ECONOMIC INTELLIGENCE WEEKLY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80B01495R000500050033-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 19
• Document Creation Date: December 19, 2016
• Document Release Date: October 27, 2005
• Sequence Number: 33
• Publication Date: June 12, 1974
• Content Type: REPORT

Approved For Rene, ase 2005/11/23: CIA-RDP80BO1495R00(00500050033-9
Secret
No Foreign Dissem
Economic Intelligence Weekly
Secret
CIA No. 8038/74
12 June 1974
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NATIONAL SECURITY INFORMATION
Unauthorized Disclosure Subject to Criminal Sanctions
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ECONOMIC INTELLIGENCE WEEKLY
Articles
Chemical fertilizer, already at record high prices and in short supply, will
become even more expensive.
? Morocco increased the price of phosphate rock by 50% in June after
tripling prices in January.
? Togo announced that its rock prices would be based on Morocco's
and voided existing contracts.
? Prices of phosphate rock exported from the United States more than
doubled in January and will increase by an additional 32% in July.
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Before the latest increases, spot prices of nitrogen and phosphate fertilizers
were four to six times the level of June 1973. Potash prices increased by 30%
to 40% in the same period.
The bill for importing countries could be three times the 1973 outlays. India,
for example, may pay $500 million for fertilizer in 1974/75, compared with an
estimated $200 million in 1973/74. Western Europe will be hard hit by the increased
price of phosphate rock; its import bill in 1974/75 probably will jump to $1.2
billion to $1.4 billion, compared with $300 million in 1973/74.
Fertilizer will remain in short supply over the next year or so, undercutting
plans to increase crop yields. In recent years, fertilizer has accounted for about
40% of increased grain yields in the United States, 33% in Taiwan, and 60% in
India. (CONFIDENTIAL) ^
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Good weather in May improved grain prospects in Eastern Europe, whereas
the outlook for the Soviet crop remains indifferent. Assuming average weather
throughout the remainder of the crop season, the grain harvests in both areas will
be well below the record 1973 levels. This could result in substantial grain imports
in FY 1975.
East European Drought Broken
Although average rainfall and below-average temperatures in May alleviated
the drought in Eastern Europe, we project breadgrain output at 34-1/2 million
tons, still 7% less than last year. The harvest of coarse grains also is expected
to fall short of 1973's near record of 34.8 million tons.
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In the southern countries -- Bulgaria, Romania, and Hungary - the May rains
brought most of the winter grains out of the long drought in good condition.
They also aided germination and early development of spring sown grains, especially
corn. Flooding in Bulgaria and Hungary caused crop losses in some areas. However,
because on balance soil moisture remains below normal, a hot, dry summer could
reduce grain production even more.
In the northern countries - Czechoslovakia, East Germany, and Poland --
rainfall ranged from 7% to 15% above normal and subsoil moisture at the end
of May was only 10% below normal. In Poland, however, grains suffered from
both winterkill and drought, and winterkill may also have been higher than average
in East Germany.
Poor Weather Threatens to Reduce Yields in the USSR
Above-average winterkill and delays in spring sowing, taken together with
average growing conditions in the important June-July period, indicate a Soviet
grain output this year of 190 million tons or less. Although far below the planned
output of 206 million tons and last year's record 222.5 million tons, a crop of
this size could still exceed the pre-1973 high of 187 million tons.
The USSR normally relies on winter grains for about one-third of its grain
supply. In the fall of 1973 the Soviets planted the largest area to winter grains
since 1968. Temperature extremes and sparse snow cover damaged about one-fourth
of these fields, leaving a smaller acreage than the average harvested in 1966-71.
Moreover, yields on the remaining area may be no more than average because of
spotty germination last fall, temperature variations, and spring frosts.
Spring sowing got off to an early start, but cold, snow, and rain in mid-April
stalled the campaign. Unusual cold in late May killed some of the newly seeded
grain in the European RSFSR and the Ukraine. More important, when the last
of the late grains is planted this week, the total grain area is likely to be 5 million
to 10 million hectares less than the planned 130 million. On the basis of growing
conditions so far, yields on spring grains would be below the average of the past
10 years. Weather, however, has its greatest effect on spring grains in June and
July.
Shortfalls Could Spur Imports
Eastern Europe's import requirements for FY 1975 are likely to be higher
than the 8 million tons estimated for FY 1974 and exports lower. Romania --
usually a net exporter of grain -- entered a precautionary request for US grain
before rains improved harvest prospects. Grain imports by the northern countries
may also increase because of the reduced output of rye and the possibility of
a poor potato crop.
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Estimated Soviet domestic requirements and export commitments are at least
6 million tons more than the projected crop. The USSR probably increased grain
stocks - mostly wheat - by 15 million to 25 million tons in 1973 following its
record harvest. Nevertheless, wheat imports may be necessary to correct imbalances
in domestic supplies since the quality of a large share of the wheat stocks may
be below milling standards and the share of breadgrains in the 1974 acreage is
smaller than usual. If world prices for wheat and feed grains were right, moreover,
Moscow might buy to avoid a stock. drawdown and to maintain flexibility in meeting
requests for grain from Eastern Europe or Third World countries such as India.
(CONFIDENTIAL) m
Gold prices have trended downward from a peak of nearly $180 an ounce
in early April to $157.25 an ounce in London yesterday. In the last two weeks,
major oscillations have mainly reflected the market's reaction to US developments:
? 30 May - up $6.50 when the US Senate passed a bill allowing US
citizens to own gold.
? 31 May -- down $5.25 when US Treasury officials emphatically
opposed private ownership.
? 5 June - up $7.25 when Secretary Simon suggested the United States
may be amenable to a rise in the official price.
? 7 June - down $3.50 when EC finance ministers failed to propose
a revaluation in the official price.
The recent downward trend in price is largely explained by the decline in
commercial demand for gold, which has been only partially offset by increased
speculative demand. Commercial users have gradually withdrawn from the market
because of high prices and the worldwide economic slowdown.
estimate commercial gold purchases are down about one-third from their 1973
peak. At the same time, new gold sales by South Africa and the Soviet Union
are almost as high as last year.
Sharp fluctuations in the gold price are likely to continue as uncertainty
persists about gold's future role in the international monetary system. International
financial officials are holding a series of meetings this week at which the role of
gold will be on the agenda. EC finance ministers started discussions last week in
Luxembourg. The dialogue will continue at the annual meeting of the Bank for
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London Free Market Gold Price* 1974
*Based on the afternoon fix in London on the
last trading day in each week.
"Gold was fixed at an all time record high of $179.50 on April 3.
100
Jan Feb Mar Apr May Jun Jul Aug Sep act Nov Dec
556012 6-74
International Settlements in Basle and at the Group of Ten and Committee of
Twenty meetings in Washington this week.
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CHILE BOOSTING NITRATE PRODUCTION
High world prices for fertilizer have spurred Chile to expand output of natural
nitrates, a substitute for petroleum-based nitrogen fertilizers. Santiago is seeking
more than $30 million of foreign credits to purchase the machinery and equipment
necessary to raise output 25% to 1 million tons in 1975. It also hopes to obtain
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concessionary terms to avoid exceeding the short-term credit ceiling imposed in
an IMF $95 million standby agreement.
Chile is the world's dominant commercial supplier of natural nitrates, largely
sodium nitrate found with little or no overburden in the Atacama Desert. These
nitrates are particularly valuable because they " contain elements useful for sugar
beets and crops delayed by frost and drought. In 1973 the Netherlands and the
United States purchased 40% of the 420,000 tons exported. Thus far this year,
China has contracted for 70,000 tons of Chilean nitrates. Natural nitrate prices
are now about double the 1973 level. Prices of petroleum-based fertilizers
meanwhile have tripled, making the prices of natural nitrates -- on a nutrient
content basis - only slightly higher.
Production of natural nitrates has been declining for decades because of the
expanded use of cheaper chemical fertilizers. Chilean production in 1965 totaled
about 1.2 million tons but dropped to 674,000 tons in 1973 under the Allende
government. Rising prices and more efficient management probably will push 1974
production up to 800,000 tons. (UNCLASSIFIED).
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Austria has become the eighth nation to conclude a deal with the USSR for
uranium enrichment services. The $56 million contract calls for 1.26 million
separative work units with delivery beginning in July 1978. The enriched uranium
will be used for Austria's second nuclear powerplant, an American-style light water
reactor to be constructed at Enns. Austria was forced to rely on the Soviet Union
for enriched uranium for the Enns plant because of inability to meet the USAEC's
30 June 1974 contract deadline for enrichment services to be provided before
mid-1982. Vienna, which has not made up its mind on the size of the plant, could
not furnish the details required by the USAEC. (UNCLASSIFIED)
US Finances Truck Sale to Yugoslavia
The Ex-Im Bank and a New York commercial bank will finance most of a
$3.1 million sale of quarry trucks to Yugoslavia for use in mining iron ore. The
banks are extending direct credit for 90% of the purchase at 7% interest. The
19 trucks on order will be built by WABCO of Illinois. (FOR OFFICIAL USE
ONLY)
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INTERNAL ECO4dOMIC INDICATORS
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Average Annual
Growth Rate Since
WHOLESALE PRICES
Industrial
Average Annual
Growth Rate Since
Percent Change
Latest from Previous 1 Year Previous
Percent Change
Latest from Previous
1 Year 3 Months
Quarter Quarter 1970 Earlier Quarter
Month Month
1970
Earlier Earlier
741
-1.6
3.9
0.2
-6.3
United States
Apr 74
8.6
20.8 30.2
741
-5.0
6.2
-2.4
-18.6
Japan
Apr 74
11.2
35.6 22.9
73 IV
-0.1
3.1
3.4
- 0.3
West Germany
Mar 74
6.8
13.1 30.3
13 1V
1.8
.5.8
5.7
7.3
France
Apr 74
12.8
34.0 I 45.3
73 1V
-0.4
3.1
3.9
-1.4
United Kingdom
Apr 74
10.7
23.9
45.2
731
0.8
3.1
5.2
3.4
Italy
Jan 74
11.8
33.9
68.3
73 1V
2.8
6.1
7.2
11.6
Canada
Mar 74
1
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
RETAIL SALES*
Current Prices
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Average Annual -
Growth Rate Since
Average Annu
Growth Rate Si
al
nce
Percent Change
Latest from Previous 1 Year 3 Months
Percent Change
Latest from Previous 1 Year
3 Months
Month Month 1970 Earlier Earlier-
Month Month 1970 Earlier
Earlier
Apr 74
0.4
4.6
0.7
-6.2
United States
Apr 74
0.6
5.8
10.3
12.9
Apr 74
-1.7
6.9
2.7
-9.9
Japan
Apr 74
2.7
11.4
24.9
30.8
Mar74
-1.7
3.2
1.1
-2.2
West Germany
Apr 74
0.6
6.3
7.1
7.3
Mar74
-0.8
6.4
5.0
5.4
France
Apr 74
1.6
7.7
13.2
17.7
Mar74
2.0
1.7
-4.0
-21.1
United Kingdom
Apr 74
3.4
10.3
15.2
27.0
Mar 74
Feb 74
-2.4
0.9
3.9
6.7
11.0
4.5
-5.3
7.0
Italy
Canada
Apr 74
Apr 74
1.2
0.7
9.2
6.0
16.3
9.9
26.6
11.4
Average Annual
Growth Rate Since
Average Annual
Growth Rate Since
Percent Change
Latest from Previous 1 Year 3 Months
Percent Change
Latest from Previous 1 Year
3 Months
Month Month 1970 Earlier Earlier"
Month Month 1970 Earlier
Earlier
May 74
1.0
10.3
6.8
13.9
Unit
ed States
May 741
1.6
7.0
7.0
10.0
Nov 73
3.4
14.6
27.4
32.0
Japa
n
Feb 74
1.2
17.6
15.8
8.7
Feb 74
0.9
8.7
0.9
11.4
West
German
y
Feb 74
0.5
8.8
1.1
8.6
Feb 74
0.8
7.0
12.9
29.0
Fran
ce
Feb 74
-0.3
11.9
9.0
14.9
Jan 74
-1.3
11.5
13.1
16.9
Unite
d Kingdo
m
Apr 74
2.7
9.3
3.0
1.0
Oct 73
0.6
16.2
29.1
56.7
Italy
Dec 73
2.6
21.2
17.9
22.1
I Mar 74
-1.0
11.4
11.8
23.1
Cana
da
13.8
14.4 .
18.5
1 Year 3 Months 1 Month
Representative Rates Latest Date Earlier Earlier Earlier
United States
Prime finance paper
6 Jun
9.25
7.25
7.25
9.00
Japan
Call money
3 Jun
12.50
6.63
12.00
12.00
West Germany
Interbank loans (3 Months)
31 May
9.38
14.00
10.50
9.50
France
Call money
28 May
13.00
7.63
12.75
11.75
United Kin
dom
L
l
th
it
d
i
30 M
1
"Seasonally adjusted.
g
oca
au
or
y
epos
ts
ay
3.13
7.52
14.63
13.75
r'Averge for lat4st 3 months com
ared
Canada
Finance paper
31 May
12.00
6.50
8.50
10.85
p
i apa for previous 3 months.
Euro-Dollars
Three-month deposits
31 May
11.88
8.69
B.88
11.50
12 June 1974
Office of Economic Research/CIA
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F; TERNAE EMOMIC INDICATO
EXPORTS*
f.o.b.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
I Apr 74
Apr 74
Apr 74
Apr 74
Apr 74
Apr 74
Apr 74
Million US $ Percent
Million US $ 1974 1973 Change
8,230
30,624
20,908
46.5
4,267
15,293
10,941
39.8
7,734
28,076
19,070
47.2
3,764
14,305
10,624
34.6
3,048
10,749
8,801
22.1
2,502
8,827
5,768
53.0
2,429
10,020
7,978
25.6
Million US $ Percent
Million US $ 1974 1973 Change
Apr 74
8,138
29,843
21,545
38.5
Apr 74
4,676
16,634
8,785
89.3
Apr 74
5,423
19,720
14,994
31.5
Apr 74
4,141
15,362
10,092
52.2
Aar 74
3,981
14,570
9,796
48.7
Apr 74
3,368
11,580
6,406
80.8
Apr 74
2,306
9,605
7,290
31.7
TRADE BALANCE*
f.o.b./f.o.b.
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Latest Month Cumulative (Million US $)
Million US $ 1974 1973 Change
Apr 74
92
781
-637
1,418.
Apr 74
-409
-1,342
2,156
-3.498
Apr 74
2,310
8,355
4,075
4,280
Apr 74
-377
-1,057
532
-1,589
Apr 74
-934
-3,821
-995
-2,826
Apr 74
-866
-2,753
-638
-2,115
Apr 74
123
415
688
-272
BASIC BALANCE"'
Current and Long-Term-Capital Transactions
Latest Period Cumulative (Million US $)
United States'
Japan
West Germany
France
United Kingdom
Italy
Canada
73 IV
Apr 74
Mar 74
73 IV
73 IV
72 IV
731V
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
End of
Apr 74
Apr 74
Mar 74
Apr 74
May 74
Mar 74
May 74
Million US $ 1973 1972 Change
214
1,209
-9,838
11,047
-1,005
-9.702
2.137
-11,839
1,176
3,950
4,566
-616
-352
-2,391
-369
-2,022
-1,394
-3,164
-1,989
-1.175
800
N.A.
2,983
N.A.
27
376
1,155
-779
1 Year 3 Months
Billion US S Jun 1970 Earlier Earlier
14.7
16.3
14.0
14.6
12.7
4.1
16.8
11.6
32.9
8.8
32.3
33.1
8.1
4.4
11.5
8.3
6.9
2.8
6.7
6.0
6.7
4.7
6.3
6.4
6.2
4.3
6.1
6.2
EXPORT PRICES
US$
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest from Prgvious
Month Month
Apr 14 0.6
Dec 73 2.6
Mar 74 5.9
Jan 74 -5.9
Dec 73 0.1
Oct 73 2.1
Feb 74 , 4.1
EXPORT PRICES
National Currency
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
Percent Change
Latest from Previous
Month Month
IMPORT PRICES
National Currency
Percent Change
Latest from Previous
Month Month 1970
United States Apr 74 6.3 19.0
Japan Dec 73 9.3 7.2
West Germany Mar 74 1.6 6.2
France Jan 74 14.9 11.3
United Kingdom Dec 73 4.5 16.3
Italy Oct 73 3.4 14.0
Canada Feb 74 - 3.6 1 7.9
Apr 74
Dec 73
Mar 74
Jan 74
Dec 73
Oct 73
Feb 74
EXCHANGE RATES Spot Rate
As Of 7Jun74
Japan(Yen)
West Germany (Deutsche
Mark)
France (Franc) (Pound
United Kingdom Sterling)
Italy (Lira)
Canada (Dollar)
US S
Per Unit
0.0035
0.4026
0.2047
2.4035
0.0016
1.0382
Dec 66
28.31
60.14
1.39
-13.87
-2.87
12.55
Dec 66
i -17.57
TRADE-WEIGHTED EXCHANGE RATES**
As of 7 Jun 74 Percent Change from
United States
Japan
West Germany
France
United Kingdom
Italy
Canada
1970
11.5
5.7
4.1
8.0
9.8
8.3
10.3
Average Annual
Growth Rate Since
1970
11.5
13.7
13.9
11.1
8.7
11.6
12.4
1 Year 3 Months
Earlier Earlier
30.3 23.5
32.6 14.9
21.9 37.5
18.9 -35.2
17.4 12.0
23.7 29.1
34.3 65.6
Average Annual
Growth Rate Since
1 Year 3 Months
Earlier Earlier
30.3 23.5
20.6 42.6
13.0 30.6
17.6 31.3
18.8 33.0
20.4 17.0
31.8 51.5
Average Annual
Growth Rate Since
1 Year 3 Months
Earlier Earlier
48.6 98.2
29.0 81.5
25.7 56.1
33.0 127.4
42.6 50.6
38.7 130.8
21.3 42.4
18 Dec
1971
9.02
29.75
3.96
-7.76
-9.59
4.05
19 Mar 31 May
1973 1974
-6.92 -0.20
13.70 1.26
-7.12 0.10
-2.34 0.29
-12.15 0.32
4.06 -0.19
18 Dec 19 Mar 31 May
1971 1973 1974
-8.16 -1.52 -0.16
2.96 -8.96 -0.34
17.15 12.09 0.76
-9.31 -11.75 - 0.69
-19.87 -5
48 -0
02
.
.
25.74 i1 -24.35 -17.42 ; -0.32
9.07 2.47 4.11 -0.27
*Seasonally into ue . 05/11/23 : Cld-?
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