Ford recommends hydraulic oil meeting CNH 134D (or later) specs but many folks do use Type F ATF fluid. No doubt the PS system is very badly contaminated with water. You will need to flush it with clean fluid many times to clear it out. Don't forget to change the filter beneath the oil in the PS pump reservoir (Eaton pump). If the PS pump belt has been removed (not uncommon) either the system leaks badly, the pump has failed, or both.
If your tractor has two hydraulic control handles beneath the seat and beside the lift control handle, it has a dual spool remote valve. There are various types but all allow operation of a remote cylinder with either spool. Note, FEL operation will be slow using the tractor mounted 3-4 GPM pump but this is how it was done for decades.
961 tractors have become popular with Ford collectors in recent years.
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Today's Featured Article - Talk of the Town: How to Crank Start a Tractor - by Staff. This interestin discussion is from the Tractor Talk Discussion Forum. Remember that safety is your first priority - make sure you know what you are doing before attempting a potentially dangerous activity!
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