Tenth District firms are now facing less of a "sellers' market" for materials inputs than they did only a few months ago. Supplies are more readily available, and price increases are moderating somewhat. With business weakening, inventory growth is being watched more carefully and purchasing policy is becoming less aggressive. In agriculture, concern over frost-damaged crops and the possibility of export controls have created uncertainty over future feed costs, but the picture for profits in the livestock industry and for food prices remains gloomy. Loan demand at Tenth District commercial banks is holding up fairly well, with business and consumer installment loans up, and farm loans and loans to financial institutions down.

Results of a survey of purchasing managers in the Tenth District suggest some easing in both the availability and prices of materials. These tendencies are not evident across the board, as some industries and some commodities are still faced with short supplies. The contrast with only a few months ago is evident, however, with a significant number of respondents now reporting shortening lead times, improved availability, some moderating in the number and degree of price increases, and a lessening in the use of allocations. As a result, several firms report that they are pursuing a less aggressive purchasing policy. Inventory accumulation targets are also being reduced in some instances. There is a definite indication that part of the change is due to current and anticipated slowdowns in demand for these firms' output.

Textiles, corrugated paper, and some chemicals were specifically listed as being more readily available to purchasers. The supply situation for iron and steel does not show as much improvement as for other goods. .A major manufacturer of off road vehicles reports very little improvement in either availability or lead times of many important items. Other firms, however, do report some slight easing in steel with allocations larger and lead times down a little. One respondent reported that reinforcing bars and mesh have become much easier to get.

With certain exceptions-mainly in metals-the purchasing managers are leaning toward a less aggressive purchasing policy. For example, one respondent said his firm was no longer "taking everything we can get, as was the case six months ago." All of them seem to be keeping a close watch on their inventories, with an eye to paring them down in light of a weakening business situation. At the same time, the experience with shortages and allocations appears to be pushing up the level of what is viewed as "normal" real accumulation. Inventory reductions will be selective and cautious; one respondent says his firm is "comfortable with most of the excess."

The majority of respondents believe themselves to be facing less of a "sellers' market" than in the recent past. Although prices generally are still rising, increases apparently are somewhat smaller and less frequent and cover fewer items. (Two makers of steel products noted that prices in the "gray" market have fallen sharply.) A firmer stand by purchasing agents is credited with having some effect on the price situation. Yet price at time of shipment seems to be more the rule than the exception. Moderation in price increases is not universally reported, however. A tire manufacturer reports "terrible price increases (for materials) in the past 90 days," with more expected to come.

Reversing a recent trend, farm prices declined 2 percent for the month ended September 15, with cattle, hogs, soybeans, and corn contributing most to the decrease. However, growing concern over the frost-damaged crops in much of the corn belt has resulted in significantly stronger grain prices since mid-September, portending another year of high feed costs for livestock producers and rising food prices for the consumer unless various measures are taken to slow export demand.

Even assuming export controls and a decline in grain prices, profits in the livestock industry will likely remain small for the next several months. Hog producers are responding by reducing farrowings and liquidating brood-sows while cattle feeders are increasing the culling rates for cows. Since adjustments proceed more slowly in the cattle industry, beef supplies should remain adequate through 1975, but pork supplies are likely to be off substantially, pushing prices up.

In the District, the planting of the new winter wheat crop is progressing well. Most of the seeded acreage in the southern half of the region has germinated and is growing. Moisture conditions are generally excellent, although parts of western and central Kansas, where some wheat was "planted in the dust," need rain to assure a stand. Rain also is needed in Nebraska where the wheat is now being seeded.

Tenth District bankers contacted this month were divided in their opinions about the strength of loan demand but in general they thought demand was holding up fairly well. Reports indicate that consumer installment and business loans continue to increase, but farm loans and loans to financial institutions have declined. Some of the decline in farm loan demand is due to liquidation of inventories by cattlemen.

Many of the bankers surveyed indicated there has been some tightening of loan policies, such as a reluctance to make term loans. It appears that tighter loan policies have been selectively applied. Loans to new customers have been discouraged. Also, term loans are being discouraged to avoid being locked into present interest rates in case interest rates should rise in the future.