a practice of long standing in that region. The amount of soybean oil meal used for human consumption has been less than that of ground meal. Total human consumption has been small, altho a considerable amount of soybean oil meal has gone into flour for infant and diabetic foods. More recently a number of TABLE 18. SOYBEAN OIL MEAL PRODUCED AND IMPORTED INTO THE UNITED STATES, 1922-1930 (Tons of 2,000 pounds) Crop Domestic production Imported during calendar year following crop Total 1922... 3 811 15 612 19 423 1923 . . ... 2 451 23 542 25 993 1924 7 361 13 901 21 262 1925 8 416 21 434 29 850 1926 ... 8 029 26 976 35 005 1927 13 405 48 405 61 810 1928 21 159 85 928 107 087 1929 38 270 56 813 95 083 1930 110 000 55 107 165 107 baking companies have substituted a portion of soybean flour for wheat flour in the making of bread, with excellent results. The amount of soybean flour used by these companies in this way has been about 15 percent of all flour used in such baking/'* Recent developments in the use of soybean meal in glue have made this an important and promising outlet for the meal. 10 * Altho a large portion of the meal or cake is used for fertilizer in - Asiatic countries, there has been no such utilization in this country owing to its greater value for other purposes. 15 * The use of soybean oil meal promises to expand as its feeding qualities are better understood and as balanced rations for feeding live- stock are more widely adopted. With prices in line with competing protein concentrates, there would appear to be ample opportunity for increasing the consumption of this product. Utilization of Soybean Oil There is a demand for soybean oil in edible products, in paint, varnish, and linoleum, in soaps, and for a variety of miscellaneous uses. Altho soybean oil has a wide range of possibilities for utilization, the more desirable outlets have been somewhat restricted (Table 19). The quality of soybean oil has varied so widely in the past that: 464 BULLETIN No. 386 [December, many users are prejudiced against it. However, developments in processing and refining have been rapid in recent years and today the product obtained is fairly uniform in quality and is on a par with and frequently superior to imported oil. Trouble experienced with ran- cidity and with the peculiar taste and odor, due to lecithin, coming from soybean oil when it is used as in cooking is now being overcome. TABLE 19. ADAPTABILITY OF SOYBEAN OIL TO USE IN VARIOUS PRODUCTS Use Probable adaptation Inferior adaptation Satisfactory adaptation Superior adaptation Drying products Paint To 50 percent To 25 percent Varnish To 20 percent To add luster yellowing Linoleum and oil cloth. . . To 20 percent Waterproof goods To 25 percent Soap products Hard soaps Toilet If hydrogenated, cracking Household to 25 percent If hydrogenated, Laundry to 20 percent Soft soaps Shampoos, etc Limited amounts Automobile soaps, etc. . Depends on price Very good Edible products Lard compounds Depends on elimi- If properly Cooking oils nation of odor and rancidity If odor permanent- refined To some extent Salad oils ly eliminated In small amounts Fountain drinks Excellent In increasing Candy Fair In large amounts amounts Margarin Miscellaneous Core oil if properly treated Printers' ink Little change from treated In small amounts present use About 6 million pounds of soybean oil, or one-sixth of the oil from the 1930 domestic crop, was used in edible products. Hydrogenated* soybean oil is being used rather successfully in margarin, in salad oils, and in lard substitutes. The margarin industry was one of the first to use considerable amounts of soybean oil and at present it absorbs in the United States approximately 750,000 pounds annually. Industries producing lard 'Hydrogenation is a process of applying hydrogen to an oil, thereby causing it to harden. 1932] SUPPLY AND MARKETING OF SOYBEANS 465 substitutes have been slower than the margarin industry in according domestic soybean oil a place in their products. Lower prices, however, have been conducive to healthy growth in the use of the oil for these purposes. Consumption in 1931 amounted to 500,000 pounds. As elimi- nation of the bean flavor has been accomplished, the demand for soy- bean oil for use as a salad oil has been increasing. A recent development of importance has been the use of soybean oil in certain confectionary and drinking fountain products. FIG. 13. FARM BUILDINGS COVERED WITH PAINT CONTAINING SOYBEAN OIL A paint containing 25-percent soybean oil was applied to the farm buildings shown above. The paint was not tacky, and was holding up well one year after application when the picture was taken. Soybean oil has probably been given most publicity in connection with the use in paints and varnishes. It is usually classed as a semi- drying oil. The iodin number of soybean oil, about 140 compared with approximately 185 for linseed oil, indicates its comparatively high rating for paint purposes. The iodin numbers of nondrying oils vary from 8 to 110. Increasing recognition is being given to the fact that soybean oil may be utilized in paint up to 25 percent with excellent results (Fig. 13). When the vehicle, or body, of the paint has been adjusted to favor soybean oil of proved quality, as much as 50 percent may be used and a satisfactory paint obtained.* In white paints and enamels soybean oil prevents yellowing (Fig. 14). Much of the earlier discrimination against soybean oil was traceable to inferiority and vari- ability of the product. *A study of soybean oil in paints is being made by the Illinois Agricultural Experiment Station. Special attention is being given to amounts and kinds of driers and to different amounts of oils in combination that can be used satis- factorily. The reaction to various kinds of woods is under consideration also. These studies include both inside and outside exposures. 466 BULLETIN No. 386 [December, Inclusion of some soybean oil in place of linseed oil in enamels gives them a better film and luster. 4 * In use for waterproofing goods, such as oilcloth and linoleum, soybean oil is decidedly superior to linseed oil in that it has a softer, more elastic film and does not crack easily. FIG. 14. EQUIPMENT AND SUPPLIES IN SOYBEAN PAINT TESTS Approved methods of testing out paint mixtures used at the University of Illinois are shown above. The racks are used for outside exposures and the hooks for inside tests. The small cribs show application of paints containing from none to 50-percent soybean oil in terms of the oil used. All vegetable oils may be used for soap-making purposes. The amounts of the various oils thus consumed has depended on price. Soy- bean oil has a fairly high saponification number 193 compared with about 195 for linseed oil, 195 for cottonseed oil, and 260 for coconut oil. The oils with high saponification numbers are most suitable for soap-making purposes. Soybean oil may be substituted almost entirely for linseed oil in soft soaps, but is not entirely satisfactory for hard soaps. 15 * There are numerous other industrial uses for soybean oil. The practicability of the use of soybean oil in foundries for core-binding purposes has been demonstrated by the University of Illinois En- gineering Experiment Station. 3 * The extensive consumption of soybean oil in soap and in certain edible products which took place in this country during the World War period is shown in Table 20. The more recent expansion of the 1932] SUPPLY AND MARKETING OF SOYBEANS 467 soybean industry is based mainly on the use of the domestic product and will probably be more permanent because it is being developed under competitive conditions rather than as a result of temporary con- TABLE 20. TOTAL INDUSTRIAL UTILIZATION OF SOYBEAN OIL AND PERCENTAGES USED IN SPECIFIED INDUSTRIES, UNITED STATES, 1916-1931 f Calendar year Total pounds Percent of all oils used in soap industry Percent of all oils used in lard-substi- tute industry Percent of all oils used in margarin industry 1916. . . 143 347 000 5 4 1 4 1 3 1917 260 949 000 10 3 2 8 2 6 1918 335 439 000 4 6 2 1 1919 150 360 000 6 4 1920 65 473 000 2 3 1921 14 827 000 1 i 1 2 1922 15 168 000 2 1923 41 555 000 .3 1 1924 7 534 000 2 () 1925 22 513 000 2 1926 25 980 000 2 .3 1927 11 366 000 2 1 1928 15 457 000 2 () 1929 20 793 000 .4 () () 1930 17 599 000 .3 .1 1931 35 501 000 3 9 .2 Less than .05 percent. ditions such as existed during the war period. If the widespread use of the oil in the orient is any indication, consumption may be expected to increase as large dependable supplies become established. The in- crease in industrial consumption in the United States in 1931 is im- portant, particularly in the part that the domestic supply represented. I Methods of Processing Soybeans for Consumption The amount and quality of the products obtained from crushed soybeans are influenced by the method used in extracting the oil. Three different methods are now in use including, first, expellers; second, hydraulic presses ; and third, solvents. 26 * Expeller Method. The most widely adopted method of oil ex- traction is a continuous-pressure process in which use is made of ex- pellers (Figs. 15 and 16). The beans are crushed, dried to a moisture content of about 3 percent and passed thru a steam-jacketed trough which heats the beans to about 150 F. before they reach the pressing cage of the expeller. This treatment renders the product more mobile without injuring the resulting oil for use in the manufacture of var- nishes or impairing the digestibility of the nutrients in the meal. The expeller operates on the same principle as a household meat grinder. The ordinary working pressure is about six tons a square inch. The 468 BULLETIN No. 386 [December, FIG. 15. SOYBEAN CRUSHERS OF THE EXPELLER TYPE The oil is removed by pressure under very high heat, resulting in thoroly cooked, roasted, and toasted soybean oil cake, which is reduced to oil meal. Fie. 16. FILTER PRESSES OF EXPELLER-TYPE CRUSHER After the soybean oil is pressed out of the soybean, the oil goes thru a filtration process to clarify it. SUPPLY AND MARKETING OF SOYBEANS 469 oil is pumped thru a rotary strainer on its way to storage, while the cake emerges in thin sheets that are broken up on a revolving cake breaker at the discharge end. Hydraulic-Press Method. The most ancient method of extracting oil is the hydraulic-press method, having been used in Manchuria for centuries. 15 * The beans are prepared in practically the same way as for the expellers just described except that the beans have to be heated to a higher temperature before being pressed. This process is not con- tinuous and requires considerable hand labor for loading and unloading the presses. Solvent-Extraction Process. In this method the oil from the flaked or ground beans is dissolved with benzol or a special high-test gasoline usually after the beans have been thoroly cleaned. The oil is then separated from the solvent by distilling off the latter. The solvent is used over and over. Objection has been made that some of the sol- vent remains in the meal. While efficiently operated modern plants can remove the last trace of the solvent, mills in the United States have not yet pushed the process to that stage of perfection. Oil obtained by this method possesses superior bleaching qualities and shows less refining loss. Likewise the meal is less susceptible to rancidity and shows better adhesive properties for utilization in the glue industry. Solvent-extraction plants would probably be the most costly of the three types of plants to install, but where loss of solvent is economi- cally minimized such plants would probably have the lowest cost of operation. 19 ' 26 * Whatever the type of plant used, efficient operation requires an annual minimum volume of about 100,000 bushels of soy- beans. Estimates of the initial cost of plants of this capacity vary from $30,000 to $50,000. A plant of this size can use labor efficiently and ship the oil and meal products in carload lots with a fair degree of regularity. Competition From Other Oils The most important vegetable oils, fish oils, and animal fats possess a certain amount of interchangeability. This is especially true after a given amount of treatment has been applied. Many of the vegetable oils, including soybean oil, require hydrogenation before they can be used in making edible products or the harder soaps. Soybean oil, as stated above, is usable in edible products, in paint and other drying materials, and in soap products. Most oils and fats are limited to two of these uses. The various oils have their special qualities and consequently their superior uses and adaptations. Thru 470 BULLETIN No. 386 [December, processing they may serve in other forms of utilization. The following discussion considers the interchangeability of the various oils from the standpoint of their quality and indicates the importance of each in actual practice. Drying Uses. The use of soybean oil in paint and other drying products has usually been recognized as the highest-priced demand outlet. Linseed oil is considered the best drying oil known, and paint in which linseed oil is used has generally been considered as the highest quality paint. Recent developments, however, have shown that some replacement of linseed oil by other oils, including soybean oil, may actually improve the product. 16 * During times of relatively high linseed oil prices, other oils in con- siderable amounts have been substituted for linseed oil in paint products, usually with no adjustment of the vehicle or body to meet the change. Corn oil and cottonseed oil : ' 3> 34 * may even be used in some of these products, tho they are much less satisfactory than soybean oil, as indicated by their iodin number. Certain fish oils are also used. Tung oil is another oil of good drying qualities that may be used to some extent for replacing linseed oil, particularly in varnishes. 34 * Con- siderable substitution of other oils for linseed oil in paint products was made during a part of the World War period. The important fact from the standpoint of the paint is not how much of the other oils is used, but what adjustments are made in the paint constituents to suit the character of the new oil. Edible Uses. In the field of edible products the most important vegetable oils used in this country are cottonseed oil, coconut oil, corn oil, and olive oil. Cottonseed oil is the most important from the standpoint of supply, and serves in the regulation of the price of oils for edible uses. Cottonseed oil finds its chief demand in lard substi- tutes, about 70 percent being used in this way. Tho a considerable amount of the remaining 30 percent goes into butter substitutes and salad oils, the greater part is utilized by the soap trade. Corn oil, on the other hand, is utilized largely in salad oils, ap- proximately 80 percent of the total production being consumed in this way. Both peanut and coconut oil used for edible purposes find their way largely into a butter substitute known as "nut" margarin. Until recently comparatively little soybean oil has been used for edible purposes in the United States. When properly treated, however, it may serve in any one of the three important food uses either in lard substitutes, in margarin, or in cooking oils. Most of the fish oils have been used widely as soap oils, but with the improved methods of treat- 1932} SUPPLY AND MARKETING OF SOYBEANS 471 TABLE 21. IODIN NUMBERS,* SAPONIFICATION NUMBERS,*" ACID NUMBERS," AND USES OF THE LEADING OILS AND FATS Product lodin number Saponifi- cation number Acid num- ber Use* Chinese tung or wood oil 160-170 189-195 0-12 Substituted for linseed oil, especially in varnishes and for putty, lacquer, and ink. Coconut oil 8-10 251-260 3-18 Important food use in nut margarin, used to some extent as lard substitute, in confectionery trade, and as filler for commercial cakes and wafers. Excellent for making cold-process soap, especially shaving and marine soaps. Corn oil 116-130 188-193 2-20 Refined oil used particularly in salad oil but also in margarins and lard substitutes. Crude oil used in soap making and in dressing leather. Cottonseed oil 100-115 192-200 2-10 Refined oil used in lard substitutes and to a lesser extent in making margarins and salad oils; foots and inferior grades of oil used in soap making. Used also in manu- facture of washing powder, glycerin, and waterproofing preparations. Fish oil 139-173 191 4-12 Used in paints as partial substitute for linseed oil, espec- ially in paints for smokestacks and in oilcloth and lin- oleum industries. Used in soap. Used recently in butter substitutes. Linseed oil 179-204 189-196 1-8 Used chiefly in paints and varnishes. Also used in putty, oilcloth, leather cloth, linoleum, printer's ink, and rubber substitutes. Used in soaps. Palm oil 48-58 196-206 10-60 Used mainly in soaps, candles, and in tin plate industry. Used to some extent in margarin and lard substitutes. Palm kernel oil 16-23 240-250 15-30 Used in manufacture of butter and lard substitutes. Chief use is in manufacture of cold-process soaps. Peanut oil 83-95 185-192 1-14 Used in manufacture of nut margarin and salad dressing. Used in soaps, as a burning oil, in silk manufacture, and in artificial leather industry. Soybean oil 124-148 189-194 2-7 Considerable quantities go into paint, varnish, enamel, linoleum, and waterproofing products. Used in soaps. Utilized in large variety of food products. Used in core oils. Tallow 35-46 192-200 1-50 Used in lard substitutes and margarins. Inedible grades go into soaps, illuminating oils, and are used for lubricants. Whale oil 121-147 188-194 1-35 Used chiefly in soaps, in tanning leather, and as an illuminating oil. Used to minor extent for edible purposes. A high iodin number indicates a good drying oil and consequently a good paint or varnish oil. ''The saponificatipn number indicates the number of milligrams of potassium hydroxid used in the saponification of the oil; a high number indicates satisfactory adaptation for use in soap. c The acid value or number indicates the number of milligrams of potassium hydroxid required to neutralize the free fatty acids in one gram of substance. ment that have been developed, they may substitute for some of the above oils for edible purposes. 34 * Soap Uses. The major soap field is sharply divided between household or hard soaps such as the better-known kinds of toilet and laundry soaps, including those extremely hard-water soaps often de- scribed as salt-water soaps and two general varieties of soft soaps ; namely, (1) shampoo and liquid hand soaps and (2) hospital and auto- 472 BULLETIN No. 386 [December, mobile soaps. Sodium serves as the salt base in hard soaps and potas- sium in soft soaps. Manufacturers of household soaps seldom produce soft soaps, and the important manufacturers of soft soaps produce no hard soaps on a commercial scale. Thus far soybean oil has taken only a minor place as a constituent of hard soaps. Coconut oil has been considered by some to be almost indispensable in the making of salt-water soaps, the present practice of manufacturers being to use it exclusively. In a country in which so large a part of the population is found in territories where much of the water is hard and where the availability of cisterns and water softeners is not universal, a great deal of hard-water soap is used. The amount of hard soaps used in the United States is probably twenty times that of soft soap. In the production of shampoos and liquid soft soaps, soybean oil is little used, coconut oil being employed almost exclusively, but it serves well in the other group of soft soaps ; namely, the hospital and the automobile soaps, in which lines it is replacing linseed oil. The hard soaps differ not only from soft soaps but also from one another. In white laundry soaps, where coconut oil constitutes be- tween one-third and two-fifths of the fat base, hydrogenated soybean oil may replace a portion of the hard fat now largely supplied from various inedible animal fats. In chips, flakes, and beads used for laundry purposes, where coconut oil makes up about one- fourth of the fat content, and in high-grade toilet soaps, where coconut oil constitutes about one-fifth of the fat content, practically no utilization of soybean oil has been developed. The difficulty of displacing coconut oil in many of its soap uses is recognized. To a limited extent palm kernel oil has become a possible substitute for coconut oil in the oil base of the hard soaps. The diffi- culties of using soybean oil in place of coconut oil are to be differ- entiated from the possibilities of using it in place of the hard fats of animal and vegetable origin which make up the remainder of the fats used in soaps. These hard fats afford the more significant field for enlarging the use of soybean oil, because by the process of hydro- genation the unsaturated fatty glycerids in soybean oil can be con- verted to saturated fatty glycerids, the principal components of the hard fats. With the exception of coconut and palm kernel oil the saponifi- cation numbers of all the important oils and fats used in either hard or soft soaps differ but little, and with special treatment these oils and fats may be utilized to meet any of the demands made on a soap 1932] SUPPLY AND MARKETING OF SOYBEANS 473 oil with the exceptions indicated. Several forms of oils and fats may be used at one time or may be varied from time to time to produce a given grade of soap. 31 - aa * Soybean oil comes nearest to constituting an exception to the rule of special adaptation, its intermediate position and its inherent quali- ties suggesting that it may serve in widely diversified uses. A summary of the qualities and uses of the more important oils and fats is shown in Table 21. Distribution of Gathered Soybeans by Uses Some of the uses made of the 12 million bushels of soybeans gathered in the United States in 1930 are shown in Table 22. The portion used for seed was slightly larger than the portion, crushed. TABLE 22. UTILIZATION OF SOYBEANS AND SOYBEAN PRODUCTS BY AMOUNTS, UNITED STATES, 1930 CROP- Amount Hrum bu. Feed 2 750 000 Seed 4 025 000 Ground Food 200 000 Feed 200 000 Crushed 4800000 Total 11 975 000 Oil Edible purposes lb.\. Oleomargarine 750 000 Lard substitutes 500 000 Other food products 4 750 000 Paint and other industries Paint and varnish 9000000 Linoleum and oil cloth 4 000 000 Other uses 3 500 000 Soap kettle 8 500 000 Increased stocks including oil equivalent 6 200 000 Total ... 37 200 000 Meal Feed Ions Commercial feeds 84 100 Other feeds 15 000 Food Flour 850 Infant and diabetic foods 50 Other uses, including glue 10 000 Total... 110 000 Imports of soybean oil and beans practically balanced exports of soybean oil for the year Octo- ber 1, 1930, to September 30, 1931. One- fourth of the 37.2 million pounds of oil produced from crush- ing 4.8 million bushels of beans was utilized in paints and varnishes, about one-tenth in linoleum and oilcloth, nearly one-fourth in soap, and about one-sixth for edible purposes. 474 BULLETIN No. 386 [December, Domestic production of oil meal of all kinds was approximately 4.2 million tons in 1930. Of this amount, soybean meal represented slightly more than 2i/ percent. Beans gathered in Illinois have found their way into the three major channels of consumption; namely, feed, seed, and crushing. Of the beans gathered from the 1930 Illinois crop, the proportion used UNITED STATES 1926 1930 ILLINOIS 1926 1930 FIG. 17. PROPORTION OF GATHERED SOYBEANS UTILIZED FOR SEED, FEED, AND CRUSHING IN THE UNITED STATES AND ILLINOIS, 1926 AND 1930 CROPS The crushing of soybeans had not only increased to a point of prominence by 1930, but was concentrated to a decided degree in Illinois. Feeding of whole soybeans has been more important in the United States as a whole than in Illinois. for feed was smaller than the proportion of the United States gathered beans used for feed, but a larger proportion of the Illinois crop was used for crushing (Fig. 17). Illinois has contributed the bulk of the domestic beans used for crushing in the United States (Table 23). 1932] SUPPLY AND MARKETING OF SOYBEANS 475 TABLE 23. ESTIMATED DISTRIBUTION OF GATHERED SOYBEANS ACCORDING TO USE, ILLINOIS, 1926-1931 CROPS (Based on total estimated amounts used for all purposes) Crop Used by oil mills and feed manufacturers Used for seed in state Used for seed outside of state Used for feed on farm 1926 percl. 22 percl. 29 percl. 24 percl. 25 1927 24 24 22 30 1928 43 19 18 20 1929 40 27 18 15 1930 52 22 15 11 1931 SO 22 13 15 PRACTICES IN MARKETING SOYBEANS AND SOYBEAN PRODUCTS Production of soybeans in commercial quantities is more or less concentrated in the corn-belt states. The bulk of the commercial soy- beans grown in Illinois come from a relatively few counties (Table 8). Of these counties, three Christian, Champaign, and Piatt have been the chief producers for the entire period 1924-1932. In 1927 and again in 1931, in order to obtain information concern- ing the handling of the 1926 and 1930 crops, questionnaires were sent to establishments handling soybeans in Illinois. Replies were received from 151 active handlers, or dealers, who reported their operations for both crops." These establishments handled approximately five times as many beans from the 1930 crop as from that of 1926 (Table 24). Of the supply bought by these dealers from the 1926 crop grown in Illinois about 75 percent was shipped out of the locality to seed dealers and oil mills and about 25 percent was later sold back to farmers in the same locality. The only district in which the local handlers reported more beans shipped in from outside the locality in 1930-31 than in 1926-27 was "The 1927 questionnaires were distributed by the Illinois Agricultural Ex- periment Station and the Illinois Crop Reporting Service (a cooperative enter- prise of the Illinois Department of Agriculture and U. S. Department of Agri- culture) to country elevators and local seed dealers in Illinois. Usable replies were received from 747 establishments, but only 210 indicated that soybeans were handled. The 1931 questionnaire was sent by the Illinois Agricultural Ex- periment Station to those establishments reporting in 1927 and to enough other names to make a representative sample. Of the 360 establishments that replied, 169 reported the handling of soybeans. A summary of results, published in mimeograph form by the Illinois Station in September, 1932 ("Some Recent Changes in Marketing Illinois Soybeans," by C. L. Stewart, W. L. Burlison, and O. L. Whalin) includes fairly complete information on the market move- ments of Illinois soybeans of the 1926 and 1930 crops. 476 BULLETIN No. 386 [December, the Carbondale district (7). The greatest gain in supplying local needs was shown in the Bloomington, Mattoon, and Dixon districts (5, 6a, and 1). By 1930 the reporting handlers in all areas were shipping out TABLE 24. EXTENT TO WHICH PURCHASED SOYBEANS CAME FROM LOCAL SOURCES OR WERE SHIPPED IN FROM OUTSIDE THE LOCALITY, AND EXTENT TO WHICH BEANS SOLD WENT TO LOCAL PURCHASERS OR WERE SHIPPED OUT OF THE LOCALITY, 151 IDENTICAL COUNTRY ELEVATORS AND LOCAL SEED DEALERS, ILLINOIS, 1930 AND 1926 CROPS Number Crop reporting of Total Bought Shipped Total Sold Shipped district reports bought locally in sold locally out 1930 crop 1 Dixon 21 bu. 3 947 Perct. 61.9 perct. 38.1 bu. 2 787 perct. 44.8 perct. 55.2 3 Chicago 17 7 981 18.9 81.1 7 981 19.8 80.2 4 Galesburg 9 16 121 95.1 4.9 15 966 36.4 63.6 4a Springfield 21 249 709 99.8 .2 249 709 1.5 98 5 S Bloomington 19 87 942 89.6 10.4 86 654 10.8 89.2 33 177 775 99 5 5 177 537 3 8 96 2 6a Mattoon 15 26 037 96.1 3.9 26 037 21.2 78.8 7 Carbondale 7 414 36.2 63.8 414 100.0 9 11 810 91 5 8 5 11 810 13 2 86 8 State 151 581 736 96.3 3.7 578 925 6.2 93.8 1926 crop 1 Dixon 21 2 070 22.1 77.9 2 030 97.2 2.8 3 Chicago 17 4 854 1.2 98.8 312 100.0 4 Galesburg 9 3 010 83.0 17.0 3 Oil 76.8 23.2 4a Springfield 21 34 320 98.7 1.3 30 895 19.8 80.2 5 Bloomington 19 16 217 13.8 86.2 16 152 19.4 80.6 6 Champaign 33 47 055 92.6 7.4 38 909 22.0 78.0 6a Mattoon 15 18 185 55.7 44.3 17 735 45.8 54.2 7 Carbondale 7 349 63.3 36.7 349 98.8 1.2 9 Harrisburg 9 495 93.9 6.1 420 52.4 47.6 State 151 126 556 73.9 26.1 109 813 28.3 71.7 TABLE 25. SOYBEANS PURCHASED BY 151 COUNTRY ELEVATORS AND LOCAL SEED DEALERS, ILLINOIS, 1931 CROP Crop reporting district Establishment reporting Total beans bought Beans bought locally Beans shipped in Total Handling soybeans 1 Dixon 58 54 19 35 45 64 34 30 17 356 18 12 12 21 16 34 23 5 10 151 bu. 750 5 515 25 992 305 114 226 920 203 673 77 748 200 4 100 870 012 perct. 13.3 44.2 100.0 99.3 97.4 98.1 100.0 50.0 100.0 98.2 perct. 86.7 55.8 .7 2.6 1.9 50.0 1.8 3 Chicago. . . 4 Galesburg 4a Springfield 5 Bloomington 6 Champaign 6a Mattoon 7 Carbondale 9 Harrisburg State 1932] SUPPLY AND MARKETING OF SOYBEANS 477 of their localities the bulk of the soybeans they handled, or an average of 93.4 percent. The Springfield district (4a) showed the most in- crease as a source of market beans. Corresponding figures reported as of December, 1931, show that 356 handlers up to that time had purchased 870,000 bushels of beans from the 1931 crop (Table 25), which probably indicates that for the year as a whole over twice as large an amount was handled as was handled during the entire previous season. Four of the central districts supplied about 95 percent of the beans, distributed as follows: Spring- field (4a), 35 percent; Bloomington (5), 26 percent; Champaign (6), 23 percent; and Mattoon (6a), 11 percent. Sources of Market Information The most detailed and authentic information on the soybean crop is published seasonally by the Bureau of Agricultural Economics, U. S. Department of Agriculture. This includes by leading markets wholesale prices offered by seedsmen (by weeks, January to June) and the following by states: Size of crop (December) Farm prices offered growers (October-February) Movement of crop out of growers' hands (November-February) Retail prices quoted by seedsmen (March- June) Prospective demand (around March 10) Retail sales of seed for season in terms of previous year (July) Prices and other pertinent information are also distributed by oil mills, seed dealers, and grain papers. Price quotations by varieties are sent out by dealers about the first of February. The leading markets for which regular quotations have been re- ported are New York, Baltimore, Richmond, Louisville, St. Louis, Kansas City, Chicago, and Minneapolis. Of these markets Louisville, St. Louis, and Chicago are the most important receivers of seed beans from Illinois. Numerous Indiana cities receive some Illinois beans. Shipments are made to Cincinnati and Memphis also. The surveys re- veal that Decatur and Bloomington were the most important receiving points for soybeans raised in Illinois in 1926, and Chicago, Decatur, Peoria, Toledo, St. Louis, Bloomington, and Taylorville were the most important receiving points for the 1930 crop. The greater portion of beans was received by oil mills located at these points. The chief sources of soybeans received for local distribution by the reporting dealers from the 1926 and 1930 crops, aside from soy- beans bought locally, were stations in central and southern Illinois and Chicago, Bloomington, and St. Louis. Very few beans were shipped in from points outside the state. About 20 percent of the beans bought 478 BULLETIN No. 386 [December, by these Illinois dealers from the 1926 crop and about 12 percent bought from the 1930 crop were sold locally. Time of Movement Soybeans usually leave the growers' hands more rapidly in Illinois than in other states. They begin moving in October, and by January 15 an average of 48 percent of the Illinois beans are out of the growers' hands. This is to be compared with 35 percent in North Carolina, 46 percent in Missouri, and 30 percent in Indiana. All these compari- sons are based on the ten crops for the years 1923-1932. Movement of Illinois soybeans in recent years has been unusually rapid during the early part of the season. On the average for the five crop years 1927-1931, 47 percent of the crop leaving the growers' hands was out of their hands by November 15 (Table 26). An addi- TABLE 26. PROPORTION OF SOYBEAN CROP LEAVING GROWERS' HANDS THAT WAS OUT OF THEIR HANDS BY MIDDLE OF NOVEMBER, DECEMBER, AND JANUARY, ILLINOIS, 1922-1932 (Based on total crop) Crop November IS December 15 January 15 1922 . . . . perct. 20 percl. 25 perct. 1923 30 40 60 1924 30 40 50 1925 15 30 40 1926 25 25 30 1927 35 50 50 1928 55 70 70 1929 50 55 70 1930 65 65 70 1931 30 35 45 tional 8 percent moved out in the next thirty days and 10 percent during the following thirty days. The beans moved more rapidly than usual in 1928, 1929, and 1930 as a result of the special purchasing basis used by oil mills and feed manufacturers." A survey covering the 1923 Illinois crop showed that most of the sales of soybeans to elevators were made before March. January was the month of heaviest sales. The amount sold by growers direct to oil mills was small, the sales being heaviest in February. Purchases were made by mills from growers consistently from December thru April, while sales were made to farmers all thru the season up to June but were heaviest in April and May. Production and marketing at that time were evidently adjusted to the demand for seed. See pages 487 to 490. 1932} SUPPLY AND MARKETING OF SOYBEANS 479 50 - 10 40 M _J M . N.D. J. F M.A.M.J. J. O.N.D J. F M.A.M.J.a O.N. D. J. F M.A.M.J. J. O.N. D. J. F M.A.M.J. J. SHIPPED OUT SOLD LOCALLY I93O 1926 1930 1926 w _) 9 < 1 n no H U E UJ 0. |0 0, . 1 ,1 Illl...- ,1, 1 . il. . ..it i O.N.D.a F M A.M.J. J. O.N. D. J. F M.A.M.J. J. O.N.D. J. F M.A.M.J. J. O.N.D.J. F M.A.M.J. J. FIG. 18. MONTHLY MOVEMENT OF SOYBEANS BY LOCAL HANDLERS IN ILLINOIS, 1930 AND 1926 CROPS Movement of the 1930 soybean crop in Illinois was unusually rapid both because most of it went to crushing mills and because marketing arrangements afforded no incentive for holding back the crop. In-movements were smaller than out-movements and showed some tendency to develop two peaks of move- ment each year, one in the fall when the bulk of the crop was moving and the other in the spring when growers were making inquiries for seed. 480 BULLETIN No. 386 [December, In the case of the 1930 crop the same 151 handlers purchased nearly nine times as many beans locally as in the case of the 1926 crop! but shipped in only seven-tenths as many. Local purchases from the 1930 crop were concentrated to a considerably greater extent in the months of October and November than were local purchases from the 1926 crop (Fig. 18). In-shipments were heaviest in April and May during both seasons. There was some tendency for earlier pur- chasing of in-shipments from the 1930 crop and less purchasing after May. TABLE 27. ESTIMATED PROPORTION OF SOYBEAN SEED SHIPPED OUT OF THE LO- CALITY BY WHOLESALE DEALERS AND JOBBERS BEFORE SPECIFIED DATES IN JANUARY, SELECTED STATES AND UNITED STATES, 1919-1931 CROPS (Based on total amounts shipped) Date United States Illinois Indiana Missouri North Carolina Jan. IS, 1920 perct. 48.4 perct. 71.0 perct. perct. 34.6 perct. 47.9 Jan. 15, 1921 . 17.1 .8 36.0 21.6 Jan. 28, 1922 23.5 38.8 11.6 23.1 26.1 Jan. 28, 1923 42.4 38.3 21.2 100.0 43.8 an. 26, 1924 34 5 42.5 20.0 49.3 28.6 Jan. 26, 1925 39.9 33.8 12.1 33.0 50.3 Jan. 25, 1926 33.1 42.8 19.5 44.0 27.8 Jan. 31, 1927 35.9 49.0 16.3 33.8 30.2 Jan. 30, 1928 34.0 40.1 16.9 25.6 33.4 Jan. 28, 1929 61.7 74.4 43.1 81.0 47.4 Jan. 27, 1930 51.6 68.1 47.1 65.3 33.3 Jan. 28, 1931 37.3 68.7 49.5 22.8 24.9 Jan. 25, 1932 18.9 21.3 50.0 6.5 30.0 Average. 1923-1932 38.9 47.9 29.6 46.1 35.0 Data for the 1926 and 1930 crops show movement out of dealers' hands, both as to the portion shipped out and that sold locally (Fig. 18). In the portion shipped out is included that which went to oil mills as well as to seed dealers. The greater part of the 1930 crop shipped out left local handlers in October and November, nearly 85 percent moving during these two months. Marketing of the 1926 crop was! also heaviest during these two months, tho less than 50 percent of the crop moved ; the next most important three months were May, Febru- ary, and December. Movement of soybeans from the hands of growers is to be dis- tinguished from the subsequent distribution among dealers and from dealers to consumers. Information on the latter type of marketing is meager. As has been indicated, most of the soybeans purchased by seed dealers have been received between December and May. As an average for the ten years 1923-1932 about 48 percent of the soybeans have left the hands of Illinois seed dealers by the latter half of Janu- ary (Table 27). The average for all states was nearly 39 percent. 1932] SUPPLY AND MARKETING OK SOYBEANS Varieties Marketed in Different Sections of Illinois 481 The leading varieties of soybeans marketed in Illinois are Illini, Manchu, Midwest, A.K., Virginia, and Ebony. Others of consider- able importance are Peking, Ilsoy, Wilson V, Ito San, Haberlandt, Black Eyebrow, and Ohio. Three recent varieties, besides Illini, are Dunneld, Laredo, and Mansoy. Manchu and Ito San appear among the varieties in demand in all areas taking Illinois seed. Black Eye- brow, Ebony, Midwest, and Virginia varieties are generally demanded also. From the standpoint of volume, however, Manchu is the out- standing variety, followed by Illini, Midwest, Virginia, and Ebony. In the northern half of the state the marketed varieties have been mainly Illini, Manchu, A.K., Midwest, and Ebony, and in the southern half, Manchu, Midwest, Virginia, and Ebony. Black Eyebrow and Peking varieties have been found mainly in the western part of the state. In the 1927-1931 surveys made by the Illinois Station information was obtained concerning the varieties of Illinois-grown beans shipped out of the localities where grown and their market destinations. The varieties of the 1926 and 1930 crops shipped to the following markets are listed in the order of their importance (amount). 1926 CROP Decalur Bloominglon Chicago Other St. Louis points in Illinois Manchu Manchu Manchu Manchu Virginia A.K. A.K. Midwest Midwest Manchu Ebony A.K. Ebony Northern Southern Louisville Cincinnati Memphis Other southern Indiana Indiana points Manchu Virginia Manchu Manchu Virginia Virginia Wilson Ebony Ebony Manchu Ilsoy Black Eyebrow Ebony 1930 CROP Decatur Bloom- Chicago Peoria Taylor- Other St. Louis ington ville points in Illinois Yellow Manchu Yellow Illini Illini Virginia Yellow Illini Illini Illini Manchu Manchu Ebony Illini Manchu Yellow Manchu Yellow Illini Manchu Dunneld Dunneld Yellow Dunneld Ebony Black Eyebrow Manchu Black Eyebrow Toledo Milwaukee Indianapolis Other Other Other points in points in points in Indiana Ohio states Illini Illini Manchu Illini Virginia Manchu Manchu Manchu Manchu Ebony Virginia Yellow Dunneld Illini Illini Manchu Wilson The varieties shipped in by 151 identical Illinois handlers during the crop seasons of 1926-27 and 1930-31 and the points from which 482 BULLETIN No. 386 [December, they were received are indicated by the following tabulation, the vari- eties being listed in the order of their importance (amount) : 1926 CROP Peoria Chicago Bloomington Champaign Northern county Illinois Manchu Manchu Manchu Manchu Midwest Midwest Midwest Ebony Illini Manchu Ebony Midwest Central Southern St. Louis Indiana Other Illinois Illinois states Manchu Ebony Manchu Manchu Wilson Midwest Virginia Virginia Manchu 1930 CROP Peoria Chicago Bloomington Champaign Northern county Illinois Manchu Manchu Manchu Illini Illini Illini Illini Manchu Manchu Ebony Central Southern St. Louis Indiana Other Illinois Illinois states Illini Virginia Virginia Manchu Manchu Ebony Ebony Illini Midwest Manchu Manchu Wilson Ebony In marketing channels Manchu was found to be more widely dis- tributed in Illinois in both 1926 and 1930 than was any other variety. The widespread demand for this variety has been due to the fact that it is grown in important quantities in all parts of the state except in the two southern crop reporting districts. Until about 1925, Midwest was the leading variety marketed in the state, but it has given way rapidly to Manchu. Midwest is still grown to some extent in the west- central portion of the state, but primarily for silage and pasture. The Illini variety is most important in the Galesburg (4a), Champaign (6), Bloomington (5), and Mattoon (6a) districts. Ebony, mainly a hay bean, is marketed in small amounts in the central districts, but scarcely at all in the two northern and two southern districts. Virginia, a hay and seed bean, is marketed chiefly in the Springfield (4a), Mattoon (6a), Carbondale (7), and Harrisburg (9) districts. Ilsoy, a hay and seed bean, is marketed in the same areas as Virginia. Selling Soybeans for Seed The ever-increasing acreage of soybeans in the United States has kept the demand for seed active up to and including 1931. Many of the early Illinois growers specialized in seed production. Oil mills have assumed importance as an outlet for Illinois soybeans only since 1925. Demand for soybean seed has come mainly (1) from the expand- ing acreage, chiefly in the corn belt, devoted to the growing of soy- beans for beans, and (2) from the need for seed of medium-early vari- eties for hay and pasture in the feeding and dairy sections of the corn 1932] SUPPLY AND MARKETING OF SOYBEANS 483 belt, in territory adjacent to the corn belt, and in certain areas in the southern states. Of these two sources of demand that for seed in the corn belt was the more important thru 1922, but once soybean growing became established in the various parts of the corn belt, the growers became less dependent upon shipped-in seed, and since 1922 the de- mand for seed of hay and pasture varieties has been the more im- portant. Before 1925 the demand for seed was sufficient to absorb most of the good seed beans on the market. In the livestock and dairy regions and in those southern states which use soybeans mainly for hay and pasture, the seed demand has continued, especially for the medium-late varieties, which are best grown for seed in the latitude of the southern counties in Illinois. If livestock feeders and dairymen in the corn belt raise their own soybean seed rather than buy from growers specializing in its produc- tion, they will tend to diminish the outlet for seed. Since costs of harvesting and threshing soybeans have been high and since weather conditions are somewhat uncertain during the harvest season, there is likely to be a more or less permanent tendency to concentrate seed production within certain restricted areas and on specialized farms. If this occurs it will greatly facilitate the marketing of high-quality seed. A survey made by the U. S. Department of Agriculture in 1919 showed that 13 percent of Illinois soybean seed was raised on the farms using it, 9 percent was obtained from neighboring farms, and 78 percent was obtained from seed dealers. 29 * Replies from Illinois farm- ers indicated that of the 1923 crop of soybeans harvested by them about 35 percent went directly to farmers, 36 percent to seed com- panies, 8 percent to country elevators, and 5 percent to oil mills. Of the soybean seed planted in Illinois in 1925, about 54 percent was grown by the farmer planting it, 27 percent was bought from other farmers, 10 percent from local seed dealers, and 9 percent from distant seed dealers.* As the crop has become better established, fewer grow- ers have purchased their seed except in areas where seed frequently fails to mature or where the crop is harvested mainly as hay or forage. Sales by Individual Growers. The selling of soybean seed by indi- vidual growers is on the decline. Some of the reasons given are the following: (1) enthusiasm for the soybean seed enterprise has waned as large profits from local sale of seed have disappeared; (2) the price is too low for many growers to be bothered with local selling, most sales being made in April and May when growers cannot afford to stop field work; (3) grower-sellers object to granting credit to grower- "Unpublished data furnished by the Illinois Crop Reporting Service, Illinois Department of Agriculture and U.S. Department of Agriculture cooperating. 484 BULLETIN No. 386 [December, buyers; (4) there is an increasing tendency for growers to dispose of their entire crop to seed dealers, leaving to dealers the trouble and expense of marketing the seed. Sales by Local Dealers. When the soybean crop increases to a stage of commercial importance, local dealers handle a large portion of the crop not utilized on the farms where grown. These handlers render two services ; they take the crop from surplus areas, reclean it, place it in areas where needed, and hold and store it until there is a demand for it. Local dealers buy for local needs and for resale to wholesale dealers or to distant retail dealers. In surplus areas the local dealer merely redistributes seed within the community and disposes of the surplus. By combining the handling of soybean seed with other seed and perhaps other classes of merchandise, he can sell compara- tively small lots of seed to better advantage than can the growers whose business is primarily that of production. In areas of deficit seed production local dealers have a more clearly defined function. By purchasing in fairly large lots they can buy and ship in more cheaply and with less trouble than individual growers. Dealers can also assure themselves more definitely as to the quality of the product than can individual growers. Dealers in deficit areas have opportunities to encourage the use of good-quality seed of the better adapted varieties. Sales by Wholesale Dealers. Wholesale dealers in soybean seed are largely responsible for carrying and storing the crop, for keeping varieties distinct, for furnishing seed having desired qualities, for assembling seed from surplus areas, and for distributing it in deficit areas. The wholesale handling of seed is a specialty business. It re- quires considerable capital, special management, and a reasonable amount of permanence. Wholesale handling of soybean seed must ordinarily be combined with a general seed business because as a specialty it would not furnish a large enough volume of business. Wholesale dealers usually arrange to have their supplies of soybean seed well in hand and germination tests completed by March 1. They then send out price lists to jobbers, retail dealers, and selected growers. Most of the seed purchased later in the season is for the purpose of filling in shortage of certain varieties or for taking care of extra de- mands. Inquiries from jobbers and retail dealers begin to arrive by the first of February, and the greater portion of the sales are made before the first of May. These sales are made on the basis of information included in the price lists. Sales are usually in small lots of bagged beans, altho most price lists give some inducements for shipments 1932] SUPPLY AND MARKETING OF SOYBEANS 485 above a specified size. Unless prices change a great deal, no new price lists are sent out but supplementary information may be supplied from time to time. Wholesale sales of soybean seed are nearly always for cash. Sales by Retail Dealers. Retail dealers buy seed beans both locally and from more distant dealers. The local beans are usually cleaned at the expense of these dealers unless they are already suitable for planting. In most cases in which no information as to germination tests is supplied to retail dealers, none is made available to purchasers. In a territory of considerable retail seed movement retail dealers often make early purchases in quantities of those varieties for which there is a dependable demand, and later acquire supplementary sup- plies if needed. In areas of small demand the retail dealer acts simply as a commission agent, ordering for the few growers who request such service. Retail dealers usually inform growers about the available seed by advertisements in local newspapers and especially by direct contact as growers come in for other seeds and supplies. In many communities retail dealers buy beans from one farmer and sell to another; in some cases all seed handled is grown in the community. Many of the retail sales are on book account, the settle- ment being made after the purchaser has a crop of soybeans or other cash crop to sell to the dealer. Sales by Cooperative Agencies. In several states there are crop improvement organizations whose chief aim is to promote the use of better seed. The Illinois Crop Improvement Association, since its establishment in 1921, has exerted considerable influence on the improvement of soybean seed. The association was responsible for the introduction in 1922 of the present strain of Manchu. Altho mainly a seed certifica- tion association, it has given encouragement in the disposal of seed in certain localities thru cooperation with the local seed organizations, the first of which, the Tolono Soybean Seed Association, was estab- lished in 1924 in Champaign county. Similar organizations have arisen at other points in the county, a county-wide association being first at- tained in 1928. The beans of the members of the Tolono association are taken di- rectly from the threshing machine to the warehouse where they are cleaned and stored. No outside beans are handled, except when the pool supply is low and then only when the seed is of known origin and meets certification requirements. The average expense for han- dling and marketing soybeans by the Tolono association has been about -ISC. BULLETIN No. 386 [December, 15 cents a bushel. Sales are made to both retail and wholesale dealers. Prices are established rather early in the season and contacts are made with prospective purchasers. As the season advances, prices are ad- justed so as to dispose of the entire crop. The greater portion of the sales are made in bulk in carload lots. In certain communities in Illinois and in some other states an in- formal type of cooperative selling of soybeans has arisen. In such groups the advertising is usually carried on in the name of one of the members, who serves also as an informal manager for the group. By far the greater quantity of soybeans handled thru cooperative agencies has been handled by purchasers of seed. Local purchasing organizations affiliated with farm bureaus have developed in certain counties, notably in Sangamon and DeKalb counties, Illinois. Another arrangement has been the disposal of the seed of farm-bureau members in certain counties thru local seed firms on favorable terms. Some combining of buying and selling functions of cooperative as- sociations has taken place. In general, cooperative marketing of soy- beans and other seed is a recent development, most of it having arisen since the World War. A few cooperative associations operate on a fairly large scale and buy and sell much as do wholesale dealers except that they tend to give similar attention to the orders from individual growers and those from dealers. Sales of Seed by Oil Mills. Some soybean mills buy and sell seed beans in addition to beans for crushing. One of the earliest crushing plants in Illinois was developed to utilize the surplus beans from the seed trade. All the above agencies serve to some extent in establishing contacts between buyers and sellers, in performing the ordinary services of marketing, in insuring quality and variety of seed, and in adding more definiteness to price quotations. They aid in establishing a common ground of interest on the part of growers and consumers in the pro- duction of high-quality products. Selling Soybeans for Industrial Uses Nearly all the soybeans entering marketing channels from the Illinois crops are first handled by country elevators or local dealers, unless they are grown in the vicinity of oil mills and are sold directly to the mills. Soybeans sold to local dealers are stored in bulk by them for shipment in carload lots ; yellow beans are handled separately from the others. Soybeans are bought" by oil mills according to federal grades, and 1932] SUPPLY AND MARKETING OF SOYBEANS 487 the farmer is usually paid on that basis. The mills buy on the basis of U. S. No. 2 grade, but usually pay premiums for No. 1 and for Extra No. 1 over the No. 2 price. They likewise discount No. 3 and No. 4 beans from the price of No. 2 beans. All poor-quality beans marketed go to oil mills at low prices. Soybeans going to oil mills are seldom cleaned. Most of the beans bought by local dealers are held only a short time. Elevators handle such soybeans in the same man- ner as other crops. Guaranteed Minimum Price of 1928 and 1929. Beginning with the 1928 crop the marketing of soybeans in Illinois has furnished a unique example of marketing practice as applied to the general crops of the corn belt. Previous to 1928 some of the producers and users of soybeans had been considering ways and means of increasing the acreage devoted to this crop so that a dependable supply of sufficient volume to be at- tractive to commercial processors would be assured. The extensive winterkilling of wheat during the 1927-28 season left a considerable acreage of land in the soybean-growing districts of the state which would have to be planted to some spring crop. In April, 1928, meetings were held by representatives of producers and of leading soybean crushers of Illinois which resulted in the crushers offering to contract for the soybean crop from 50,000 acres in Illinois at a price of $1.35 a bushel for No. 2 beans delivered at Peoria or Bloomington. The full quota of contracts was obtained in 1928, and the mills ex- tended the price to soybeans which had not been contracted, so that about 1.2 million bushels of beans were received by these mills during the fall and winter of that year. Under the stimulus of an assured market at a guaranteed price, the acreage of soybeans showed con- siderable increase that year. The contract was especially liberal in the provision that if a grower were offered a better price than that stated in the contract, he would have the privilege of selling to other buyers, provided that he first gave the contracting crushers the opportunity of purchasing at the advanced price. In other words, the crushers provided an assured market for the beans without limiting the chances of a better market. The contract permitted the grower to anticipate a seed demand and still retain his commercial outlet under the contract. Under this arrangement the crushing mills received a very large proportion of the commercial soybeans of the state. Since there was little incentive for growers to hold the beans, they were rushed in as 488 BULLETIN No. 386 [December, soon as threshed, the Peoria mills receiving 150 cars during a single day. The mills were forced to declare a virtual embargo for a few; days until they could obtain storage space. They were out of the market only four days, a change in the weather assisting them in hold- ing back the flood of beans. There was no further serious trouble in this respect. Practically the entire output of soybean oil meal was turned over to one of the parties to the contract, the Grange-League-Federation Exchange of Ithaca, New York, a cooperative organization furnishing feeds and other supplies to dairy sections in the East. This meal was used in the preparation of mixed dairy feeds. The beans were stored and crushed thruout the year so as to furnish a seasonal supply of both meal and oil. Under this original contract the mills had practically underwritten the 1928 soybean crop in Illinois and had thereby secured a fairly large volume of beans. Essentially the same contract was again offered to growers in the spring of 1929. The principal difference was that the price was on a sliding scale beginning at $1.33 for No. 2 beans de- livered up to November 15, and increasing one cent each 15 days until a price of $1.38 was reached for beans delivered after January 15. Late in the summer of 1929 the price of linseed oil and meal began to advance because of shortage in the crop of flax both in the United States and Argentina, and it was apparent that soybeans would, on the same basis, be worth more than the contract price. The contracting millers therefore voluntarily raised their price to a flat $1.50 for No. 2 beans delivered at the mills. There was lively bidding by other millers, and quite a few of the beans which had been contracted for were sold elsewhere by producers. The sliding scale of prices adopted in the 1929 contract was de- signed to compensate the producer for withholding his beans from shipment. The mills in the meantime had increased their storage fa- cilities, and when the contract price was raised in the fall of 1929, it was again made a flat figure. The assurance which the processors de- rived from having the beans actually in storage in their own elevators was evidently sufficient to justify them in carrying these costs. The maximum handling charge of five cents a bushel which was offered to the country elevators in 1928 was far from attractive where beans were handled in small amounts and hence used disproportion- ate amounts of storage space, where it was necessary for the elevator to hold the beans for some time, or where the elevator had to assume the danger of high-moisture beans going out of condition. 1932} SUPPLY AND MARKETING OK SOYBEANS 489 In 1929 many local handlers had no signed agreements with the contracting mills and when the beans came to their elevators, some of them sold considerable quantities to the highest bidders. In this way mills which had not entered into the contract were in some cases able to fill their requirements from beans which presumably were in- tended for the contracting mills. The contract with the growers was specified in terms of acres rather than bushels. Under such a contract it was to be expected that the production of the acres under contract would be reported large if the market went down and small if prices in the outside markets rose above the contract price. Since the contract was intended to stimulate production, and since many farmers had not had enough experience with soybeans to have a very good idea as to how large a yield they might reasonably expect, it may be assumed that the mills were willing to enter this arrangement in the hope that the increased amounts of beans made available would justify the risks assumed. The same may be said of the provision in the contract for "giving the rise of the market," which the processors regarded as necessary in order to secure the desired amounts of soybeans. In 1928 the original intention was to contract for a million bushels of beans. When the crop started to move in the fall, it became obvious that unless the contracting mills extended the same price to the balance of the crop, competitors would obtain at least a part of the desired volume at lower prices. As a result, contracting mills received con- tract and noncontract beans on the same basis. While this was prob- ably the expedient thing to do, it removed a large part of the incentive to the farmer to sign the contract the following year, and while a larger acreage was planted, a smaller acreage was represented by the contracts. Altho the contracts provided for delivery at either Peoria or Bloomington, nothing was specified as to how the point of delivery for individual lots of beans was to be decided. Naturally each pro- ducer chose to deliver to the point having the lower freight rate from his station. The result was an occasional lack of adjustment to the requirements of the mills. The mills absorbed the difference in freight, however, when it was necessary to reship to the more distant point. Contracts of a similar nature were made in the winter of 1929-30 for the 1930 crop by another company which, up to that time, had not processed soybeans on an extensive scale. The minimum price specified in these contracts was above the market prices quoted in the fall of 1930, and apparently the results were not profitable to the buyer. Since 490 BULLETIN No. 386 [December, 1930, contracts which specified minimum prices have not been available to Illinois growers. Falling prices tend to increase the hazards to buyers who contract to pay minimum prices. The soybean contracts fulfilled a major purpose in directing atten- tion to the economic problems of this new crop, and particularly in contributing toward a systematic market development. Selling the Pooled Soybeans of 1930 and 1931. During October, 1929, the Soybean Marketing Association was formed in Illinois for the purpose of representing the interests of growers and stimu- lating industrial consumption. The Illinois Agricultural Association was largely instrumental in bringing about the soybean organization, and the management contract is vested with its affiliate, the Illinois Agricultural Service Company, Chicago, Illinois. The members of the Soybean Marketing Association, operating at first under a three-year marketing contract, consigned their crop to the association pool. Development of marketing machinery for handling the 1930 soy- bean crop was started in August of 1930. Application was made to the Federal Intermediate Credit Bank of St. Louis and the Federal Farm Board for commodity loans which were granted in the sum of $650,000 for financing and marketing the crop. Contracts were entered into for storage space in bonded warehouses under federal license which could issue warehouse receipts acceptable as collateral. Sales contracts were then effected with six important processing companies. Contracts were also made with 192 country elevators for receiving and shipping the beans handled by the association. A dollar a bushel was established by action of the board of directors as the amount to be advanced on No. 2 soybeans. That advance was main- tained thruout the season. 24 * When time for entering into sales contracts for the 1931 crop ar- rived, most crushers offered only 25 cents or less a bushel. Agreement was finally reached with one of the largest mills and a second mill co- operating with it, whereby the association would receive an immediate payment of 30 cents a bushel on delivery. On the strength of this, an advance of 20 cents a bushel was made to the growers. While the beans were transferred to the crushers for the initial consideration of 30 cents a bushel, the agreement entitled the association to additional marketing responsibilities and returns. After expenses were deducted, including an agreed fixed charge for processing, the profit from the sale of the oil and oil meal was to be divided between the association and the crushers. Furthermore the association retained a voice in the 1932] SUPPLY AND MARKETING OF SOYBEANS 491 sale of the products. Final sales permitted additional payments of 5^4 cents a bushel. Thus the final price received by members of the asso- ciation was 25^4 cents a bushel. As the season advanced, an export demand developed of which the association easily took advantage because of its large volume of beans. This market became so favorable that it was more profitable to sell part of the stored beans for export than to process them. A supple- mentary agreement was made with the cooperating crushers to aid in meeting this new situation. The Soybean Marketing Association in pooling the soybean crop of its members over this two-year period was handicapped by falling prices. It is of course impossible for a cooperative association which pools to pay as good prices as can be obtained in the open market early in the season, unless it makes an advance which is above the average price realized. It turned out that the soybean association over-ad- vanced on its initial payment in 1930. Had there been an advancing market, a pool distributing sales more or less over the season or shar- ing in advances on the products might have paid an average price above the early season open-market price, but below the later season open-market price. Such differences in prices must be expected by members of pools which operate alongside an open market paying prices based on day-to-day developments. It is significant that the Soybean Marketing Association developed direct dealings with the processors and exporters. It was instrumental in working out arrangements with large-scale processors for selling soybeans in such a way that the prices received were based on the actual value of the products into which the beans were processed, not as prices of a particular date, but over a period of time. While two years of experience is not enough to judge of the perma- nence of this method of selling soybeans, cooperation between pro- ducers and users of beans, which this method of pooling provides, has made for a mutual understanding of the problems involved in market- ing the products and in stimulating the development of the entire industry. Selling Soybean Oil and Oil Meal Most of the oil processed from Illinois soybeans is sold on contract thru vegetable oil brokers of Chicago. The National Soybean Oil Manufacturers Association of that city distributed early in 1932 re- vised trading rules the following excerpts from which are illustrative of the carefulness with which marketing problems are being ap- proached in present-day oil dealings. 492 BULLETIN No. 386 [December, The rules as to oil may be summarized as follows: Maximum Maximum Quality Specific gravity at 15.5/15.5 Centigrade. . . . lodin No. (Wijs) Saponification No Unsaponifiable matter, percent with penalty Acid No or free fatty acids, percent . Volatile matter at 105 Centigrade . Foots 4.0 2.0 .2% without penalty 1.5 3.0 1.5 .1% 2.5% Minimum .9240 131.0 190.0 "Off Quality. Crude Soybean Oil shall not contain in excess of \Vi% Free Fatty Acids or Moth of 1% moisture and impurities. "Shipments up to 2% Free Fatty Acids and %oth of 1% moisture and im- purities shall constitute legal deliveries with an allowance to the buyer of \fa% of the purchase price for any excess Free Fatty Acids above ly% and up to a maximum of 2%, fractions in proportions, and with an allowance of %oth of 1% of the purchase price for any moisture and impurities in excess of Moth of 1% and up to %oths of 1%. "Quantity. One (1) tank car to be understood as 61,000 pounds with 2% leeway allowed. "Terms. Unless otherwise specified at time of sale, terms are to be net cash sight draft with bill-of-lading and other proper documents attached. "Time of Shipment. Unless otherwise specified at time of sale, shipment is to be made during the month or months specified in the contract with a toler- ance period of fifteen (15) days without charge to the buyer. After the ex- piration of these 15 days the seller shall have the right to either ship the car to the buyer within five days, after giving written notice by registered mail or telegraph, charging $2.00 per day for the period of delay after the tolerance period, or may sell the contract, or may sell the oil in the open market for buyer's account or store oil and make a charge for such storage of $1.50 per tank car per day. In case the contract is a drum or barrel contract, an equivalent storage charge is to be made of 30c per 400* drum or barrel per month, or Ic per 400 * drum or barrel per day. Shipments shall be understood as follows: 8uick shipment within two working days nmediate shipment within five working days Prompt shipment within ten working days Rejection. All oils not constituting legal deliveries shall be subject tc rejection. Such rejection to be made by telegraph within seventy-two hours after delivery of the oil to buyer's plant. If rejection is uncontested, seller shall tender replacement shipment within twenty-four (24) hours from time of ac- ceptance of rejection. A telegram offering delivery, followed by a confirming letter on the same day, shall constitute a tender. Actual shipment must follow within forty-eight hours of the sending of the telegram unless otherwise agreed upon between buyer and seller. "Brokerage. On all sales of Soybean Oil through brokers, the seller shall pay the brokerage, unless otherwise specifically agreed at the time of sale, and the rate is one (1%) per cent of the sale price. "Brokerage is payable regardless of whether deal is actually consummated or not. 1932] SUPPLY AND MARKETING OF SOYBEANS 493 "Brokerage is payable on net weights, and F.O.B. Mill value. "Tank Cars. It is understood that seller's tanks are to be provided un- less otherwise specified at time of sale. "Unloading. Buyer agrees to empty seller's tank cars promptly upon arrival and to return as per seller's instructions. Forty-eight (48) hours will be allowed for unloading and $2.00 per tank for each 24 hours thereafter is to be paid by buyer to seller." Soybean oil meal has been disposed of mainly thru direct sales by processors to mixed- feeds manufacturers and to a less extent thru brokers. The most common sales are made for bagged oil meal on a basis of tons, in carlots, with settlement by sight draft. In order for soybean oil meal to command the highest price, it must have (1) a bright yellow color, (2) a sweet, nutty flavor (not burnt), and (3) a protein content of 42 to 44 percent, tho a slight premium may be paid for a higher percentage of protein. ELEMENTS OF COST IN MARKETING SOYBEANS Marketing Mill Beans The costs involved in marketing soybeans are different for the two principal outlets, mill and seed. The principal items of cost in handling mill beans are (1) local elevator costs, including costs of temporary storage, (2) freight, (3) selling costs, and (4) storage costs, if the beans do not move directly to the mill. Local Elevator. The actual charge put on a particular lot of beans may be established either as a margin earned by purchase and sale or as a service charge for handling without actually taking title. The actual cost to an elevator of handling soybeans should not be very different from the cost of handling wheat. Bushel for bushel, beans and wheat are of the same weight and have about the same value. An analysis of the costs and capital investments in 1927 of 79 farmers' elevator companies located in eastern and central Illinois indicated that an average margin of 4.3 cents a bushel was applicable to wheat. 17 * Some items of cost have been reduced since 1927, and the generally lower level of crop prices will in the long run make it necessary for crops to be handled on lower margins. The method whereby local companies handle beans at a fixed charge per bushel has been fairly common since the contract or pooling system of sale has been used. In the contracts made with local elevators by the Soybean Marketing Association in 1930, a maximum charge of 5 cents a bushel was established. In some cases this was reduced by private arrangements between the grower and the local elevator. For this charge the local elevator company advanced cash to growers equal- 494 BULLETIN No. 386 [December, ing the value of the beans until repaid by the association; it stood shrinkage, if any, provided temporary storage, and loaded out and shipped the beans. In fact the elevator handled the product as tho it had purchased the beans for its own account, except that it was not responsible for selling or for price fluctuations. In the handling of the 1931 crop these charges were reduced. The setting of the handling charge was left somewhat to the local ad- visory councils of the Soybean Marketing Association within their re- spective counties, it being their duty to obtain agreements with ele- vators in their counties to handle the pool beans. The board of direc- tors of the association, however, had placed a limit of 4 cents a bushel on the handling charge.* Information received from 166 identical establishments handling soybeans from the 1930 and 1931 crops in Illinois indicated that 30 and 23 percent respectively were recleaned (Table 28). The cost of re- TABLE 28. ESTIMATED COST OF HANDLING SOYBEANS FOR ALL PURPOSES BY 166 IDENTICAL COUNTRY ELEVATORS AND LOCAL SEED DEALERS, ILLINOIS, 8 1930 AND 1931 CROPS (Cents per bushel) Crop reporting district 1930 crop 1931 crop Re- cleaned Cost of reclean- ing Other costs Total cost Re- cleaned Cost of reclean- ing Other costs Total cost 1 Dixon perct. 84 12 31 39 30 34 2 30.3 9 '4 3 5 3 4 12 3.4 32 5 7 4 8 4 5 13 5 4.9 34 5 11 5 9 5 5 13 19 5.9 perct. 0>) 41 10 18 39 CO 23.4 '4 3 5 1 4 "5 3.1 38 3 3 3 4 3 4 3.4 '3 7 4 5 3 4 4.1 3 Chicago 4 Galesburg 4a Springfield 5 Bloomington 6 Champaign 6a Mattoon 7 Carbondale 9 Harrisburg State Each district and state is weighted by number of bushels reported for given item. b Less than 1 percent. cleaning given by all handlers reporting on these crops averaged 3.4 cents a bushel for the 1930 crop and 3.1 for the 1931 crop. In 1931 the range varied from one cent in the Champaign district (6) to 5 cents in the Bloomington and Harrisburg districts (5 and 9). Other handling charges per bushel, besides cleaning, reported for the 1930 crop averaged 4.9 cents and for the 1931 crop 3.4 cents. The Information supplied by Wilbur H. Coultas, Manager, Soybean Marketing Association. 1932] SUPPLY AND MARKETING OF SOYBEANS 495 total cost per bushel for the local handling of the 1930 crop, as re- ported, averaged 5.9 cents, and for the 1931 crop 4.1 cents.* The replies from local handlers in leading soybean-producing counties of Illinois in 1927 and 1931 indicated average handling charges, other than cleaning, to be 12 cents a bushel for the 1926 crop, with a county range from 3 to 20 cents (Table 29). The same handlers reported an average of 4.8 cents for the 1930 crop, with a range of 4 to 6 cents for the counties listed. TABLE 29. COST OF HANDLING SOYBEANS OTHER THAN CLEANING BY IDENTICAL COUNTRY ELEVATORS AND LOCAL SEED DEALERS IN LEADING PRODUCING COUNTIES, ILLINOIS,' 1926, 1930, AND 1931 CROPS (Cents per bushel) Counties 52 identical handlers 57 identical handlers 1926 1930 1930 1931 LaSalle io 14 's 3 15 14 20 12 5 5 5 5 5 5 4 4 's 4 4 5 '6 5 4.8 5 5 5 5 4 5 2 5 's 4 4 5 3 6 5 5 4.4 3 3 3 3.5 3 4 2 3 3 3.5 3 3 3 2 3 4 4 3.2 Hancock Schuyler Cass Christian Sangamon DeWitt McLean Macon Menard Champaign Livingston Piatt Vermilion Coles Douglas Average The 1926 and 1930 comparison represents mainly beans handled for seed, while the 1930 and 1931 comparison includes all beans handled. Comparison of handling costs other than cleaning for the 1930 and 1931 crops shows an average cost of 4.4 cents for the 1930 crop, with a county range from 2 to 6 cents, and an average charge of 3.2 cents for the 1931 crop, with a range from 2 to 4 cents. The most common figure given for the 1930 crop was 5 cents and for the 1931 crop 3 cents. 'There is no inconsistency in the fact that there are some cases in which the sum of the cleaning cost and other handling charges is not the same as the total cost shown. For the Champaign district (6) in 1931 the sum shown is 4 cents and the total handling cost 3 cents. Only 18 percent of the beans in that district were cleaned, so that at the rate of 1 cent a bushel for cleaning, less than one-fifth cent was added for this item when the charge was spread over the entire 100 percent of beans reported. Furthermore the tendency to disregard fractions of less than a half cent would cause the one-fifth under consideration to be dropped from all but the state total. 4% BULLETIN No. 386 [December, The cost or charge for local handling of soybeans was not well established in 1926-27, but by the time the 1930 and 1931 crops were marketed, charges were falling in line with other farm products, so that the handling charges for the 1931 soybean crop were comparable to the charges for other products. FIG. 19. AREAS SERVED BY Six LEADING RECEIVING MARKETS FOR SOYBEANS PRODUCED IN ILLINOIS, DETERMINED MAINLY BY FREIGHT COSTS Illinois is well supplied with crushing mills. These mills have been located not only near concentrated areas of production but in localities favored by trans- portation connections for economical distribution of the products. Transportation. Most of the soybean crop moves by rail from local points to the milling or storage centers, altho beans from areas around the milling centers have been trucked in in increasing amounts. Soybeans have usually taken the grain rates. Six important concentration points have developed for soybeans grown in Illinois ; namely, Bloomington, Chicago, Decatur, Peoria, St. Louis, and Taylorville. Chicago, Peoria, and St. Louis have consider- able advantage from the standpoint of transportation facilities and freight rate arrangements, while Taylorville, Decatur, and Blooming- 1932] SUPPLY AND MARKETING OF SOYBEANS 497 ton are much nearer the chief centers of production. The practical limits of the supply area for each market, as determined by freight rates, is shown in Fig. 19. These areas in most instances have equally favorable rates to two markets. Most of the beans in the areas of concentrated production reach terminal markets with freight charges of 4.5 cents to 7 cents a bushel. Truck shipment has been more eco- FIG. 20. TERMINAL STORAGE ELEVATOR The elevator shown above is located at Peoria, Illinois. It has been used by the Soybean Marketing Association for the storage of soybeans. nomical for many of the beans going to Taylorville, Decatur, Bloom- ington, and Peoria, as the main part of the tributary area is within 50 miles of these markets, which are served by an unusual network of good roads. In some cases producers trucking beans to Bloomington and Peoria have received prices no higher than local station prices when allow- ance is made for local elevator charges. Processors have not made price adjustments to compensate for the elimination of the railroad cost between the local station and the mill that results when beans are trucked. The explanation advanced is that the processor has been losing the benefit of applying reshipping rates in the case of trucked- in beans. This loss has about equaled the freight charge from local station to mill. Trucking charges averaged about 3 cents a bushel for 498 BULLETIN No. 386 [December, the 1931 crop. Moreover freight rates have not responded to lower price-levels as have elevator costs. Increasing use of truck transporta- tion can be anticipated under the circumstances. Selling. Soybeans are not regularly sold thru organized exchanges, as are many other kinds of crops. Instead, direct contacts have been built up between mills and local elevators. Grain brokers at interior points have been used by some buying agencies. The charge has usually been one cent a bushel. Soybeans are bought on the basis of grade, and inspection fees must be included in selling costs. These are assessed on the basis of cost and vary at different points. Weighing charge is another small item of cost. Storage. The processor takes storage costs into consideration in arriving at the price which he can afford to pay for the beans. If beans are stored by a selling agency, storage costs must also be considered (Fig. 20). There are four elements in storage costs: (1) use of stor- age space; (2) interest on money invested in product during time stored; (3) shrinkage; (4) any processing that may be needed to make beans a storable product, such as drying, cleaning, and treatment to prevent deterioration in grade or quality, resulting from insect injury or other causes. Over a period of years these items have amounted to about 6 cents a bushel for wheat and should be no greater in the case of soybeans. Storage costs for soybeans from the 1931 crop were reported as 614 cents a bushel. 82 * Processing Beans The price received by farmers for Illinois beans has been about 40 cents a bushel less than the gross value of the products obtained by processing. This covers the charges made by the local elevator, trans- portation agencies, and the processor, including profit. Cost of processing a bushel of beans was reported by the U. S. Tariff Commission to be 27.1 cents in 1923-24. At Japanese mills costs were 17.8 cents, at the mills of Great Britain 15.3 cents, and at the mills of Dairen, Manchuria, 8.5 cents (Table 30). If from the 40 cents a bushel, which seems to be the approximate figure used in basing bids, there is subtracted 11 cents a bushel for local elevator handling, trans- portation, inspecting and weighing services, the manufacturing margin, including profit, would be 29 cents a bushel. If beans cost a mill 40 cents a bushel and yield 7.75 pounds of oil and 48 pounds of meal, and the oil is sold at 3 cents a pound and the meal at $18.50 a ton, 27.5 cents a bushel would remain for manufacturing costs and profit. SUPPLY AND MARKETING OF SOYBEANS 499 As noted above, costs were indicated to be higher in this country than in foreign milling centers during the period for which comparable data are available. Any reduction in the cost or charges made for processing will be reflected in higher prices to growers of beans under existing systems of marketing. TABLE 30. COSTS OF RAW MATERIALS AND OTHER ITEMS OF SOYBEAN OIL PRO- DUCTION, UNITED STATES AND SELECTED FOREIGN COUNTRIES, 1923-1924 (Per bushel of soybeans crushed) United States Manchuria Japan Great Britain All Manchuria Dai re n only Cost of soybeans used for crushing $1.376 .171 .100 .271 $1.647 Ibs. 6.15 44.18 cts. 10.21 $1.112 .052 .031 .083 $1.195 Ibs. 5.69 56.74 els. 6.26 $1.157 .053 .032 .085 $1.242 Ibs. 5.77 56.51 cts. 6.41 $1.332 .128 .050 .178 $1.510 Ibs. 8.87 47.46 els. 6.57 $1.392 .102 .051 .153 $1.545 Ibs. 7.46 51.37 els. 7.79 Conversion cost Factory expense General expense Total Total manufacturing cost Yield of crude oil Yield of cake Cost per pound* of producing oil Total cost of crushing allocated to oil and cake on basis of sales return for each product. Marketing Seed Beans Unless premiums are paid for quality, the cost to the purchaser of seed beans in carload lots will be practically the same as the cost of beans bought for processing. To these costs must be added the cost of cleaning, storage, advertising, selling, and collection. Comparison of reports received from identical handlers dealing mostly in seed beans indicate that 73.1 percent of the 1926 crop was cleaned and 67.1 percent of the 1930 crop (Table 31). The seed handlers incurred a recleaning cost of 7.1 cents a bushel for the 1926 crop and 5.3 cents for the 1930 crop. Costs from the various crop re- porting districts had become more uniform by 1930, yet they varied at that time from 4 to 9 cents a bushel. Handling charges aside from cleaning amounted to 15.7 cents a bushel for the 1926 crop and 11.5 cents a bushel for the 1930 crop. The range between averages for the various crop reporting districts was wide for both years, being from 5 to 51 cents for the 1926 crop and from 7 to 32 cents for the 1930 crop. Total handling charges for seed beans were given as 21.0 cents a bushel for the state in 1926-27 500 BULLETIN No. 386 [December, and 14.9 cents a bushel in 1930-31. With increased production, han- dling operations have become better organized and costs have decreased. Marketing costs for handling soybeans for seed purposes may be summarized as follows for the 1930 crop: cost from producer to wholesale handlers, 1 1 cents ; cleaning, 5 cents ; other handling charges, 11 cents. A total of 27 cents in costs is thus added to the producer's price by the time wholesale prices are quoted to the retailer. To this must be added transportation costs from wholesale dealer to retail dealer or final purchaser, and retail selling cost if the beans are passed thru a retail handler, as well as a reasonable profit for each of the various seed handlers. TABLE 31. ESTIMATED COST OF HANDLING SOYBEANS USED MAINLY FOR SEED, 151 IDENTICAL COUNTRY ELEVATORS AND LOCAL SEED DEALERS, ILLINOIS," 1926 AND 1930 CROPS (Cents per bushel) Crop reporting district 1926 crop 1930 crop Re- cleaned Cost of reclean- ing Other costs Total cost Re- cleaned Cost of reclean- ing Other costs Total cost 1 Dixon perct. 30 72 77 64 77 58 88 6 53 73.1 17 5 5 5 9 5 7 3 12 7.1 51 5 10 21 10 20 19 5 15.7 70 9 15 23 17 23 26 32 25 21 perct. 84 17 88 73 85 90 5 67.1 9 '4 4 5 8 5 '5 5.3 32 13 7 9 18 11 13 8 11.5 34 14 12 13 25 17 13 11 14.9 4 Galesburg 4a Springfield 6 Champaign 6a Mattoon 7 Carbondale 9 Harrisburg State Each district and state is weighted by number of bushels reported for given item. Exporting Beans During the period of development of commercial soybean produc- tion in Illinois little attention was given to the foreign outlet for soy- beans. In fact steps were taken to get duties adopted which would shut out imports of foreign beans or materials made from them. \Vith the collapse of domestic soybean prices in the fall of 1931, opportunity arose for the exportation of soybeans at higher net prices than the domestic users were currently paying. Experimental export shipments were made by the Soybean Marketing Association in the early winter of 1931-32 and also by certain other interests in the corn-belt and At- lantic seaboard trade. Somewhat larger exports were made in the following spring (Fig. 21). One drawback to the use of this market, however, is the large expense involved in moving the commodity from 1932] SUPPLY AND MARKETING OF SOYBEANS 501 the interior to some exporting point. What this amounted to in one instance was as follows: COST PER BUSHEL OF MOVING SOYBEANS FROM CENTRAL ILLINOIS ON BOARD BOAT AT NEW ORLEANS, 1931 CROP* Cents Local elevator charge 3.5 Freight, central Illinois to New Orleans 15.3 Elevation and boat loading at New Orleans 1 . 75 Brokerage to exporter 1.0 Commission firm at New Orleans for forwarding and checking records at New Orleans .5 Weighing and inspection .2 Total 22725 The value of soybeans per bushel in gold was reported as 55 cents at Dairen, Manchuria, in December, 193 1. 20 * This just about equaled the prevailing buying price at Illinois country points plus the cost of marketing and transporting to New Orleans. This shows the superi- ority of the world market to the interior domestic market during the 1931-32 season. This point is further indicated by the price quoted on Manchurian soybeans in European ports. Early in December, 1931, the U. S. Department of Commerce 30 * reported Manchurian soybeans at Dutch and German ports to be worth the equivalent of 63.6 cents a bushel. By February this price had risen to 76.8 cents. The superior export market was due in part to better prices for soybean products and in part to lower processing costs for soybeans abroad. Late in February, 1932, soybean meal English extracted in bulk was quoted at the equivalent of $24 a ton, and soybean oil English crude, extracted, spot, naked at 4.05 cents a pound. Both of these prices were above prevailing American prices at producing points. The lower processing costs have been referred to on page 498. While it is undoubtedly true that a remunerative soybean-produc- ing enterprise cannot be built up in Illinois without a well-developed domestic processing industry, nevertheless the experience of 1931-32 shows the importance of opening up and developing foreign connec- tions. Inasmuch as soybean production for export is largely in the northern hemisphere, with the season of harvesting in Manchuria simi- lar to that in the United States, it would be expected that the seasonal variation of soybean prices would be such that winter storage costs would normally be offset by a rise in price. The better organized trans- port facilities in the United States may give United States growers an opportunity to market ahead of the Manchurian soybean growers. Information supplied by Wilbur H. Coultas, Soybean Marketing Associa- tion, 1932. 502 BULLETIN No. 386 [December, The commercial production of soybeans in the United States is still small in comparison with Manchurian exports. Exports of soy- beans from Manchuria in the 1930-31 season amounted to the equiva- lent of about 134 million bushels of beans, cake and oil, 82 million FIG. 21. A SHIP LOADED WITH ILLINOIS SOYBEANS FOR EXPORT MOVEMENT The first cargo of soybeans exported from Illinois by way of the Great Lakes is shown in the above picture. This cargo of 205,000 bushels left Chicago during April, 1932. bushels of which were exported as beans. Exports of domestic beans from the United States began with the 1931 crop on a commercial scale and were as follows for February- August, 1932. 30 * Monti: Total bushels Value Bushels shipped to $ 27 227 France United Kingdom 7 467 Canada 2 900 Germany 130 667 Other destina- tions 60 390 192 907 56 050 41 277 208 618 1 518 525 918 191 200 75 232 121 383 33 18 750 112 000 184 799 73 735 190 455 77 498 36 400 293 228 37 333 1 900 b 3 125 816 90 671 123 765 22 d 62 531 1 200 831 37 333 233 549 39 340 458 617 25 128 423 052 7 647 801 258 3 63 847 Feb 141 091 Mar 367 796 Apr 717 077 May 301 564 June 128 888 July 214 458 Aug 109 451 Total 1 980 325 f 'Netherlands. b Argentina. "Jamaica. d Columbia. "Guatemala. 'Exports from the 1931 crop began in November and amounted to 141.225 bushels for November and December. In November 18.667 bushels were shipped to Germany and 29,792 bushels to Netherlands. In December 26.581 bushels were shipped to Germany and 66,185 bushels to Netherlands. Soybean exports from the United States were in excess of 100,000 bushels for the first time in February, 1932. About a third of the season's export movement took place in April. About two-fifths of the beans exported during this season were shipped to Germany. New 1932] SUPPLY AND MARKETING OF SOYBEANS 503 Orleans was the principal port from which shipments were made, tho Chicago, an inland port, ranked second in bushels of beans exported. Bushels shipped from Month Feb Virginia New Orleans Chicago Mobile ( nker destin- ations Mar 111 794 149 337 1 510* 105 118 37 Apr 107 598 345 332 190 455 73 680 11 May 37 399 186 667 77 498 June 17 817 74 667 36 400 3 July 123 765 90 671 22 Aug 28 181 56 142 25 128 Total... 302 789 935 910 420 152 178 798 73 (Michigan.) Difficulties generally involved in European buying of American products apply to soybeans. Declines in the exchange value of English and Scandinavian currencies have created difficulties in exporting to these countries, but this particular difficulty has not applied to exports to Germany or Holland, both of which are large users of oil seeds. The development of an export outlet for soybeans from the corn belt emphasizes again the need for developing facilities which will per- mit more economical systems of transportation to ocean ports. THE INSPECTION SYSTEM AND SOYBEAN GRADES After extensive studies of the various phases of the soybean in- dustry, the U. S. Department of Agriculture announced standards for soybeans in September, 1925, and recommended their use in the grad- ing and marketing of this commodity. These standards were used as a basis for federal inspection of the 1925 crop of soybeans at original shipping points in eastern North Carolina. Based on the application of the standards and on further studies of the industry, slight revisions were made, effective September 1, 1926. One important change was the addition of a supergrade to take care of extra high-grade stock for which there is demand at a premium, especially from the seed trade. Wholesale seedsmen have found it ex- pedient to purchase their supplies on the basis of the two high grades. Shippers and state agencies are cooperating with federal inspectors for the purpose of furnishing buyers with authentic supplementary infor- mation as to variety and germination. Oil mills buy soybeans on the basis of U. S. No. 2 grade, with a scale of discounts for lower grades and premiums for higher grades. Soybean inspection is provided by licensed inspectors operating under a federal inspection system administered by the Hay, Feed and Seed Division of the U. S. Bureau of Agricultural Economics. This is separate from the system of federal supervision of grain inspection 504 BULLETIN No. 386 [December, and is operated on a different basis. In many cases, however, licensed grain inspectors also meet the special requirements necessary to secure a license to inspect soybeans. Soybean inspection service provides for the maintenance of federal soybean inspectors at shipping points and at important terminal markets under cooperative agreements between the Bureau of Agri- cultural Economics and organizations such as state departments of TABLE 32. CARLOADS OF SOYBEANS FEDERALLY INSPECTED IN LEADING SOYBEAN PRODUCING STATES, 1928-1932 (Figures represent full carloads, with few exceptions) Inspection points 1926- 1928 Fiscal years ending June 30 1929 1930 1931 1932 1929-1932 Illinois Bloomington 4 108 638 746 108 5 69 928 135 134 289 558 45 207 84 14 76 984 174 643 613 13 1 443 368 9 416 616 69 37 2 958 194 62 507 604 872 64 2 303 260 429 161 415 534 378 4 480 611 62 1 284 604 2 412 77 5 050 673 438 892 1 115 622 560 9 350 Cairo Chicago Decatur 22 East St. Louis Peoria Taylorville Total 26 Missouri St. Louis and Sikeston Indiana Indianapolis and LaFayette North Carolina Elizabeth City, Raleigh, and Washington 219 Ohio Cincinnati and Toledo Virginia Norfolk and Richmond 33 8 286 Other points agriculture, commercial exchanges, and dealers' or growers' associa- tions. The organization cooperating with the Bureau pays the in- spector and the local expenses necessary to the proper conduct of the work. Fees charged for inspection are divided between the local or- ganization and the U. S. Department of Agriculture in such manner that both are reimbursed as completely as possible. Inspectors located at any shipping point or terminal market usually are available for making inspections at neighboring points. Illinois supplied more than half of the beans inspected in three of the four years ended June 30, 1932 (Table 32). 1932} SUPPLY AND MARKETING OF SOYBEANS 505 Soybean inspectors in Illinois are located at Bloomington, Chicago, Peoria, Taylorville, East St. Louis, and Cairo, the last two points hav- ing been added for the 1931 crop. Soybeans are divided into five classes: yellow, green, brown, black, and mixed. Soybeans of the yellow and green classes may not contain more than 5 percent of soybeans of other colors, and those of the brown and yellow classes may not contain more than 10 percent of other classes. The Black Eyebrow variety is listed under mixed soy- beans. TABLE 33. FEDERAL GRADE REQUIREMENTS FOR YELLOW, GREEN, BROWN, BLACK, AND MIXED SOYBEANS* U.S. grade Condition and general appearance Minimum test weight per bushel Maximum limit of Mois- ture Splits Damaged beans Foreign material Extra No. l b Cool, of natural odor, plump, well screened, and of good color Ibs. 56 perct. 15 perct. .5 perct. 1 perct. .2 No. 1 Cool, of natural odor, a nd of good color 56 15 1 2 .5 No. 2 Cool, of natural odor, and may be slightly stained or mottled 54 16 10 3 2 No. 3 Cool, of natural odor, and may be stained or mottled 52 17 20 5 5 No. 4 Cool, may be badly stained or mottled, and may be slightly frosted or im- mature 50 18 30 8 10 Sample grade Soybeans which do not comply with the requirements of any of the above grades or which have any commercially objectionable foreign odor, or are sour, heating, hot, moldy, infested with live weevils or other insects injurious to stored soybeans, or are of otherwise distinctly low quality Handbook of United States Standards for Soybeans, Form HFS-899, U. S. Dept. Agr. Bur. Agr. Econ., Sept.. 1928. b The grade Extra No. 1 shall apply only to yellow soybeans, green soybeans, brown soybeans, and black soybeans containing not more than one percent (1%) of soybeans of other classes, either singly or in any combination, and shall not apply to the class, mixed soybeans, unless the latter is composed of 98 percent or more of the Black Eyebrow variety. Each class is divided into six grades with requirements for each grade as indicated in Table 33. The following specifications are from the "Handbook of U. S. Standards for Soybeans." 28 * "The grade designations for soybeans shall include successively the letters 'U. S.,' the name or number of the grade or the words 'Sample Grade,' and the name of the class, and in case of 'Mixed Soybeans,' in addition the name and approximate percentage of each of the classes Yellow Soybeans, Green Soy- beans, Brown Soybeans, or Black Soybeans which constitutes 5 per cent or more of the mixture. In lots of 'Mixed Soybeans' which contain 5 per cent or more of the Black Eyebrow variety, the percentage of such variety shall be stated in the same manner as that of a class." 506 BULLETIN No. 386 [December, An examination of the grade requirements will show that while the provisions for the upper grades are rigid, requirements are much less strict for the lower grades. Since the methods of harvesting and storage now in use produce beans varying in quality, this wide spread in requirements is necessary to prevent too large a proportion of beans going into sample grade. The structure of the grades, as provided in the United States stand- ards for soybeans, corresponds only roughly to that of grain grades. Foreign material in soybeans is a broad term, including dirt, weed seeds, cereal grains, and small pieces of soybeans which pass thru a sieve with round perforations *% 4 inch in diameter, as well as all matter other than soybeans which remains on top of the sieve. Pods and broken stems are sometimes present. The factor of splits is not comparable with any factor employed in the grading of any of the grains. Split beans are useless for seed and have the further disadvantage of tending to become rancid in storage. There is ample justification, therefore, for discriminating against shipments of soybeans having a high percentage of splits. Soybeans grown in Illinois are graded largely on these two factors, foreign material and splits. The amount of soybeans inspected according to grades by licensed federal inspectors was twice as large for the year ended June 30, 1932, as for the preceding year, and for these two years it was more than five times as large as for the two years ended June 30, 1930. The amounts of each year's inspection falling in each of six grades was as follows: Carloads inspected during year ended June 30 Grade Extra No. 1 . . 1929 10 1930 {931 (Thousands of bushels) 24 2 110 251 377 2 082 378 1 544 123 190 137 48 1 149 4 117 1932 10 192 6 629 1 252 156 106 8 345* 1929-1932 Total 46 591 9 470 3 547 646 471 14 771 Percent .3 4.0 64.1 24.0 4.4 3.2 100.0 No. 1 38 No. 2... 382 No. 3 373 No. 4 177 Sample 180 Total... . 1 160 (Includes 1,853,477 bushels inspected for export.) Nearly two-thirds of the inspected soybeans were graded No. 2, taking the total of the four years as a whole ; the percentage was less than one-third for the two years ended June 30, 1930 and not quite half during the year ended June 30, 1931. The proportion grading No. 2 during the year ended in 1932 was so large as probably to cause the four-year percentage in that grade to be higher than could be ordinarily expected. 1932] SUPPLY AND MARKETING OF SOYBEANS 507 The proportion graded Extra No. 1 and No. 1, as well as the pro- portion graded Sample and No. 4, became progressively smaller during the four years as the concentration in Grades 2 and 3 became greater. The question has been raised whether the grading system for soy- beans should not recognize that a pound of oil is worth more than a pound of meal and should not determine the oil content of the beans. 27 * This would, of course, add to the expense of the grading process. Moreover it is questionable whether increased oil content necessarily represents increased commercial value. The oil content and the protein content of soybeans tend to be so related that as the percentage of one is increased, the percentage of the other is decreased. 25 * The con- tent problem in soybeans thus assumes a double form, emphasizing both protein and oil. SPECIAL CONSIDERATIONS APPLYING TO THE VALUATION OF SOYBEANS AND SOYBEAN PRODUCTS Use- Values of Soybeans and Soybean Products in Feeding Soybeans and soybean products may be considered from the stand- points of value in use as well as value in exchange. Estimated use- values of feed products of soybeans, expressed in terms of digestible protein and total digestible nutrients per 100 pounds and per acre of each product, based on Illinois returns, are shown in Table 34. TABLE 34. DIGESTIBLE NUTRIENTS IN FEED PRODUCTS OF SOYBEANS" (Pounds) Digestible Total digestible protein nutrients Yield Product per acre Per 100 Per Per 100 Per pounds acre pounds acre Soybean hay 4 176 9.7 405 42 1 754 Soybean seed 1 392 32.5 452 89 1 239 Soybean straw 2 366 .4 10 24 577 Soybean seed and straw 3 758 . 12.3 462 48 1 816 1 114 37.0 412 76 847 Averages of 59 plots (16 varieties) cut for hay and 59 comparable plots harvested for seed and straw in the South-Central rotation, University South Farm, Urbana, Illinois, 1919-1926. Assuming digestible protein to be three times as valuable as total digestible nutrients, a ratio that has been fairly constant, soybean hay would show 15 percent greater value an acre for feeding than soy- beans alone, while the oil meal would have about 20 percent less value. 508 BULLETIN No. 386 [December, A comparison of the feeding value of the digestible protein and total digestible nutrients in 100 pounds of soybean oil meal and soybeans on the basis of the above ratio shows an equal total feeding value for the two. Soybean meal is superior to soybeans for swine feeding, and also for dairy feeding, where the use of legume hay removes the need for additional conditioner. 2 - 21 * This would indicate that sometimes such considerations are sufficient to justify farmers in undertaking the added costs incurred in exchanging beans for meal on a pound for pound basis. Since soybean oil meal represents the most desirable form of the soybean to use in feeds for livestock, a comparison of its feeding value with that of the leading protein concentrates is shown in Table 35. TABLE 35. DIGESTIBLE NUTRIENTS IN SOYBEAN OIL MEAL AND OTHER PROTEIN FEEDS (Pounds) Product Digestible protein per 100 pounds Total digestible nutrients per 100 pounds Feeding value in terms of soybean oil meal* Soybean oil meal 37 76 perct. 100.0 30 77 89.3 Cottonseed meal (41 percent) 36 76 98.4 Gluten meal 34 84 99.5 Wheat middlings 13.2 73 60.2 Wheat bran 12.5 61 52.7 Tankage 56.2 71.4 128.3 Value determined by obtaining the sum of the value of the digestible protein and the total digestible nutrients of each product and dividing it by value of soybean oil meal. Digestible protein was given a weight of 3 and total digestible nutrients a weight of 1. It has been established that soybean oil meal may be fed in con- nection with most livestock rations. It ranks high both in digestible protein and in total digestible nutrients (Fig. 22). On the basis of the above stated relation of values between digestible protein and total digestible nutrients, cottonseed meal (41 percent protein) and gluten meal have about the same feeding value as soybean oil meal on a pound for pound basis. 8 * Compared with soybean oil meal, linseed meal may be rated about 90 percent as valuable for feeding, wheat middlings about 60 percent, and wheat bran nearly 53 percent. The results obtained in feeding experiments have not varied widely from these figures. Linseed meal has usually been considered equal to soybean oil meal and to cottonseed meal in the fattening of livestock. As a protein supplement for hogs, 21 * the ef- ficiency of soybean oil meal varies from two-thirds to three- fourths that of tankage. Soybean oil meal is somewhat short in mineral con- SUPPLY AND MARKETING OF SOYBEANS 509 stituents, but the shortage may be overcome by supplementing the meal with a simple mineral mixture. The percentage of the digested protein that may be stored in the animal as body tissue determines the quality of a protein, and is re- FIG. 22. SOYBEAN MEAL BEING FED TO BEEF CATTLE Soybean oil meal has proved to be a satisfactory protein supplement in corn- belt cattle feeding rations in experiments at the University of Illinois. ferred to as its "biological value." Investigations at the University of Illinois have shown that soybean protein has a high biological value as compared with many of the other vegetable proteins. 11 ' 12 * I Derivative Products as Factors in the Market Valuation of Soybeans Prices of mill beans depend on prices of oil and meal. The gross value at different prices of the oil and meal content of a bushel of soybeans is given in Table 36. These values represent the sum of 7.75 pounds of oil and of 48 pounds of meal at their respective stated prices. If meal is worth $20 a ton and oil 3 cents a pound, the value of the products in a bushel of soybeans would be worth 71 cents; of this, 48 cents would be attributable to the meal and 23 cents to the oil. A price change of 1 cent a pound for oil corresponds to a difference of about 7.75 cents in the value of a bushel of beans. A difference of $1 a ton in the price of meal corresponds to a difference of about 2.4 cents in the value of a bushel of beans. The value of the oil and meal de- termines the value of beans to processors. To get at a net price which a farmer might expect to receive, the following items would have to be deducted ; the cost-and-profit margin 510 BULLETIN No. 386 [December, TABLE 36. TOTAL GROSS VALUE OF PRODUCTS OBTAINED FROM A BUSHEL SOYBEANS AT DIFFERENT PRICES OF OIL AND MEAL (Based on 7.75 pounds of oil and 48 pounds of meal per bushel) OF Price of oil per pound at Gross value of products with price of meal per ton at $15 $16 $17 $18 $19 $20 $25 $30 $35 $40 els. 2\i .. $ .55 .56 .57 .58 .59 .60 .61 .62 .63 .64 .65 .66 .67 .68 .69 .70 .71 .72 .73 .74 .75 .82 .90 .98 1.06 1.14 $ .58 .59 .60 .61 .62 .63 .64 .65 .66 .66 .67 .68 .69 .70 .71 .72 .73 .74 .75 .76 .77 .85 .93 1.00 1.08 1.16 $ .60 .61 .62 .63 .64 .65 .66 .67 .68 .69 .70 .71 .72 .73 .74 .75 .76 .77 .78 .79 .80 .87 .95 1.03 1.11 1.18 $ .63 .64 .65 .65 .66 .67 .68 .69 .70 .71 .72 .73 .74 .75 .76 .77 .78 .79 .80 .81 .82 .90 .97 1.05 1.13 1.21 $ .65 .66 .67 .68 .69 .70 .71 .72 .73 .74 .75 .76 .77 .78 .79 .80 .80 .81 .82 .83 .84 .92 1.00 1.08 1.15 1.23 $ .67 .68 .69 .70 .71 .72 .73 .74 .75 .76 .77 .78 .79 .80 .81 .82 .83 .84 .85 .86 .87 .94 1.02 1.10 1.18 1.26 $ -79 .80 .81 .82 .83 .84 .85 .86 .87 .88 .89 .90 .91 .92 .93 .94 .95 .96 .97 .98 .99 1.06 1.14 1.22 1.30 1.38 $ .91 .92 .93 .94 .95 .96 .97 .98 .99 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.18 1.26 1.34 1.42 1.50 $1.03 .04 .05 .06 .07 .08 .09 .10 .11 .12 .13 .14 .15 .16 .17 .18 .19 .20 .21 .22 .23 .30 .38 .46 .54 .62 $1.15 1.16 1.17 1.18 .' 1 . 19 1 1.20 1.21 1.22 1 1.23 3 1.24 1.25 1.26 j 1.27 1.28 1.29 1.30 ; 1.31 1.32 1.33 1.34 j 1.35 ] 1.42 1.50 1.58 1.66 1 . 74 j 2$ 2:: 2J^ 3... 3\4.... 3%.. 3% 3H... Ig:::::: sy g 4... 4}^... 4... 4Ji 4H 4ji 4Ji 5... 6 7 8.. 9 10 of the processor, the freight on the beans, the charge made by local elevators for shipping, and any other marketing or storage costs. The above analysis assumes that beans were being bought for cur-- rent delivery on the basis of current prices. Even if beans were being bought for future delivery, prices of products would be taken into con-< sideration in arriving at the offers. The prices used would either be estimated or established by selling products for delivery at a later date. Table 36 and the accompanying discussion are meant to serve as an illustration of a method and indicate only approximate values. PRICES OF SOYBEANS AND SOYBEAN PRODUCTS Prices of Seed Beans The market structure for seed beans is more complicated than for mill beans. The seed trade can be divided into three classes: (1) the regular annual demand from sections or farms where beans are grown chiefly for hay or forage; (2) the demand from new growers in sec- tions producing mill beans and in newly developing soybean areas ; 1932\ SUITLY AND MARKETING OF SOYBEANS 511 (3) the intermittent demand from commercial growers who are re- placing their seed stocks. The stability of the demand from these three sources differs. From the hay and forage producers it tends to be regular and stable, but from the other two classes rather irregular. Demand for seed from new producers will be important as long as the industry is expanding into new regions or to new farms in regions in which the crop has been grown. Up to the present time this requirement has been quite important because of the tendency for the acreages of the crop to expand. The intermittent demand from commercial growers who are replacing their seed stock will be particularly important when improved varieties are being introduced or in years following seasons when the weather causes quality of farm seed to be low. Otherwise this demand will be a factor only when individual farmers decide to change their seed. Producers of hay varieties may count on a fairly steady market from year to year. The market for thresher-run seed beans is not usually well estab- lished before November, prices having a tendency to increase thruout the season. Prices for the 1930 crop, however, actually declined. Thruout the period 1917-1931 prices varied widely from state to state (Table 37). The corn-belt states and North Carolina produce the bulk of commercial beans and include the low-priced areas. For the 1929, 1930, and 1931 crops, yearly prices averaged approximately a dollar a bushel for the states referred to, with a range from 95 cents in Illinois and Ohio to $1.20 in Missouri. The South Atlantic states produced the bulk of the remaining beans entering seed channels, and averaged $1.75 a bushel for the same period, with a range from $1.40 in Maryland to $2.45 in Georgia. Illinois has had centers of extensive production of commercial beans which are usually of such quality as to be suited for seed and which to a large extent dictate the price of the latter. Local Prices of Soybeans in Illinois. A comparison of farm-price figures for different districts in Illinois indicates wide sectional differ- ences in soybean seed prices (Table 38). Prices for the period Janu- ary to May were used rather than for a period which included the harvest months, in order to arrive at prices for seed rather than for mill beans. The farm prices as reported are a composite of the two, particularly at harvest time in the sections producing mill beans. As in the case of grains, prices were lowest in the Champaign district (6). The Galesburg and Rloomington districts (4 and 5) had about the same price averages, altho for individual years they differed widely. 512 BULLETIN No. 386 a P H Q H H J-. Z w n I Q W W We* -3 ?4J w S- fcl < i~g SlcgSsggSSSgES * I 1 ?S:S 8 ISSSSISSSS .!? . rj .p 10 /l O o O O O :?!i?!l5 : " ** ' I OmOOOmO r^ cs r* t*5 O (** O*OO*O*^JtO 'O*/lOO OOO*OOOOOO -f^rSfOO jj (S 2 S5g^8 :2 :^!?^K : 5^"""^ ' N --"-" H o OOOioO 00 00"500 -o So 5"-"- 1 " ---N ID N a O -OmpOO c*> o o* o ^f to T}-^t^ OOt^OO -^ fS *- ^ CS 1/3 (N ^ ^H -^ *-< ^^ fN O o -omo om>ooo * ts Ov c*< O^ 00 ^ oomoo . *^ o ^^ -^ oo SJ -- - O * O *o *o O 10 IO O to O to ts o S3 :2SKi!C t^ O X O Ov g ^SSESgSSgS : * 00 e> . . ^* ^H (S 'I* ' Tt O O O* * cqcscsrs .(N't"! "> 2 a O ->OO : oooo JO ^ U 1 : jjjj :j li 1932} SUPPLY AND MARKETING OF SOYBEANS 513 Prices were highest in the Carbondale and Harrisburg districts (7 and 9). The price differences between these southern districts and the rest of the state reflect to a large extent the relative importance of the mill and hay varieties. The larger the proportion of the acreage in hay- type beans, the greater the relative scarcity of seed and the higher the price. TABLE 38. AVERAGE FARM PRICES OF SOYBEANS BY SELECTED CROP REPORTING DISTRICTS, ILLINOIS," JANUARY-MAY, 1925-1931 (Dollars per bushel) Year Gales- burg (4) Spring- field (4a) Bloom- ington (5) Cham- paign (6) M.tttu,. n (6a) Carbon- dale (7) Harris- burg (9) 1925 $2.04 $2.14 $2.06 $2.30 $2.20 $2.32 $2.00 1926 1.73 1.92 2 09 1 83 2.07 2.65 2.43 J927 2.23 2.27 1.78 1.69 1.76 1.88 2.07 1928 1.60 1.71 1.58 1.43 1.65 1.74 1.77 1929 1.64 1.74 1 77 1.53 2.00 2.25 2.26 1930 1.58 1.69 1.54 1.49 1.77 2.07 2.15 1931 1.08 1.08 1 .00 .97 1.21 1.61 1.56 Average . . $1.70 $1.79 $1.69 $1.61 $1.81 $2.07 $2.03 The northern districts are omitted because the data are not satisfactory, prices not having been reported regularly. Farm prices of soybeans in the Springfield, Champaign, and Mat- toon districts (4a, 6, and 6a) were reported in a manner which makes month to month comparison satisfactory. All three districts include important producing centers. The monthly prices in these districts from October thru June for the crop years 1925-1931 are shown in Table 39. In the Springfield district (4a) average prices for this seven- year period rose steadily after October; January prices averaged 20 cents higher than October; March, 17 cents over January; and May, 10 cents over March. May, in recent years, has become the final month of active seed purchases. In six years out of the seven soybean prices increased by significant amounts between October and March. A part of this increase reflected the change from the mixed mill and seed prices to strictly seed prices, and reflected the keen demand for soy- bean seed during this period of expanding acreage. The exceptional years, when prices declined, were 1930-31 and 1931-32, the entire soy- bean season in both years being characterized by severe price declines in commodities generally. The rise in price in the Champaign district (6) was less marked than in any other district, altho the price was significantly higher in the spring than in the fall during six of the seven years (1925-1931). The exception occurred again in 1930-31. The average increase from October to May was only 28 cents compared with 47 cents in the 514 BULLETIN No. 386 [December, , Springfield district (4a), hay beans exercising a larger influence on composite prices in the Springfield district than in the Champaign district. TABLE 39. AVERAGE MONTHLY FARM PRICES OF SOYBEANS IN THREE CROP- REPORTING DISTRICTS IMPORTANT IN SOYBEAN PRODUCTION, ILLINOIS, OCTOBER-JUNE, 1925-1930 CROPS (Dollars per bushel) Crop year beginning Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June October Springfield (4a) 1925 . . $1.55 $1.25 $1.67 $1.88 $1.55 $2.05 $2.00 $2.13 $2.86 1926 . . .33 1.76 2.02 2.01 2.34 2.26 2.32 2.40 2.37 1927 .58 1.45 1.57 1.54 1.42 1.80 1.84 1.96 1.98 1928 .29 1.29 1.35 1.44 1.50 1.89 1.93 1.92 2.18 1929 .41 1.63 1.47 1.55 J .60 1.66 1.81 1.84 1.84 1930 .13 1.18 1.15 1.08 1.25 1.04 .93 1.12 .83 1931 .21 .32 .34 .36 .37 .38 .44 .41 .43 Average . . . $1.21 $1.27 $1.37 $1.41 $1.43 $1.58 $1.61 $1.68 $1.78 Champaign (6) 1925 . . $1.61 $1.68 $1.53 $1.93 $1.61 $1.67 $1.76 $2.16 $2.65 1926 1.58 1.41 1.30 1.61 1.66 1.44 1.85 1.88 2.35 1927 1.16 1.31 1.00 1.19 1.38 1.53 1.49 1.56 1.71 1928 1.11 1.19 1.38 1.24 1.40 1.51 1.65 1.86 2.00 1929 1.44 1.44 1.46 1.47 1.40 1.56 1.44 1.58 1.39 1930 1 13 1 08 1 12 1 10 1 06 .99 .91 .80 .80 1931 .21 .32 .24 .30 .21 .36 .34 .35 .36 Average. . . $1.18 $1.20 $1.16 $1.26 $1.26 $1.29 $1.35 $1.46 $1.61 Mattoon (6a) 1925 . $1.20 $1.44 $1.46 $1.56 $1.69 $1.65 $2.13 $2.17 $2.71 1926 1.62 1.46 1.49 1.63 1.78 1.74 1.88 1.79 2.00 1927 1 14 1 37 1 28 1 48 1 57 1 63 1.70 1.85 2.00 1928 1.59 1.40 1.55 1.80 1.75 2.12 2.09 2.22 2.11 1929 1.70 1.61 1.62 1.70 1.65 1.74 1.89 1.88 1.88 1930 1 27 1.24 1 22 1 35 1 23 1 23 1.11 1.07 .95 1931 .25 .30 .35 33 .38 .40 .40 .37 .38 Average . . . $1.25 $1.26 $1.28 $1.41 $1.44 $1.50 $1.60 $1.62 $1.72 Seasonal prices in the Mattoon district (6a) usually started at a slightly higher level than did prices in the Springfield district (4a) and considerably higher than prices in the Champaign district (6). Prices in the Mattoon district during 1925-1931 represented more nearly seed prices than did prices in either of the other two districts and by late May reached a midway position between those of the other two dis- tricts, representing an adjustment of the demand and supply situation of the three areas. The average seasonal increase in price was 37 cents. The trends were similar in all three districts. Comparison of records from 151 firms handling soybeans from 1932\ SUPPLY AND MARKETING OF SOYBEANS 515 both the 1926 and 1930 crops shows that the prices paid to producers for soybeans from the 1926 crop, except for a slight decrease in Janu- ary, increased gradually up thru June (Table 40). Prices for July are generally not shown. Because of the backwardness of the 1927 plant- ing season, however, a market was maintained for the 1926 crop about a month longer than usual. Prices for the 1930 crop were rather uni- form thru May, with a downward trend for the remainder of the crop year. Prices after May were not mainly for seed beans, as the demand for seed had been practically supplied by this time. TABLE 40. AVERAGE PRICES PAID TO PRODUCERS FOR SOYBEANS BY 151 IDENTICAL COUNTRY ELEVATORS AND LOCAL SEED DEALERS, ILLINOIS, OCTOBER-JULY, 1930 AND 1926 CROPS (Dollars per bushel) Num- Crop ber of Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Aver- reporting reports age district 1930 crop 1 Dixon 21 17 9 21 19 33 15 7 9 151 $ .95 1.50 1.10 1.05 1.35 1.10 1.40 $1.55 $1.00 $.... $.... $.... 1.15 $1.25 1.00 $1.25 $.... $.... $1.20 1.20 1.15 1.05 1.15 .90 1.45 1.50 1.50 $1.20 3 Chicago 1.00 1.20 1.30 1.00 1.35 1.30 1.10 1.25 1 15 1.30 1.10 1.10 1.05 1.65 1.55 1.15 1.05 1.45 1.15 "95 1.65 1.10 1.00 1.00 1.50 1.55 1.15 1.00 .70 1.20 1.50 .60 .95 .55 1.40 .55 ".30 1.50 6 Champaign 6a Mattoon 9 Hanisburg 1.50 1.40 $1.25 $1.25 i.50 1.50 $1.20$1 30 1.60 $1.35 1.45 $1.30 $1.20 1.50 $1.20 $ .90 $ .80 State 1926 crop 1 Dixon 21 17 9 21 19 33 15 9 151 $2.75 1.00 i!65 i!75 iiss $.... 2.10 $2.70 $.... $3.35 $2.90 $.... $2.90 1.65 2.00 2.00 1.95 1.85 2.00 2.25 1.55 $2.00 3 Chicago 4 Galesburg 2.00 2.00 4a Springfield i.60 1.55 1.35 1.70 i'.'so $1.70 1.65 1.50 1.40 2.00 2.40 1.50 $1.75 2.00 1.80 1.60 2.00 2.40 1.50 $1.85 1.80 2.00 1.70 2.00 i'.SO $1.80 2.00 2.15 1.75 1.50 i'.so $1.85 2.15 2.40 1.85 1.90 2.20 1.90 $2.15 2.10 1.60 2.00 2.00 i!so $1.90 2.20 2.20 1.90 2.00 iiso $2.15 2.35 2.40 2.50 2.50 2.00 1.50 $2.30 2.10 2.00 2.25 2.50 iiso $2.05 6 Champaign 7 Carbondale 9 Harrisburg State Wholesale Prices of Soybeans. The markets of most interest to Illinois handlers are Chicago, St. Louis, Louisville, and Kansas City. Monthly and yearly prices are available for these markets beginning with the 1919 crop, and weekly figures beginning with the 1925 crop. Prices at the various markets differ from year to year and quite often from month to month within the year. Since 1924, Kansas City prices of soybeans have been higher than those of the other three markets, except in 1927 and 1929, when prices at the Kansas City market 516 BULLETIN No. 386 [December, dropped below those of the other markets, and in 1931, when prices in that market ranked third, preceded by Chicago and Louisville (Table 41). Wholesale prices for the months of January to May for the five years ended 1931, disregarding Minneapolis, were highest in Chicago at $2.45 a bushel, and lowest in Baltimore at $2.10. TABLE 41. AVERAGE YEARLY WHOLESALE SELLING PRICES OF SOYBEAN SEED, SELECTED MARKETS; QUOTATIONS GIVEN FOR FIRST FIVE MONTHS OF THE FOLLOWING YEAR, 1919-1931 CROPS (Dollars per bushel) First five months of Chicago St. Louis Louis- ville Kansas City Minne- apolis Balti- more 1920. . . $6.00 $5.75 $5.40 $5.70 $6.10 $4 75 1921 4.75 3.10 2.65 5.70 2.20 1922 . 2 15 2 45 2 25 2 10 3 00 2 OS 1923 2.70 2.85 2 60 2 45 3 60 2 35 1924 2.50 2.80 2.55 2.50 3.45 2.50 1925 2.35 2.30 2.30 2.45 2.65 2.90 1926 2.50 2 45 2 45 2 55 3 00 2 20 1927 2.85 2.60 2.30 2.25 3.05 1.80 1928 1.80 1.90 1.95 2.10 2.25 2.00 1929 . . . 2.55 2 65 2 50 2 35 2 55 2 40 1930 2.35 2.20 2.20 2.95 2.55 2.10 1931 2.60 1.85 2.30 2.00 2.15 2.25 1932 . . . 85 95 75 95 1 05 1 00 Average of 10-year period 1922- 1931 $2.45 $2.40 $2.35 $2.35 $2.80 $2.25 Average of 5-year period 1927- 1931 $2 45 $2 25 $2 25 $2.35 $2.50 $2.10 Retail Prices of Soybeans. Retail selling prices of soybeans have tended to be from 5 to 25 percent higher than wholesale prices. There has been less seasonal variation in retail prices than in wholesale prices, but as wide a range between states (Table 42). As in the case of prices referred to previously, retail prices were lower in the corn-belt states, especially in Illinois and Indiana, than in any of the other states. Ken- tucky prices have averaged well toward the top, but they have fluc- tuated widely because of variations in local supplies in that state which in years of shortage have made it necessary to bring in supplementary supplies either from Illinois and Indiana or from these states and! North Carolina. Average Illinois prices per bushel for the six years< 1925-1930 were as follows: paid producers, $1.39; wholesale, $2.39;. and retail, $2.52 (Table 43). The spreads between producers' and! wholesale prices in Illinois were somewhat wider than for most other states since producers' prices in Illinois included amounts paid for beans going to oil mills as well as for those sold for seed. The wide! spread between producers' prices and wholesale prices in Illinois, in| addition to reflecting the influence of prices paid to producers for SUPPLY AND MARKETING OF SOYBEANS 517 beans going to oil mills, reflected costs of marketing services, including profits received by both local and wholesale dealers, part of which was TABLE 42. RETAIL SELLING PRICE OF GOOD-QUALITY SOYBEAN SEED IN SELECTED STATES," MARCH-MAY, 1926-1932 (Dollars per bushel) Year and month Illinois Indiana Iowa Ken- tucky Mis- souri Ohio Ten- nessee 1926 March 2 $2.70 $2.65 $3.00 $2.65 $2.80 $2.80 $2.20 March 30 2.65 2.65 2.95 2.80 2.80 2.80 2.20 May 1 2.80 2.90 2.95 2.90 2.85 3.10 2.20 1927 March 1 2.75 2.75 3.35 2.65 2.85 3.00 2.10 April 1 2.80 2.75 3.50 2 70 2.75 3.00 2.50 May 1 2.95 2.85 3.50 2.50 2.95 3.10 2.00 1928 March 1 2.30 2.45 3.00 2.60 2.75 2.30 2.30 April 1 . 2 30 2 30 2.90 2 50 2 55 2.50 2.25 May 1 2.35 2.45 2.75 2 65 2.65 2.45 2.50 June 1 2.45 2.50 2.80 2.65 2.70 2.60 2.50 1929 March 1 2.45 2.35 2.80 3.00 2.70 2.85 3.05 April 1 2 80 2 65 2.70 2 95 2 85 2.65 2.85 May 1 2.80 2.60 2.90 3.10 3.05 2.90 2.80 June 1 2.85 2.65 2.95 3.00 3.25 2.90 3.05 1930 Feb. 26 2.50 2.65 2.90 2.80 2.90 2.80 2.50 March 25 2 40 2 65 2 70 2 70 2 85 2.85 2.50 April 30 2 95 2 55 2.95 2 90 3.05 2.80 2.65 May 27 2.75 2 50 2.95 3.35 2.80 2.95 3.05 1931 Feb. 25 1.80 1.70 2.25 2.50 2.10 2.05 2.15 March 25 1.90 1.65 2.15 2.35 2.05 1.80 2.10 April 25 1 80 1 55 2 15 2 65 1.90 2.00 2.25 May 26 1.65 1.40 2.00 2.25 1.90 1.75 2.25 1932 Feb. 25 .80 .70 1.35 1.10 1.00 .85 1.20 March 25 .80 .65 1.15 .95 .90 .80 1.05 April 26 .75 .65 1.15 1.30 .95 .85 1.15 May 24 .65 .65 1.20 1.00 .85 .80 1.15 North Carolina is omitted because separate price reports are not available for this state. TABLE 43. AVERAGE PRICES PAID TO PRODUCERS FOR THRESHER-RUN SOYBEANS AND AVERAGE WHOLESALE AND RETAIL SELLING PRICES, ILLINOIS, 1925-1931 CROPS (Dollars per bushel) Crop of 1925 1926 1927 1928 1929 1930 1931 Average price paid producers $1.75 $1.60 $1.30 $1.30 $1.30 $1.10 $ .40 Average of Chicago and St. Louis wholesale prices 2.50 2.75 1.90 2.60 2.30 2.20 .90 Average retail price 2.75 2.85 2.30 2.75 2.65 1.80 .75 518 BULLETIN No. 386 [December, compensation for the speculative risk involved in disposal of the crop for seed. The spread between wholesale and retail selling prices in- cluded only one profit. Price Differences Among Varieties of Soybeans in Illinois. Vari- eties of soybeans differ in price in the various districts of Illinois, much depending upon the use for which they are grown, the supply, and the prospective demand. Compared with the unweighted average of the prices quoted for all varieties in county farm-bureau publications (Table 44), the prices indicated for selected varieties were as follows for the crops harvested. TABLE 44. AVERAGE ADVERTISED PRICE OF SOYBEAN SEED OFFERED FOR SALE BY PRODUCERS, BY VARIETIES, ILLINOIS, MARCH-JUNE, 1920-1930 (Dollars per bushel) Variety 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 Aver- ; ' age j 1928-30 Illini $2.70 2.05 2.05 1.90 2.00 $2.10 1.95 1.90 2.05 2.25 $1.40 1.35 1.25 1.55 1.80 $2.05 1.80 1.75 1.85 2.00 Manchu 2.65 1.95 2.15 2 35 2.55 2.30 2.45 2 65 2.30 2.15 2.35 2 75 2.25 1.90 2.40 2 45 2.45 2.05 2.60 2 40 1.85 1.90 1.85 1.90 A. K . 4.85 5.05 4 50 2.30 2.30 2 05 Midwest Ebony Virginia 2.75 2.35 2.60 2.75 2.95 2 70 3.40 3.30 2 55 2.45 2.50 1.90 2.45 2.55 2.30 2.35 1.90 1.95 2.50 2.00 2.00 2.30 2.50 2.15 1.90 2.75 1.40 2.25 2.40 J 1.85 Wilson 3 10 2 10 Peking 3.95 2.30 1.75 2.50 2.00 2.05 2.50 1.80 2.25 2.00 2.35 3.00 2.55 2.65 2.35 2.10 2.95 1.90 2.95 2.50 2.15 2.60 iiso 2.55 2.00 2.40 i!60 2.60 2.15 2'.35 1.90 2.00 2.40 2.10 2.35 2.25 2.00 2.00 2.00 2.20 $2.15 $2.60 2.00 2.50 2.35 2.25 i! 2.00 2.20 $2.15 $2.30 2.50 iiss 1.50 i!i6 1.20 3.25 $1.80 $2.20 2.30 2.30 2.20 2.00 2.00 1.75 1.75 2.55 $2.08 $2.35 : Ito San Ilsoy Haberlandt Ohio Dunfield 6.50 Mansoy 3.85 $4.80 $3.95 1.95 $2.30 $2.30 2.55 $2.25 $2.75 2.40 $2.55 $2.65 3.00 $2.65 $2.35 2.85 $2.35 $2.45 2.45 $2.45 $2.75 2.00 $2.00 $1.90 Average Wholesale average of Chicago and St. Louis during the five years 1924-1928: above average, Virginia, Ilsoy, Peking, Wilson V, Ebony, and Haberlandt ; and below average, Blaclq Eyebrow, Midwest, Manchu, Ohio, Ito San, and A. K. For the 1929 and 1930 crops Ebony and Haberlandt had moved into the below- average group and the Ito San into the above-average group. The tendency for hay varieties to carry higher prices than commercial varieties is due not only to the fact that hay varieties usually produce- less seed per acre than commercial varieties, but also to the fact that supplies are relatively smaller since most of the acreage is cut for hay. These price differences have persisted thruout most of the period for; which variety price data are available (Fig. 23). The average difference in quotations given by country handlers on 1932} SUPPLY AND MARKETING OF SOYBEANS 519 the 1926 crop on account of variety was 65 cents, and for the 1930 crop 85 cents. During the period 1924-1931 the A. K. variety averaged lowest in a majority of the crop reporting districts as well as for the entire state. 3.50 3.00 u I 5)2.50 cr E 2.00 1.50 1.00 VIRGINIA \ \r 921 '22 A.K: \ 5 NV \ .V ^ ^ '23 '24 '25 26 CROP YEAR \\ a rt V S '21 '28 '29 1930 FIG. 23. AVERAGE PRICES OF SOYBEAN SEED OF SELECTED VARIETIES IN ILLINOIS, 1921-1930 CROPS New promising varieties of soybeans usually run highest in price until there is an abundance of seed, and then may become the cheapest of all varie- ties, as in the case of the Manchu. On the other hand, varieties of decreasing importance may at times increase noticeably in price as a result of unusual scarcity. The relative position of hay and seed varieties varies from year to year on account of dissimilar changes in supplies. Virginia was highest for the entire state and in the Mattoon and Car- bondale districts (6a and 7). Black Eyebrow averaged highest in the Springfield district (4a), and Ebony in the Champaign district (6). Prices of Soybean Oil Prices of soybeans for other purposes than seed are determined largely by the two major products: oil and meal. Price relationships 520 BULLETIN No. 386 [December, between these two products have been such that the oil from a bushel of beans has been worth less than the meal. During considerable periods of time, therefore, soybean oil has been produced when the returns from it alone would not warrant its production. The demand for soybean oil cannot be studied independently of the demand for other important vegetable oils, such as linseed, cotton- seed, corn, and coconut oil. 1920 '21 '22 '29 '30 '31 1932 FIG. 24. PRICES OF SOYBEAN OIL AND FOUR OTHER LEADING VEGETABLE OILS AT NEW YORK, BY MONTHS, 1920-1932 While there was considerable variation in the prices of vegetable oils from the middle of 1922 to the middle of 1929, the trend was practically level. Since then the prices of these oils have gradually moved downward. From 1926 to 1928 soybean oil had a favorable price position compared with other oils. Thiss position has been somewhat reversed since the fall of 1930. Prices of the drying oils in the United States have usually been higher than those of other vegetable oils. When the available supply of quality soybean oil cannot be used in the paint, varnish, linoleum, and other industries using drying oils, and a part of the existing stock must be sold in competition with lower-priced oils, these lower-priced uses will determine the general level of prices for soybean oil. There is no distinction between prices of domestic and imported oil, but good domestic oil which ordinarily is from crude to semirefined in quality usually commands a slight premium over imported crude oil. Comparing soybean oil prices with linseed, cottonseed, coconut, and 1932} SUPPLY AND MARKETING OF SOYBEANS 1920 '21 "22 '23 *24 '25 '26 '27 '28 521 30 *3t 1932 4 2 50 a UJ _p - / w^/v> - 1 ; 'V- V \ . ^LINSEE fc - A *f" A iv '"A X ^xA r> a. i/> 5.4 UJ O -6 -B i SOYBEAr JCHU A E V *>J - - 1920 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 1932 I92O '21 -22 '23 24 '25 '26 1920 '21 '22 '23 124 '25 '26 27 '28 29 30 '31 1932 FIG. 25. PRICES OF SOYBEAN OIL COMPARED WITH PRICES OF FOUR OTHER LEADING VEGETABLE OILS AT NEW YORK, BY MONTHS, 1920-1932 The price of soybean oil was nearest that of linseed oil and farthest from that of coconut oil during most of the period between 1920 and 1930. More recently the price of soybean oil has moved down into direct competition with cottonseed oil. Linseed oil prices have remained above both soybean oil and coconut oil. corn oil prices, as quoted in the New York market for the period 1920-1931 (Figs. 24 and 25), the following facts are to be noted: 1. Considering price primarily during the period 1921-1931, soy- bean oil could have profitably replaced only linseed, and for a period 522 BULLETIN No. 386 [December, of about three years, 1926-1928, it was higher in price than linseed oil. 2. Compared with linseed oil, the price of soybean oil was slightly lower from 1920 thru 1925, higher from 1926 thru the first half of 1929, and lower for the balance of the period. The most common re- lationship was from a basis of parity to 2 cents below. There was a tendency for soybean oil to be somewhat more stable in price than lin- seed oil from 1923 thru 1929. Since the soybean oil was largely im- ported, it was probably easier for its price to remain fairly constant. 1928 1929 93t 1932 FIG. 26. PRICES OF SOYBEAN OIL AND FIVE OTHER LEADING VEGETABLE OILS AT IMPORTANT MILLING CENTERS, 1928-1932 Shifts in vegetable oil prices since 1928 have been such that soybean oil has moved from a price position where it was influenced mostly by linseed oil to one where it is influenced by almost all oils. Soybean oil prices of the first quarter of 1932 reflected not only the large stocks of soybean oil on hand but of all other vegetable oils and animal fats as well. 1932\ SUPPLY AND MARKETING OF SOYBEANS 523 3. Soybean oil showed a distinct premium over cottonseed oil during most of the period 1920-1931 and hence could not compete with cottonseed oil on a price basis. The increased soybean price premium after 1923 was caused partly by decline in cottonseed oil prices and partly by rise in soybean oil prices. 4. The prices of coconut oil represent Manila oil beginning with 1922. Soybean oil showed a price premium over coconut oil from early in 1922 during the remainder of the period except for a few months at the end of 1925 and since December, 1931. Tariffs on vegetable oils effective since 1922, except those on imports from the Philippines, have been an important factor in widening the spread in price between coco- nut oil and other vegetable oils. 1920 22 "23 '24 '25 "26 '27 '28 "29 30 1931 FIG. 27. PRICES OF SOYBEAN OIL AT DAIREN (MANCHURIA), HULL (ENGLAND), AND NEW YORK, 1919-1932 Prices of crude soybean oil at leading markets in various countries have had a tendency to fluctuate together. Prices have been highest in the markets farthest from the important sources of soybean supply and nearest the centers of consumption. Tariff duties have widened the spread between New York and foreign markets since 1922. All prices are on a gold basis. 5. The production of corn oil has been steady and prices have moved in accord with those of cottonseed oil except that they have fluctuated less, and have usually been at a slightly higher level. The price relation of corn oil to soybean oil has therefore been similar to that of cottonseed oil to soybean oil. The price decline in all of the vegetable oils, which, except for linseed oil, began in the latter part of 1929 and included linseed oil after the latter part of 1930, has been due to a slump in general prices, depressed demand, and to increased stocks of all vegetable oils (Fig. 26). Prices of soybean oil for the period 1920-1930 were lower at 524 BULLETIN No. 386 [December, Dairen, Manchuria, than at either Hull, England, or New York City* (Fig. 27). Dairen is an important exporting point for Manchurian oil, and Hull is an important oil importing and manufacturing center. Prices at New York and Hull were about on a parity until the United States imposed an import duty in 1921, at which time the price at Hull was slightly lower than at New York. Following the imposition of the duty, the margin between New York and Hull has widened until it has become larger than the duty plus the additional freight cost. Prices of Soybean Oil Meal Domestic soybean oil meal was on the United States market to only a limited extent before 1928, tho the imported product has been usec for a longer period on the Pacific coast because of cheapness of ob- taining foreign supplies and because of high costs of obtaining do- mestic cottonseed and linseed meal. Current information on soybean oil meal prices has not been readily available until recently. The bulk of this product has been sold on con- tracts between processors and manufacturers of mixed feeds, open- market sales being uncommon. Not until the spring of 1931 was soy- bean oil meal included in the weekly Feed Market Review of the U.S. Department of Agriculture. Soybean oil meal sells in direct competition with cottonseed and linseed meal, its price being related to the prices of these two feed- stuffs. During the 1928-1930 period, when soybean oil meal was being used to an increasing extent, linseed meal sold at a higher level than cottonseed meal, with soybean oil meal prices conforming more closely to those of linseed meal, as soybean oil meal was being used extensively as a substitute for the latter. With the lower price-levels that were established toward the end of this period, the prices of the various oil meals have come closer together. Beginning with the 1931 crop soybean oil meal prices have been nearer to those of cottonseed meal, than to those of linseed meal (Fig. 28). In the absence of data concerning soybean oil meal prices extend- ing over a long period, the following tentative statements may be re- corded: first, a limited supply of soybean oil meal can be sold on the basis of prevailing prices of linseed meal because it will be used as a direct substitute ; second, as the supply is increased, soybean oil meal will have to compete more directly with the lower-priced cottonseed meal and its price will necessarily conform more or less to that of cot- tonseed meal ; third, an increase in the supply of the soybean oil meal should bring linseed meal prices more nearly into line with cottonseed 1932} SUPPLY AND MARKETING OF SOYBEANS 525 NOI 526 BULLETIN No. 386 [December, meal prices, which would lessen the possibility that either linseed or soybean oil meal would sell at a marked premium over cottonseed meal. The supply of linseed meal in relation to the demand for it was apparently such for a few years before 1930 that it would sell at a premium over cottonseed meal. Soybean oil meal is now being used as a substitute material for linseed meal, as evidenced by changes made in the formulas of certain manufacturers of mixed feeds. The increased production of soybean oil meal has had precisely the same effect as an increase in production of linseed meal on the price of the latter. Neither the use of soybean oil meal in foods nor its use in ferti- lizers need be given much consideration from the standpoint of in- fluence on soybean prices at the present time. The demand for soy- bean meal by firms in the United States using it in the manufacture of food products is not large enough to raise the price of meal above feed prices. As fertilizer, its value would be below its value as a feed, and there is little likelihood that production will be increased to the extent that it will become economically feasible to use soybean oil meal for fertilizer. In the orient where soybean cake is extensively used as a fertilizer, there is now a question about its being able to meet competition from other nitrogenous fertilizer. 23 * Prices of soybean oil meal have been lowest in the corn-belt states (Fig. 29). Prices at St. Louis and Chicago have not differed markedly. Prices at Kansas City and Minneapolis have varied by a somewhat wider margin than the Chicago and St. Louis prices, the former markets being farther away from the source of supply. Use as Affected by Prices Prices of products whose functions may be largely supplied by substitutes, as in the case of soybeans, are influenced by the total sup- ply of all competing products satisfying the demand for a given type of product rather than by the supply of any single product. In the case of soybean hay, the price is almost entirely a local matter since very little of it enters commercial channels. This price is largely determined by the price of other hay and feed in the area. The price of soybeans for crushing purposes is dependent on the supply available for that purpose and on the supply and price of cot- tonseed and flaxseed in relation to the demand for the resulting products. Demands effective in determining prices in southern and eastern states are those for seed and for feed; and in the south-central por- tion of the corn-belt states, for home-grown feed and for crushing 1932] SUPPLY AND MARKETING OF SOYBEANS 527 Si ry NOI a3d sdvnnoo CO -7. & k> +? .* i/, X HH "> O O .o u t- *> hN o^ 528 BULLETIN No. 386 [December, products. Toward the northern boundary of the corn-belt states com- petition centers upon soybeans and other crops in feeding; and in the western part of the corn belt, upon its uses for seed and for feed. In northern Illinois the dominant competition is between soybeans and other crops for feeding; in the central portion of the state, extending well to the south, between feed and mill products ; and in the southern- most portion, between seed and feed. Of the three important demands absorbing soybeans and soybean products namely, demands for seed, for feed, and for crushing the seed demand naturally has priority and tends to result in price premi- ums for such soybeans as meet the requirements. Since the point at which the soybean seed demand is satisfied has already been reached in much of Illinois, it is expected that the demand for feeding or crush- ing will absorb an even larger amount of beans in the future. The price that is paid for soybeans for the use which absorbs the new surpluses as expansion proceeds determines the price at which most of the beans move. Exceptions to this are premiums for local use arising from local deficit or for seed use associated with higher quality. The tendency for newer uses to set the price of the whole crop in any one area also operates indirectly to set the price in other areas. In so far as the prices of vegetable oil and oil meal are high enough to cover, in addition to the cost of the raw product, the costs of trans- portation, processing, and merchandising incident to extracting the oil and getting the meal into the hands of users, crushing mills should be able to absorb a growing surplus. A basic consideration is the differ- ence in net return obtained by using soybeans as a hay crop on the farm and by gathering the beans and selling them to mills. The greatest demand at present is for soybeans for feeding, including both feeding on the farm where raised and inclusion in mixed commercial feeds. MEETING THE PRICE RISKS IN MARKETING Shippers, dealers, and crushers holding large supplies of soybeans are confronted with possibilities of change in prices of beans and bean products. Industrial establishments using beans and bean products as raw materials are confronted with hazards of price change which can- not always be avoided by forward sales of final products. Changes favorable to the one group may be unfavorable to the other. Even in the simplest transaction involving a movement of soy- beans there is at least a small risk of adverse price change. As in sales 1932] SUPPLY AND MARKETING OF SOYBEANS 529 of grain, whether sold "on track," "to arrive," on consignment, or thru pooling arrangements, these risks must be assumed by someone.* The soybean crop differs from numerous other crops in that it has been handled with a minimum use of organized exchanges. None of the exchanges have made provision whereby hedging transactions could be undertaken directly in soybeans, in soybean oil, or in oil meal. To only a very limited extent have attempts been made to hedge soybeans or the oil or meal products by future contracts made in terms of flax- seed or in terms of products of cotton more or less analogous to soy- bean oil and meal. Except for the shortest of periods, the movements of prices of these two types of products have not been sufficiently parallel to justify using one product as the basis for hedging against adverse price movements in the other. There are a number of conditions that must be met before hedging transactions could be successfully carried on in commodities advancing into commercial prominence, such as soybeans and soybean products. In order that a commodity may be suited to the development of futures transactions it must meet requirements as follows: (1) It must be known and its value understood broadly enough by the general public, as well as by the special trade by which it is used, that it will attract investment and speculative buying and selling in periods of price fluc- tuation. (2) It must be easily transferred from one marketing position to another. This is essential if cornerings and congestions are to be avoided and if users, especially where they are not numerous, are to be prevented from manipulating the market to their immediate advant- age. (3) The commodity must have a fairly large annual commercial volume enjoying the liquid characteristic referred to and should have offerings fairly well spread thruout the marketing year. (4) The com- modity should be fairly free of entanglements or surprises where de- liveries are made in pursuance of contracts. In addition to the above characteristics it would be desirable for a central market attempting to create futures facilities for soybeans or soybean products to be so situated that billing thru that point could be used to advantage. A product as complex as soybeans will not likely be made the basis for future trading on an organized exchange so long as the volume handled is not greatly in excess of the amounts which have thus far moved thru any single domestic market center. Altho hedging is now scarcely possible in connection with soybeans "Descriptions of the methods referred to are given in many standard treatises on marketing and, with special reference to the problems of price risks, in Hoffman, G. W., "Future Trading and Cash Grain Marketing" Circular 201, U. S. Department of Agricuhurc, 1932. 530 BULLETIN No. 386 [December, or soybean products, processors who distribute the risk on part of their purchases by forward sale of their mill products may attain a result no less satisfactory. Such sales of soybean oil meal to large feed dis- tributing companies have been quite common. The Soybean Marketing Association developed its policy on rather original lines largely in response to recognized need for handling price risks. The contract used by the association in connection with the sale of the 1931 crop of soybeans was an attempt to distribute the risk be- tween the processors and the producers. The method is described on page 490. The processors carried all of the risk of the price falling below a certain point ; from that point on the risk was divided. The as- sociation has devoted its efforts not only toward developing larger out- lets for its products, but also toward putting supplies into a better marketable position and organizing sales and settlements so as to minimize and mutualize the risks of price changes within the market- ing period. INTERNATIONAL TRADE IN SOYBEANS AND SOYBEAN PRODUCTS In the foreign trade of the United States imports of soybean oil have appeared since 1910 and of soybeans since 1914. The United States exported domestic beans to Europe in quantity for the first time during the fall of 1931, more than 2 million bushels being shipped from the 1931 crop. The chief source of world trade in soybeans is Manchuria. From this source soybeans and soybean products have moved principally to other parts of China, particularly the southern part, to Japan, and to countries of northwest Europe. Previous to 1907, when a small lot was shipped to England, the trade was confined largely to oriental regions, particularly to China and Japan. Later expansion has paral- leled the economic development of Manchuria which followed (1) the Russo-Japanese war of 1906, (2) the developmental activities of the South Manchurian Railway, which was taken over by Japanese in- terests at the close of that war, (3) the large migration of Chinese into Manchuria, and (4) the construction in recent years of other railroads by Chinese interests. Soybeans. Japan has served as a marketing intermediary for some of the Manchurian soybean crop (Table 45). A small amount of beans has been reexported from the Netherlands also. For a time the United Kingdom enjoyed a monopoly in the trade outside of the orient, but Germany and France soon adjusted con- ditions so as to share this trade. 1932] SUPPLY AND MARKETING OF SOYBEANS 531 TABLE 45. EXPORTS OF SOYBEANS FROM SELECTED EXPORTING COUNTRIES, 1923-1930 (Thousands of pounds) Calendar year Total China* Japan including Chosen Nether- lands 1923 350 525 349 590 923 11 1924 471 136 470 033 876 227 1925 405 224 404 090 824 310 1926 435 528 434 268 826 435 1927 563 986 562 843 1 087 90 1928 797 799 796 768 952 77 1929 912 521 911 472 949 81 1930 917 520 916 685 816 17 b These figures are for yellow soybeans only, but yellow soybeans include nearly all the Chinese soybeans, according to Paul O. Nyhus, Agricultural Commissioner, United States. b Eight months. TABLE 46. IMPORTS OF SOYBEANS INTO SELECTED COUNTRIES, 1913 AND 1919-1931 (Thousands of pounds) Calendar year Total of eight countries 1 Denmark Japan including Korea France Germany Nether- lands United Kingdom United States 1913. 336 262 105 963 99 (b) 60 746 169 454 1919. 387 547 173 116 72 162 137 901 4 368 1920 243 562 170 764 1 45 131 8 279 16 251 3 136 1921 387 435 104 155 3 139 600 4 567 135 164 3 946 1922 511 901 175 271 23 190 493 11 413 131 165 3 536 1923. . 1 722 732 284 221 950 040 389 195 348 36 557 252 529 3 648 1924 1 891 484 345 167 947 697 70 302 761 41 905 249 700 4 184 1925 2 392 675 250 149 956 461 18 741 171 80 464 360 600 3 812 1926. 2 284 384 385 051 936 136 15 815 787 41 693 101 974 3 728 1927 . . . 2 712 105 348 406 884 710 1 270 062 21 907 182 831 4 189 1928 3 872 697 472 469 1 040 128 17 564 1 868 892 40 180 429 208 4 256 1929. 4 613 330 518 753 1 261 690 3 798 2 257 198 108 304 459 250 4 337 1930 3 602 935 388 593 1 002 936 1 208 1 959 417 42 397 204 532 3 852 1931 4 317 306 524 788 1 210 628" 23 840 2 236 726 70 950 246 834 3 540 Imports into Sweden in the years 1928 to 1931 were 200, 221, 108, and 69 thousands of pounds respectively; imports into Italy in the years 1928 to 1930 were 141, 195, and 18 thousands of pounds. b Less than 500 pounds. "Figures for 1931 not yet available for Korea and Italy. Importations of beans and oil into countries outside of the orient in 1913 were fairly equal, considering oil as representing 10 percent of the weight of the beans from which extracted. The total importation of beans into these countries showed little increase prior to 1922 (Table 46). Since then the imports have moved steadily upward, reach- ing seven times the 1922 figure by 1930. The leading importing countries for beans have been Germany, Denmark, and the United Kingdom, most increase having been shown in Germany. Importation into the United States has always been small. Japan, including Korea, has led in the importation of soybeans into the orient. Soybean Oil. The importation of soybean oil into countries out- 532 BULLETIN No. 386 [December, side of the orient had increased tenfold over 1913 by 1919. Since 1919 there has been considerable variation from year to year, but no appre- ciable permanent increase. The increase between 1913 and 1919 was largely influenced by war demands. The leading importing countries have been the Netherlands and the United Kingdom. Importations into these countries and into France and Germany have increased somewhat since 1919, while those into the United States and Denmark have decreased (Table 47). Germany, Denmark, and the United King- TABLE 47. IMPORTS OF SOYBEAN OIL INTO SELECTED COUNTRIES, 1913 AND 1919-1931 (Thousands of pounds) Calendar year Total of seven coun- tries* Den- mark Japan includ- ing Chosen F ranee Ger- many Nether- lands United King- dom United States 1913 27 895 416 6 922 6 336 14 221 1919 294 514 5 610 8 365 84 733 195 808 1920 254 407 11 733 16 761 48 232 80 094 33 607 112 214 1921 185 435 717 3 955 54 504 73 174 35 802 17 283 1922 231 629 5 565 3 918 91 436 68 226 45 190 17 294 1923 230 375 7 488 1 048 6 470 58 285 65 838 49 567 41 679 1924 200 278 5 975 188 10 586 42 166 67 298 65 740 9 125 1925 269 097 9 703 33 16 073 73 793 84 793 65 209 19 493 1926 308 055 2 288 128 13 057 44 094 109 709 108 067 30 712 1927 353 936 4 394 115 24 759 25 290 166 388 118 075 14 915 1928 181 433 1 267 19 064 2 466 91 249 55 196 13 116 1929 168 504 699 17 163 4 376 93 739 33 038 19 489 1930 241 952 2 084 25 248 28 832 124 768 56 670 4 348 1931 160 852 1 908 7 200>> 20 442 62 174 64 212 4 916 Imports into Algeria in 1928, 1929, and 1930 were 3,542, 133, and 1 1 thousands of pounds respec- tively; into Austria 8,350, 9,887, and 5,894 thousands of pounds; and into Sweden 10,019, 10,433, and 30 thousands of pounds. b Eleven months only. dom have imported raw beans for crushing to a much larger extent than has France. The Netherlands has been more prominent in the importation of oil. Denmark is the only soybean importing country exporting most of her soybean oil. The United Kingdom and the Netherlands export about half of their soybean oil supply; in the case of the other countries the exports have been negligible except for Germany since 1927 (Table 48). Exports of soybean oil, however, come mainly from Manchuria. Soybean Oil Cake and Meal. Trade in soybean cake and meal has been of much less importance for all of the leading importing countries than that in soybeans and soybean oil, but has shown a gradual in- crease. Importations into .these countries for 1927 were: Denmark, 32,100 tons; the United Kingdom, 29,700 tons; and the United States, 27,000 tons. Nearly all exports of cake and meal have originated in Manchuria and have averaged about 1,375,000 tons for the five-year 1932} SUPPLY AND MARKETING OF SOYBEANS 533 TABLE 48. EXPORTS OF SOYBEAN OIL FROM SELECTED COUNTRIES, 1913 AND 1919-1931 (Thousands of pounds) Calendar year Total of eight coun- tries* China Den- mark Japan including Chosen France Ger- many Nether- lands United King- dom United States 19J3 88 446 65 574 2 130 1 838 21 034 1919 372 377 314 876 12 614 32 14 813 2 327 27 715 b 1920 355 809 288 408 32 525 1 021 154 26 766 23 374 43 715 1921 237 362 153 110 13 157 403 1 414" 45 187 22 147 1 944 1922 263 858 197 310 16 273 1 124 28 556 18 137 2 458 1923 353 883 283 590 25 179 5 731 44 1 959 18 714 16 910 1 356 J924 384 202 282 863 33 207 9 265 ( d ) 8 553 18 416 31 497 2 264 1925 386 780 265 240 28 327 15 954 63 6 314 27 963 42 399 520 1926 492 282 355 631 31 391 19 236 67 11 160 37 447 55 019 1 567 1927 540 666 329 298 33 837 11 167 85 34 663 75 314 62 025 5 444 1928 347 884 125 625 46 466 10 870 213 73 140 35 509 48 919 7 142 1929 383 541 148 673 43 690 14 739 375 103 862 M XS.X 40 347 7 967 1930 384 738 251 860 28 610 34 156 24 6 930 22 998 35 198 4 962 1931 458 234 328 862 41 070 16 008 (A) 10 190 24 140 32 412 4 552 Exports from Algeria in 1928 and 1929 were 43 and 23 thousands of pounds respectively; from Sweden 16,796 and 15,911 thousands of pounds; from Austria in the years 1928 and 1929, 35 and 45 thousands of pounds, and in 1931 less than 1,000 pounds; and from Italy in 1931, 666 thousands of pounds. b july, December only. "April, 1921, to May, 1922. d Less than 1,000 pounds. TABLE 49. EXPORTS OF SOYBEAN CAKE FROM MANCHURIA AS A WHOLE AND FROM THE PORT OF DAIREN, WITH DESTINATIONS OF BEAN CAKE f FROM DAIREN, 1926-1931 (Tons of 2,000 pounds) Exports for year ended October 30 Location 1926-27 1927-28 1928-29 1929-30 1930-31 Exported from Manchuria 1 783 789 1 283 481 1 017 463 1 362 708 1 436 960 Exported from port of Dairen .... 943 035 900 738 To Japa n 716 717 673 583 To Korea 7 213 5 304 To Europe 20 403 38 805 To United States 42 018 18 850 To China 143 607 161 812 To other destinations 13 077 2 384 period 1926-27 to 1930-31 (Table 49). About 70 percent of this ex- portation for the two years 1929-30 and 1930-31 went thru the port of Dairen and was shipped mainly to Japan and China. Most of the cake and meal going to Europe was shipped to Germany. In 1929 Germany imported 29,400 tons of cake and meal, mostly from China and Italy, and exported 204,800 tons, which went to Denmark, the Netherlands, Finland, Sweden, and the United States. Soybeans and soybean products in international trade have been influenced greatly by the imposition of tariff duties. Among the lead- ing importing countries only the United Kingdom has admitted these imports duty-free. European countries usually permit beans to come 534 BULLETIN No. 386 [December, in duty-free but they levy a rather heavy duty on soybean oil. In some cases this is less when the oil is used for soap or other inedible purposes. The trend has been definitely toward encouraging the soy- bean crushing industry in these countries. PLACE OF SOYBEANS IN ILLINOIS FARMING For the first three years of the decade 1922-1931 the total equivalent solid acreage of soybeans in Illinois had an average yearly rate of in- crease over the preceding year of between 25 and 30 percent. During the last three years of this period the corresponding increase was' slightly over 15 percent. Planting intentions for 1932 indicated a falling off in acreage about equal to the recently prevailing amount of yearly increase. While it is possible that the curve of soybean acre- age may be substantially changed, it is doubtful whether it will develop a downward trend. It is possible for soybean acreage to continue to expand by the addition of areas substantially equal to those of recent years. It is likely, however, that a saturation point will be reached in the corn belt with soybeans occupying a much smaller proportion of the cultivated area than they occupy in Manchuria, the center of greatest concentration of soybean production. The amounts which individual farmers contribute to the market supplies of soybeans and soybean products represent the result of their adjustments to numerous conditions, some internal to their own farms as organized for production and other ends, others external to their farms, their localities, or even the central markets of their country as a whole. The introduction of the soybean crop was beset with the usual diffi- culties associated with new crops. Farmers have rather generally found one or more sufficient reasons, however, for giving either a small place or a large one in some cases, no doubt, too large a place to this important legume. Soybeans fit into the farm program in a variety of ways. The more important reasons for the rapid increase in the acreage devoted to this crop in Illinois have been the following: 1. Farmers have desired to substitute some crop that will take the place of oats in the rotation and be more profitable than oats when grown other than for feed or as a nurse crop. 2. The soybean is adaptable as a leguminous catch crop when red clover or another legume in the regular rotation fails to produce a satisfactory stand. 1932} SUPPLY AND MARKETING OF SOYBEANS 535 3. The soybean is acid-tolerant and will grow satisfactorily on soil that is too sour for the common clovers. 4. The soybean is able to produce a fair crop on land that is too poor for even poor results with many other crops. It should not be inferred, however, that the soybean is not at its best on fertile land. 5. The crop is valuable as a nitrogenous supplement to other home- grown feeds. 6. The soybean is a dual purpose crop, good either for hay or for seed. Frequently the farmer plants soybeans as hay insurance, realiz- ing that if his regular legume or hay crop is successful, he can cut his beans for seed and if his clover-hay crop is disappointing or is changed to a seed crop, he can use the beans as hay or as a green-manure crop. 7. The soybean crop has a favorable influence upon the crops which follow, particularly upon spring grain and corn, tho where the major portion of the crop is removed from the land, this beneficial effect is less marked than is the case with the clovers. 8. The soybean crop is free from attack by certain insects, such as chinch bugs, that are destructive to many of our crops. Forethought relative to the European corn borer probably stimulated the interest . of many Illinois farmers in soybeans, particularly in 1928. 9. Soybeans may be satisfactorily grown in place of late-planted corn when adverse weather conditions cause corn planting to be con- siderably delayed. A restraining factor influencing the expansion of soybean acre- age should be noted in connection with the recent rapid increase in acreage planted to this crop in the corn belt. Labor requirements for soybeans grown for hay do not fit in well with those for the major crops of the corn-belt region, and for soybeans grown as a cash crop these requirements conflict markedly with those of other crops, especi- ally with corn, on many farms. Recognition of the adaptabilities and limitations of soybeans with reference to the needs of Illinois agriculture has resulted in giving them a different place in the farming operations in the southern, cen- tral, and northern parts of the state. The crop is used in the northern part of the state not only for hay but also to some extent, when in- terplanted with corn, for grazing and ensilage ; in the central division the beans are mainly gathered ; and in southern areas of the state the crop is used for hay, with a recent trend toward gathering for com- mercial purposes. Altho soybeans are no longer an unfamiliar crop to most corn-belt farmers, they need to be more fully understood, both from the agro- 536 BULLETIN No. 386 [December, nomic and economic standpoints. In order to grow soybeans satisfac- torily, it is necessary to become familiar with all pertinent facts and not only give the crop timely and proper attention,* but exercise wise judgment as to how far to push soybeans in systems of farming where their requirements for labor, capital, and management must be viewed in relation to the requirements made by other lines -of production. Habits of the soybean plant differ from those of our common corn-belt crops and unsatisfactory results can sometimes be attributed to a lack of understanding of these habits and consequently of the methods of cultivation best suited to the plant, as well as to use of varieties not best adapted to the locality and purpose for which the crop was grown. In a surprisingly brief period soybeans have become the object of widespread attention among dealers and among leaders in numerous industries. The extent to which soybean oil can be used to advantage is being determined more and more accurately by research specialists in establishments producing paint, soap, and edible products. Peanuts, rather than soybeans, have been responsible for the fact that terminal market prices for hogs are quoted with "soft or oily hogs and roasting pigs excluded." Recently, however, the rising tide of losses encount- ered by packers 1 ' * 2 * using hogs from areas in the corn belt where soy- beans not soybean oil meal are fed, may serve as a warning that discounts for swine from such sections may become a serious factor. Generally speaking, soybeans have yet a long way to go before they are as widely known for their qualities as are the major farm products of the corn belt. It is probable that a crop which, from the standpoint of the final consumer, serves the purpose of several crops, cannot be expected immediately to occupy the place in the understanding of the layman that almost any one of the major products of corn-belt farms occupies. There is no doubt, however, that workers in many fields are discovering new features in this multi-product crop and are calling it to the attention of more and more people whose natural interest it touches. All of this growth of contact and information tends to fix soybeans more firmly in the national economy. "Bulletin 310 of this Station, "Soybean Production in Illinois," gives valuable cultural suggestions concerning the soybean crop. 1932] SUPPLY AND MARKETING OF SOYBEANS 537 SUMMARY The principal points emphasized in the present study include the following: 1. In recent years in which five reporting countries have produced over 7 million tons of soybeans, the production in the United States has been between one-third and one-half million tons. (p. 433) 2. There is no county in the United States where the percentage of cultivated acreage devoted to soybeans is more than half as large as the lowest percentage of the three provinces of Manchuria, (pp. 429-430) 3. Altho only a few farms in the United States were growing soy- beans twenty years ago, nearly 5 percent reported growing them in 1929. The proportion so reporting in 1929 was nearly 9 percent in the East North-Central division, and nearly 7 percent in the South Atlantic and East South-Central divisions, (p. 434) 4. Illinois and Indiana are rapidly becoming the leading source of commercial soybeans in the United States, while the soybean producers of Missouri and Ohio are turning to hay as their major product. North Carolina has produced hay and seed for a long time and has been an important producer of commercial beans, particularly of seed beans, (p. 439) 5. The acre-yield of gathered soybeans in the United States has fluctuated considerably from season to season, but it has apparently fluctuated less than the yield of most other standard crops. In Illinois and Indiana the acre-yield has been increasing, (p. 442) 6. The acreage of soybeans gathered for beans and that cut for hay have both been important in Illinois since 1922. In soybean acreage devoted to hay during the five-year period 1926-1930 Illinois averaged highest among the states. Of the total acreage of soybeans cut for hay in the United States in 1929 and 1930, Illinois had 16 percent. The corresponding figure for gathered beans was 36 percent, (pp. 443-444) 7. In the decade 1921-1930 soybeans were less profitable on the better land of the corn-belt than were corn, wheat, alfalfa, or red clover, but they were more profitable than oats or timothy. During this period the returns from soybeans, including seed and mill beans and straw, lacked 17 cents an acre of being sufficient to pay growing and harvest- ing costs and taxes and interest on the land. (p. 450) 8. Imports of soybean oil into the United States, highest in 1918, were cut to less than 3 percent of that record figure in 1924; after in- creasing from 1925 to 1929, they dropped back in 1930 and 1931 to figures below that of 1924. Imports of soybeans, highest in 1917, 1919, 538 BULLETIN No. 386 [December, and 1929, and imports of soybean oil meal and cake, highest in 1929, have declined since those years, (p. 454) 9. Reduction of imports into the United States was influenced by an increase in import duties. The present duty on oil cake and meal is about one- fourth as high as the recent average price of these commodities, the duty on oil is equal to or somewhat greater than the recent average price, and that on soybeans is about three times the recent average price, (p. 455) 10. Soybean oil produced from domestic materials in 1931 was about 2 percent of all vegetable oil so produced, and net imports of soybean oil were not quite one-third of 1 percent of the net imports of all vegetable oils that year. Cottonseed oil, linseed oil, and corn oil were the competing oils produced in largest amounts from domestic materials. Coconut oil (including copra), palm oil (including palm kernel oil), and linseed oil (including flaxseed) were the vegetable oils imported in largest amounts, (pp. 455-458) 11. The average of 3,500,000 acres devoted to soybeans in the United States in 1929 and 1930 was disposed of as follows: cut for hay, 56 percent; grazed, 15 percent; harvested for beans, 29 percent, (p. 459) 12. Soybeans or soybean products were used in 1931 in an extensive list of commodities, including feeds, industrial products, and food products, (p. 460) 13. Soybean oil meal is now being more generally recognized as a protein supplement than it was formerly, (pp. 462, 507-509) 14. The adaptability of soybean oil as a drying oil renders it im- portant in the industries producing paints, varnishes, waterproof goods, linoleums, and oilcloth. About one-tenth of the 37.2 million pounds of oil produced in the United States from crushing 4.8 million bushels of beans from the 1930 crop was utilized in linoleum and oilcloth, about one-sixth in edible products, nearly one- fourth in soap, and one- fourth in paints and varnishes, (pp. 464-473) 15. The use of soybean oil in hard soaps has been increasing, altho coconut oil is not likely to be displaced to a very large extent. Among soft soaps, the shampoo variety makes no bid for soybean oil, while the automobile variety depends upon it very largely, (pp. 471- 472) 16. Solvent-extraction plants may be more costly to install than either expeller or hydraulic-press plants, but where loss of solvent is economically minimized such plants would probably have the lowest cost of operation, (pp. 467-469) 1932] SUPPLY AND MARKETING OF SOYBEANS 539 17. The proportion of gathered beans that were crushed was 52 percent in Illinois in 1930 compared with 38 percent in the country as a whole, (p. 474) 18. The nine crop reporting districts of Illinois show wide differ- ences in marketing tendencies, but for the state as a whole 96 per- cent of the 1930 crop reported in a special Station inquiry as purchased was purchased locally. Of the total sold, 94 percent was shipped out of the locality where grown. For the 1926 crop the corresponding pro- portions were 74 and 72 percent respectively, (p. 476) 19. Soybeans of the 1926 Illinois crop, and more markedly of the 1930 crop, tended to leave the hands of local dealers in October and November, (pp. 478-480) 20. Manchu was the most widely distributed variety in Illinois in both 1926 and 1930. Virginia and Ilsoy, which are hay and seed varie- ties, are marketed in the four southern districts of the state, (p. 482) 21. As soybeans have become better established in Illinois, fewer growers have purchased their seed except in areas where seed fre- quently fails to mature or where the crop is harvested mainly as hay or forage. The selling of soybean seed by individual growers is on the decline, (p. 483) 22. Nearly all the soybeans entering marketing channels from the Illinois crops are first handled by country elevators or local dealers, unless they are grown in the vicinity of oil mills and are sold directly to the mills, (p. 486) 23. The guaranteed minimum prices for the 1928 and 1929 Illinois soybean crops stimulated production. Subsequent marketing arrange- ments fostered by the Soybean Marketing Association have influenced nearly all phases of soybean marketing, (pp. 487-491) 24. Most of the oil processed from Illinois soybeans is sold on contract thru vegetable oil brokers of Chicago. Soybean oil meal has been most commonly disposed of thru direct sales by processors to mixed-feeds manufacturers and to a less extent thru brokers, (pp. 491-493) 25. The average cost of recleaning soybeans, based on figures for one-fourth of the 1931 Illinois crop reported recleaned, was 3 cents a bushel ; other local elevator costs were somewhat in excess of this figure. Both recleaning and other costs were lower for the 1931 crop than for the 1926 crop. Beans marketed primarily for seed were handled at higher costs than the above, (pp. 494-496, 499-500) 26. The price received by farmers for Illinois beans has been about 40 cents a bushel less than the gross value of the products obtained by 540 BULLETIN No. 386 [December, processing. This covers the charges made by the local elevator, trans- portation agencies, and the processor, including profit. Freight rates have not responded to lower price-levels as have elevator costs, (p. 498) 27. The superior export market recently developed for soybeans from the United States was a result in part of better prices for soy- bean products and in part of lower processing costs for soybeans abroad, (p. 501) 28. Oil mills buy soybeans on the basis of a U.S. No. 2 grade, with a scale of premiums for higher grades and discounts for lower grades. Illinois supplied more than half of the beans inspected in the United States during three of the four years ended June 30, 1932. (pp. 503-504) 29. Soybean oil meal ranks high both in digestible protein and in total digestible nutrients, (pp. 508-509) 30. A price change of 1 cent a pound for oil corresponds to a differ- ence of about 7.75 cents in the value of a bushel of beans. A differ- ence of a dollar a ton in the price of meal corresponds to a difference of about 2.4 cents in the value of a bushel of beans, (pp. 509-510) 31. There are wide sectional differences in soybean seed prices in Illinois, (pp. 511-515) 32. Average wholesale prices for the months of January to May for the five years ended 1931, disregarding Minneapolis, were highest in Chicago and lowest in Baltimore. Retail selling prices of soybeans averaged 5 to 25 percent higher than wholesale prices, (pp. 516-518) 33. In Illinois the following varieties have been sold at prices above average: Virginia, Ilsoy, Peking, Wilson V, Ebony, and Haberlandt. (pp. 518-519) 34. Shifts in vegetable oil prices since 1928 have been such that soybean oil has moved from a price position where it was influenced mostly by linseed oil to a lower one where it is influenced by almost all oils. (pp. 522, 524) 35. Prices of soybean oil meal made from the 1931 crop were in line with those of cottonseed meal. (pp. 524-526) 36. Futures contracts for soybeans have not yet been made on organized futures exchanges, (pp. 528-530) 37. The leading importing countries for soybeans have been the Netherlands and the United Kingdom. Importations into these countries and into France and Germany have increased somewhat since 1919. (p. 532) 1932\ SUPPLY AND MARKETING OF SOYBEANS 541 38. Most of the soybean cake and meal imported by European countries over the five-year period 1926-27 to 1930-31 went to Ger- many. European countries usually permit beans to come in duty-free but they levy a rather heavy duty on soybean oil. (pp. 533-534) 39. While labor requirements for soybeans grown for hay do not fit in well with those for the major crops of the corn-belt region, there still are many cases in which the crop, whether grown for beans or for hay, is well suited to the program of farming, (pp. 534-536) Soybeans, important for centuries in certain oriental countries, have recently claimed a position in the national economy of the United States well beyond that which might have been expected even a few years ago by persons not fully familiar with the wide range of uses of this crop and its adaptation to the soils, climates, and farming sys- tems of this country. The crop is full of challenge to consumers, to persons connected with processing and market distribution, and to those engaged in making and administering national and state legis- lative policies, as well as to operators and owners of farm land in regions where soybeans can be profitably grown. LITERATURE CITED 1. BULL, SLEETER. Soybeans not guilty. Breeder's Gaz. and Dairy Tribune 97, No. 2, p. 10. 1932. 2. - CARROLL, W. E., OLSON, F. C, HUNT, G. E., and LONGWELL, J. H. Effect of soybeans and soybean oil meal on quality of pork. 111. Agr. Exp. Sta. Bui. 366. 1931. 3. CASBERG, CARL H., and SCHUBERT, CARL E. An investigation of the suitability of soybean oil for core oil. 111. Engin. Exp. Sta. Bui. 235. 1931. 4. EISENSCHIML, OTTO. Domestic soybean oil: its history and its prospects. Paint, Oil and Chem. Rev. 87, No. 12, p. 12. 1929. 5. FERREE, C. J. The soya bean and the raw soya bean flour. William Heine- mann, Ltd. London. 1929. 6. HACKLEMAN, J. C. Growing soybeans in Illinois. 111. Agr. Exp. Sta. Circ. 255. 1923 revision. 7. - SEARS, O. H., and BURLISON, W. L. Soybean production in Illinois. 111. Agr. Exp. Sta. Bui. 310. 1928. 8. HENRY, W. A., and MORRISON, F. B. Feeds and feeding. 19th ed. Henry- Morrison Co. Madison, Wis. 1928. 9. KELLOGG, J. H. Soybeans as human food. Jour. Good Health. Dec. 1930 and Jan. 1931. 10. LAUCKS, I. F., and DAVIDSON, GLENN. Oil-sccd-residues glues. Paper in symposium on: Glues for wood products. 6th Ann. Wood-Indus. Meet- ing, Winston- Salem, N. C. 1931. 11. MITCHELL, H. H., and VILLEGAS, VALENTINE. The nutritive value of the proteins of coconut meal, soybeans, rice bran, and corn. Jour. Dairy Sci. 6. 222. 1923. 542 BULLETIN No. 386 [December, 12. and HAMILTON, T. S. The biochemistry of the amino acids, p. 535. Chem. Cat. Co., Inc., N. Y. 1929. 13. MORSE, W. J. The soybean: its culture and uses. U. S. Dept. Agr. Farmers' Bui. 973. 1922 reprint. 14. Soybeans: culture and varieties. U. S. Dept. Agr. Farmers' Bui. 1520. 1927. 15. - Soybean utilization. U. S. Dept. Agr. Farmers' Bui. 1617. 1932 reprint. 16. NEMZEK, L. P. The production and use of soya bean oil in the United States with a brief history of their development. U. S. Paint Manfrs. Assoc. Circ. 155. 1922. 17. NORTON, L. J. Financial studies of the operation of farmers' elevators in Illinois. Mimeo. rpt. 111. Agr. Exp. Sta. Sept. 1929. 18. PIPER, C. V., and MORSE, W. J. The soybean, p. 36. McGraw-Hill Book Co. New York. 1923. See also Horvath, A. A. Soya flour as a national food. Sci. Mo., p. 251. Sept. 1931. 19. RICKEY, L. F. Processing soybeans. Mimeo. rpt. 111. Agr. Exp. Sta. 1930. 20. ROSSITER, FRED J. Review of China 1930-31 soybean season. Typewritten report, Dec. 24, 1931. Shanghai, China. See also Foreign Crops and Markets, p. 295. U. S. Dept. Agr. Bur. Agr. Econ., Feb. 23, 1932. 21. RUSK, H. P., NEVENS, W. B., KAMMLADE, W. G., EDMONDS, J. L., CRAWFORD, C. W., CARROLL, W. E., and SLOAN, H. J. Utilizing the soybean crop in livestock feeding. 111. Agr. Exp. Sta. Circ. 369. 1931. 22. SIMPSON, F. M. Soft pork from the market standpoint. Proc. 24th Ann. Meeting Amer. Soc. Anim. Prod. 289. Nov. 1931. 23. SOUTH MANCHURIAN RAILROAD COMPANY AGRICULTURAL OFFICE. Manchurian beans. 300 pp. Darien, Manchuria. 1929. 24. SOYBEAN MARKETING ASSOCIATION. Information and supplies for use of soy- bean advisory councilmen and special committeemen. Mimeo. rpt. Chi- cago. Dec. 1930. 25. STARK, ROBERT W. Environmental factors affecting the protein and the oil content of soybeans and the iodine number of soybean oil. Jour. Amer. Soc. Agron. 16, 636. 1924. 26. SWEENEY, O. R., ARNOLD, L. K., and ARNOLD, J. H. Processing the soybean. Iowa Engin. Ext. Serv. Bui. 103. 1929. 27. U. S. DEPT. AGR. BUR. AGR. ECON. Protein tests for \vheat and oil tests for flaxseed and soybeans. Misc. Pub. 140. 1932. 28. U. S. DEPT. AGR. Handbook of United States standards for soybeans. Form HFS-899. Sept. 1928. 29. U. S. DEPT. AGR. Seed Rptr. 3. Oct. 11, 1919. 30. U. S. DEPT. COM. Foodstuffs 'round the world. Dec. 1931 Feb. 1932. 31. U. S. SENATE. 71st Cong. 2d sess. Report of American Farm Bureau Federa- tion concerning the interchangeability of oils and fats. Senate Doc. 82. 1930. 32. U. S. SENATE. 72d Cong. 1st sess. Hearings before Sen. Com. on Agr. and Forestry. Testimony of Earl C. Smith on amendment to agricultural marketing act. p. 63. 1932. 33. U. S. TARIFF COMM. Report to congress on copra and coconut, palm-kernel, palm, sesame, perilla, rapeseed and whale oils. March, 1932. 34. WRIGHT, PHILIP G. The tariff on animal and vegetable oils. Macmillan Co. New York. 1928. 1932] SUPPLY AND MARKETING OF SOYBEANS 543 SOURCES OF DATA Data Reproduced in Tables (Tables for which no sources are here indicated are based on material gathered at the Illinois Agricultural Experiment Station and published here for the first time.) Table 1. Illinois crop and livestock statistics, Circ. 409, 1931, and Illinois crop and livestock statistics by counties (mimeo.)i Dec. 31, 1931, from Illi- nois Crop and Livestock Reporting Service, 111. Dept. Agr. and U. S. Dept. Agr. cooperating. Table 2. Foreign Crops and Markets, May 17, 1926, and Aug. 1, 1932, Bur. Agr. Econ., USDA. Agricultural yearbook, USDA, 1932. Table 3. Agriculture, general statistics, 1929 and 1930, U.S. Dept. Com. Bur. of the Census, 1932. Table 4. Report on soybeans and cowpeas (mimeo.), Feb. 1929, and Crops and Markets, Dec. 1928 and Dec. 1931, Bur. Agr. Econ. USDA. Table 5. Report on soybeans and cowpeas (supra). Agricultural year- book, USDA, 1922, 1923, 1928-1931. Unpublished data (subject to revision) from Illinois Crop Reporting Service, 1930. Table 6. Report on soybeans and cowpeas (supra). Agricultural year- book, USDA, 1923, 1928, 1930, 1931. Crops and Markets (supra), Dec. 1931. Table 7. Unpublished data from Illinois Crop Reporting Service, 1930. Table 8. Unpublished data for 1929 and 1930; mimeographed report for 1931 (published 1932) from Illinois Crop and Livestock Reporting Service. Table 10. Complete cost data revised from 111. Agr. Exp. Sta. 42nd Ann. Rpt., p. 171, 1929. Yearly mimeographed summaries of Dept. Farm Org. and Mgmt., Univ. of 111., 1921-1930. Enterprise cost data revised from Table 37, 111. Agr. Exp. Sta. 43rd Ann. Rpt., p. 170, 1930. Table 11. Monthly summaries of foreign commerce, 1915-1931, U. S. Dept. Com. Table 12. Tariff act of 1930, House Doc. 476, 71st Cong., 2d Sess., 1930. Comparison of tariff acts of 1909, 1913, 1922, by C. F. Moore, published by U. S. Cong. House Repr. Ways and Means Com., 1924. Tables 13 and 14. Certain vegetable oils, part 2, pp. 93, 96, 97, published by U. S. Tariff Comm. Foreign Crops and Markets (supra), May 17, 1926; May 9, 1927; May 14, Dec. 24, 1928; May 20, 1929; June 23, 1930; Aug. 10, 1931 ; July 25, Aug. 1, 1932. Agricultural yearbook, USDA, 1932. Table 15. The tariff on animal and vegetable oils, by P. G. Wright, pp. 264-5, Macmillan, 1928. Animal and vegetable fats and oils, 1927-1930, by Harvey J. Zimmerman, supplemented by Statistics of fats and oils, quarterly mimeographed reports for 1931, both from U. S. Dept. Com. Bur. of the Census. Table 16. Certain vegetable oils (supra), part 2, pp. 92-106. Foreign Crops and Markets (see issues cited for Table 13). Table 17. Monthly Crop Reporter, USDA, Feb. 1916. Unpublished data from Bur. Agr. Econ., USDA. Agricultural yearbook, USDA, 1930, 1931. Table 18. Monthly summaries of foreign commerce (supra) 1922-1930. Agricultural yearbook, USDA, 1931. Table 20. Certain vegetable oils (supra), part 2, pp. 156-171. Foreign Crops and Markets (see issues cited for Table 2). Tariff readjustment 1929. Hearings before Com. on Ways and Means, House of Repr., Vol. 1, schedule 1, p. 653. Animal and vegetable fats and oils, 1927-1930, supple- mented by statistics of fats and oils, quarterly mimeographed reports for 1931 (supra). Table 21. Chemical technology and analysis of oils, fats and waxes, by J. Lewkowitsch, revised by George H. Warburton, Vol. 1, 6th ed., pp. 395- 544 BULLETIN No. 386 400, 419-442, Macmillan, 1922. The tariff on animal and vegetable oils (supra) pp. 20-78. Vegetable fats and oils, by George Jamieson, The Chemical Cata- log Co., Inc., New York, 1932. Table 23. Unpublished material from Illinois Crop and Livestock Re- porting Service. 111. Agr. Exp. Sta. questionnaires sent to operators of local elevators and seed establishments on 1926 and 1930 crops, and unpub- lished letters from crushers and manufacturing establishments. Table 26. Seasonal reports on soybeans (mimeographed) 1922-1932, Bur. Agr. Econ., USDA. Table 27. Market Reporter, Feb. 14, 1920; Feb. 26, 1921: Weather, Crops and Markets, Mar. 11, 1922; Mar. 3, 1923. Supplement to Crops and Markets, Mar. 1924; Mar. 1925. Current reports by Bur. Agr. Econ., Mar. 1, 1926; Mar. 24, 1927; Mar. 26, 1928; Mar. 26, 1929; Mar. 25, 1930; Mar. 31, 1931, Mar. 30, 1932. All from U. S. Dept. Agr. Table 30. Certain vegetable oils (supra) part 1, pp. 60-74. Table 32. Unpublished material from J. E. Barr, in charge of soybean inspection, Bur. Agr. Econ., USDA, 1932. Table 34. 111. Agr. Exp. Sta. Circ. 369, 1931. 111. Agr. Exp. Sta. Bui. 310, 1928. Table 35. Based on analyses compiled by Bur. Chem. and Soils, USDA. Table 37. Seed statistics. Statis. Bui. 2, USDA, 1924. Seasonal reports (mimeographed) issued by Bur. Agr. Econ. Hay, Feed, and Seed Div., USDA, 1925-1931. Tables 38 and 39. Based on unpublished monthly reports by Bur. Agr. Econ. Crop and Livestock Estimates Div., USDA, 1925-1931. Tables 41 and 42. Seasonal reports (mimeographed) issued by Bur. Agr. Econ. Hay, Feed, and Seed Div., USDA, 1920-1932. Table 43. See Tables 37, 41, and 42. Table 44. County farm-bureau publications, Illinois, Feb.-July, 1921-1931*. Tables 45, 46, 47, and 48. Statistics of fats, oils and oleaginous raw ma- terials, Statis. Bui. 24, USDA, 1928. Foreign Crops and Markets (supra) May 27, 1929; June 30, 1930; Aug. 17, 1931; Aug. 1, 1932. Agricultural yearbook, USDA, 1928. Unpublished data from E. L. Thomas, U. S. Dept. Com. Bur. Foreign and Dom. Com., Mar. 18, 1932. Table 49. Foreign Crops and Markets (supra), Feb. 3, 1932. Data Reproduced in Graphs Fig. 1 is based on data from The Statistical Monthly, Bureau of Sta- tistics, Legislative Yuan, National Government of China, Vol. 2, No. 12, 1-60, Dec. 1930. Similar information for the provinces of Chahar and Jehol in inner Mongolia is given in Vol. 3, No. 3, 37-63, March, 1931. The data for the following graphs were obtained from the sources in- dicated: Fig. 2, Illinois Crop Reporting Service. Figs. 4, 5, 6, and 7, U. S. Census. Figs. 8 and 9, U. S. Department of Agriculture. Fig. 10, Illinois Crop Reporting Service. Fig. 23, various county farm bureau publications. Figs. 24 and 25, U. S. Department of Labor, Bureau of Labor Statistics; Fig. 27, ibid, and U. S. Department of Agriculture. Fig. 26, National Pro- visioner and Oil, Paint and Drug Reporter, current issues. Figs. 28 and 29, U. S. Department of Agriculture. Illustrations For the use of Fig. 12 the authors are indebted to Avery Harvesting Company; for Figs. 15, 16, and 20, to Allied Mills; for Fig. 21, to Soya Products, Inc. UNIVERSITY OF ILLINOIS URBANA Q6307IL6B C002 BULLETIN. URBANA 377-3891932-33 30112019529228