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Commodity Futures Trading Commission 

CEA CASES 

NAME: INDIANA FARM BUREAU COOPERATIVE ASSOCIATION INC. AND LOUIS II. JOHNSTON 

CITATION: Comm. Fut. L. Rep. (CCH) P20,964; (1977-1980 TRANSFER BINDER) 

DOCKET NUMBER: 75-14; 234 

DATE: DECEMBER 12, 1979 

DOCUMENT TYPE: DECISION AND ORDER 

NOTE: FORMERLY CEA DOCKET # 234. APPENDIX INCLUDED BUT WAS NOT IN THE CCH 

VERSION OF THE OPINION. 

[P 20,964] In the Matter of Indiana Farm Bureau Cooperative Association, Inc., 

et al. 

Commodity Futures Trading Commission. No. 75-14. December 12, 1979. 

Initial Decision in full text. 

Manpulation -- Artificial Price -- Standing for Delivery -- Intent to 

Manipulate Not Shown. -- Despite a finding that an artificial price was 

established in a futures contract, an administrative law judge may not conclude 

that the contract was subject to manipulation if the trader accused of 

manipulation is not shown to have the requisite intent to manipulate. The 

respondent, an agricultural cooperative was alleged to have created an 

artificial price in the July 1973 corn contract on the Chicago Board of Trade 

through the accumulation of a large long position and standing for delivery, 

while knowing of a supply shortage. According to the ALJ, the cooperative had a 

commercial purpose in standing for delivery and this militated against a finding 

of intent to manipulate. The hedging activity of the cooperative also was found 

to explain the entering of scaled-up spread orders by the cooperative during the 

final month of the contract. The complaint against the cooperative and the 

manager of its grain division was dismissed. 

See P 10,025, "Liabilities -- Prohibitions" division, Volume 1. 

Darrold A. Dandy, Esq., William Hoar, Esq. and Lloyd Friesen, Esq., for the 

Division of Enforcement, Commodity Futures Trading Commission. 

James Breen, Esq., Robert P. Howington, Jr., Esq. and John Stern, Esq., for 

respondents. 

SHIPE, Administrative Law Judge: This proceeding was instituted on December 

11, 1974, with the issuance of a "Complaint and Notice of Hearing Under Section 

6(b) and 6(c) of the Commodity Exchange Act" (Complaint) by the United States 

Department of Agriculture. Upon the effectiveness of the Commodity Futures 

Trading Commission Act of 1974, (Public Law 93-463), on April 21, 1975, 

jurisdiction over all administrative proceedings that had arisen under the 

Commodity Exchange Act and were then pending before the Secretary of 

Agriculture, was transferred to the Commodity Futures Trading Commission. 

Section 412 of the 1974 Act provides that such pending proceedings shall be 

disposed of pursuant to the provisions of the Commodity Exchange Act, as amended 

(Act), that were in effect prior to the effective date of the 1974 Act. 

The Complaint alleges that there is reason to believe that the respondents 

attempted to manipulate, 

and did manipulate, the market price of a commodity for future delivery on or 

subject to the rules of a contract market. The specific futures contract in 
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issue is the July 1973 corn contract traded on the Chicago Board of Trade 

(CBOT). 

The July 1973 corn futures contract expired on July 20, 1973 at about 12:00 

noon. On July 19, 1973, the CBOT Board of Directors voted to remove the 10-cent 

maximum daily limit on price fluctuation for the final day of trading in the 

contract. n1 The midpoint of the closing range in the contract was 259 1/2 on 

July 19th. The settlement price on July 20th was 380, though trades had 

occurred at 390 before the session closed. The contract did not reach 300 until 

approximately 11:24 a.m. 

n1 Prices, spreads and bases are quoted in cents per bushels. 

It is contended that the sharpness of the increase resulted in artificial 

prices and that these prices are attributable to the trading activity of 

respondents. Respondents held a long position of 4,705,000 bushels in the 

contract at the opening of trading on July 20th, and stood for delivery of 

2,010,000 bushels upon expiration of the contract. They liquidated 

approximately 5000,000 bushels at prices of 370 to 390 in the last 20 minutes of 

trading. 

On July 20, 1973, reported corn stocks in deliverable position in Chicago 

were 12,107,000 bushels, of which 4,511,000 bushels were reported to be 

deliverable. The Division of Enforcement (DE) claims, however, that only 

511,000 bushels were in fact available for delivery. 

During the summer of 1973, there was a heavy movement of export grain to, 

among other countries the Soviet Union, resulting in a shortage of 

transportation and elevator facilities used for shipping grain. Additionally, 

quality problems with the corn crop of 1972-1973 developed in some areas of 

production. DE contends that the demand of respondents for delivery in these 

circumstances produced the alleged artificial prices, and thus constituted 

manipulation within the meaning of Sections 6(b) and 6(c) of the Act (7 U.S.C. 

§§ 9 and 13b). 

Respondents assert that DE has failed to prove that the price of the July 

1973 corn futures contract was artificial on July 20, 1973, or that the 

respondents caused the price rise that occurred on that day, or that the 

respondents intended that their actions would cause an artificial price. They 

further dispute DE's contention that there was an insufficient supply of corn 

available to satisfy delivery requirements on the futures contract. 

Oral hearings in this matter were held in November, 1976, February and March, 

1977 and April, May and June, 1978. Post-hearing briefs, initial and reply, 

were filed in December, 1978, and March, 1979, respectively. 

The respondents have submitted a motion for oral argument. Since it is 

believed that the issues are fully developed, the motion is denied. 

Based upon the entire record, including the exhibits and testimony adduced, 

and the demeanor of the witnesses, the following Findings of Fact, Discussion of 

Facts and Law, Conclusions of Fact and Law, and Order are entered. 

Findings of Fact 

I. The Respondents

1. Indiana Farm Bureau Cooperative, Inc. (IFB), the corporate respondent, is 

a regional agricultural cooperative functioning under the Capper-Volstead Act, 7 

U.S.C. §§ 291 and 292, and the Agricultural Marketing Act, 12. U.S.C. § 1141. 

DE REQ I, 38; Johnston 1726; Franklin 3102. The latter act declares it to be a 

policy of Congress to encourage the organization of producer-owned and producercontrolled cooperatives as a farm marketing system. Such cooperatives are 

organized locally (generally on a county-wide basis), as well as regionally and 

inter-regionally. IFB, as a regional cooperative, is owned by 77 local 

cooperatives, all but one of which is located in Indiana. Franklin 3108. It is 

a member of two interregional cooperatives -- Midstates Terminal Incorporated, 
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operator of a terminal elevator at Toledo, Ohio, and C.F. Industries, a producer 

of fertilizer material. It is also a part owner and member of Illinois Futures 

Company, which handles futures trading for its members on the CBOT. DE REQ I, 

40; Johnston 1720-32, 1756, 1763, Franklin 3116. n2 

n2 Transcript references are to witness and hearing session. The 

hearing transcript of November, 1976 is referenced I, and the hearing 

transcript of February and March, 1977 is referenced II. The hearing 

transcript of April, May and June, 1978, is referenced without session 

number. DE's first, second, and third requests for admissions are 

referenced DE REQ I, II and III, respectively. Respondents' requests for 

admissions are referenced RE Req. Exhibits are referenced DE (Division of 

Enforcement) or RE (Respondents), respectively. "Facts" refer to 

uncontroverted facts deemed admitted by order of December 18, 1975. 

2. The purpose of agricultural cooperatives is to market grain for their 

members and to supply them with farming materials. Johnston 1743-44; Franklin 

3103, 3113. IFB is organized into five supply divisions: Field and Poultry; 

Plant Food; Petroleum; Farm Building and Supply, and Seed. It has one marketing 

division, the Grain Division. Johnston 1730-41; Franklin 3113-14. Profits from 

its operations 

are distributed to its members as patronage refunds in proportion to the amount 

of business done with the various divisions. Johnston 1777; Franklin 3111. 

3. The Grain Division of IFB buys grain from its 77 members. Under the 

Capper-Volstead Act, it is required to do at least half of its business with 

members, and as a matter of policy, it ordinarily buys grain from other sources 

only to meet existing sales commitments. Johnston 1743, 2069-71, 2314-15. The 

members of IFB own approximately 170-180 country elevators that are used to 

receive and store corn purchased by them from local farmers. Johnston 1727. 

The local cooperatives compete with other buyers for the farmers' grain, based 

on bids supplied daily by IFB Johnston 1774, 2056, 2287. IFB also competes with 

other buyers for the grain of the local cooperatives who are under no obligation 

to sell their grain to IFB. Johnston 1743, 2058, 2070. In 1973, the Grain 

Division had sales of approximately $ 400,000,000.00, which amounted to about 65 

percent of IFB's total sales. Johnston 1764-65; Franklin 3114. 

4. In 1973, IFB's Grain Division operated grain elevators at six locations: 

Indianapolis, Princeton, and Redkey, Indiana; Louisville, Kentucky; Chicago, 

Illinois; and Baltimore, Maryland. The elevators at Indianapolis and Redkey 

receive grain by truck from points within a 75-mile radius of their respective 

location, and ship it out by rail to the Baltimore elevator, called the "Locust 

Point" elevator, from which it is exported. The elevator in Louisville, called 

the "Gold Proof" elevator, originates corn within a 75-mile radius in southern 

Indiana, and markets domestically in the southeastern United States, with 

occasional shipments to the Locust Point elevator, though no such shipments were 

made in 1973. The Gold Proof elevator maintains its own long and short position 

and its own futures account for hedging its cash position. The Princeton 

elevator receives corn principally by truck within a radius of 50 miles from 

Princeton, and ships it out by rail to points in the southeastern United States. 

The elevator in Chicago, called the "Gateway Elevator," can receive grain by 

rail, truck, or barge, and draws corn generally from northwestern Indiana, and 

some from northern Illinois, southern Michigan and Iowa. It ships out by vessel 

when the Great Lakes are open and by barge or rail when the lakes are frozen. 

It is "regular for delivery" on the CBOT. DE REQ I, 44; Johnston 1745-57; 1792; 

2034-37; Heironymus 4325-26. 

5. IFB is now, and was in 1973, a member firm of CBOT. Fact 1; DE REQ I, 35. 

6. Respondent Louis M. Johnston (Johnston) has been the manager of the Grain 

Division of IFB since 1962, and has been a member of the CBOT since 1961. Fact 

2; RE REQ I, 36 and 37; Johnston 1724-25, 2030. His managerial duties include 
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planning and development, labor relations, accounting, merchandising, buying, 

selling, and hedging. Elevator superintendents report to him. He handles about 

90 percent of export sales, and practically all of IFB's futures transactions. 

Johnston 1724-25. 

7. Johnston has been employed by the Grain Division and its predecessor, 

Indiana Grain Cooperative, Incorporated, since 1945. He graduated from high 

school and attended business college for one year. He served in the U.S. Navy 

during World War II. Johnston 2028. He enjoys an excellent reputation for 

competence and integrity within the grain business. Westerbeck 1095-96; Kattke 

1225-26; Richards 1261; Walsh 1576-77; Catron 1616-18; Wilson 1633; Cotton 3357; 

Gaston 3375. 

II. 1973 Corn

8. The crop year for corn is considered to begin on October 1st of each year, 

and to extend through September 30th, of the following year. Helmuth, DE Ex. 

83, p. 9. Iowa and Illinois are the two major corn producing states. Each 

produced over one billion bushels of corn in the 1972-73 crop year. Indiana, 

Nebraska and Minnesota each produced about one half billion bushels in that 

year. These five states produced 67 percent of the nation's corn crop in 1972-

73. DE REQ III, 70; DE Ex. 12. 

9. In the 1972-73 crop year there were 5.6 billion bushels of corn produced 

in the United States. This was 68 million bushels less than the 1972-73 crop 

year, which had been the largest corn crop in history. In 1972-73, with a 

carryover of 1.1 billion bushels from the previous year, there was a total corn 

supply of 6.7 billion bushels. DE Ex. 83, Helmuth p. 9, DE Ex. 13. 

10. There were quality problems with the 1972-73 corn supply, caused 

primarily by wet weather during the harvest and a hard winter. The harvest was 

delayed into the winter months and early spring. Some corn suffered field 

damage and other corn was damaged by the methods used to dry it. DE Ex. 26, DE 

Ex. 83, Helmuth, p. 10, 11. Additionally, corn that had been in storage for 

several years, and was therefore dry and brittle, was moving to market. Coonrod 

(1) 373; Kattke 1146; Walsh 1508-9; McCormick 1119. The magnitude of the 1972-

73 corn quality problem is reflected in the grades of corn inspected in Chicago. 

In 1973, there were 16,972 railcars of corn inspected. Only 31.4 percent of 

these cars graded No. 2, or better, which was lower than in any of 

the previous 10 years. About 28 percent graded No. 3 and 40 percent graded No. 

4 or lower. DE Ex. 27; Ex. 83, Helmuth p. 11. The percentage of corn grading 

below grade No. 3, or lower, was the highest in 10 years. DE Ex. 27; Ex. 83, 

Helmuth p. 11. The quality of corn was not uniform, being worse in eastern 

Illinois, Indiana and Ohio, and better in Iowa. Parrott 143; 1146-47. 

11. The largest demand for corn is for use as livestock and poultry feed 

within the United States. During the 1972-73 crop year, this demand accounted 

for 72 percent of the crop usage. This compared with approximately 78 percent 

during the ten previous crop years. The second largest demand for corn is for 

exports. In 1972-73 this accounted for about 21 percent of the demand, compared 

to 11 to 15 percent in the ten previous crop years. Corn processing, the third 

major demand for corn, accounted for about 7 percent of the corn usage in 1972-

73, compared with about 8 percent in the ten previous crop years. DE Ex. 83, 

Helmuth p. 13 and Ex. 13. 

12. Total disappearance (usage) of corn increased from 5,183 million bushels 

in 1972-73 to 5,991 million in 1972-73. Domestic feed use, increased by 332 

million bushels and exports by 462 million in 1972-73 over the previous year. 

Instead of increasing as was generally expected because of the large crop, the 

carryover in 1972-73 decreased to 709 million bushels compared to 1,126 million 

bushels in 1972-73. The increase in corn exports in 1972-73 over previous years 

is shown below: 

Crop Year Beginning Exports in Millions
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October 1 Of Bushels 

1962 416 

1963 500 

1964 570 

1965 687 

1966 487 

1967 633 

1968 536 

1969 612 

1970 517 

1971 796 

1972 1258 

DE Ex. 13; RE Ex. Bk. A, Hieronymus p. 10. 

13. The increase in export demand was not fully anticipated by market 

observers. The U.S. Department of Agriculture projected in November, 1972, 

February, 1973, April, 1973, and May, 1973 that corn exports would be 1 billion 

bushels, but in August 1973, revised the estimate to 1.25 billion bushels, an 

increase of 250 million bushels. Almost one-half of the 1972-73 increase in 

corn exports over the previous year (462 million bushels) was purchased by the 

Soviet Union (125 million bushels) and the Peoples Republic of China (50 million 

bushels). The U.S. Department of Agriculture, in August 1973, estimated corn 

exports of 1,125 million bushels for the following year, thereby indicating a 

continued strong export demand. RE Ex. Bk. B, Sections 1 and 2. 

14. The increased exports of corn, and other grains, resulted in a severe 

shortage of transportation facilities, particularly of rail cars. Delivery time 

for the Soviet grain purchases was shortened because of the time required to 

negotiate a shipping agreement. Little of the purchase was moved before 

December -- after the closing of the Great Lake ports. Reported rail car 

shortages exceeded 20,000 cars per day. Elevators became jammed with grain, 

resulting in cars being held for unloading, and aggravating the car shortages at 

origination points. Delays in the shipment of corn from Iowa to Chicago grew to 

as much as three months in the summer of 1973. Grain purchased for movement in 

the early spring was being moved in mid-summer. Increased transportation 

demands were reflected in increased barge and truck rates, and in abnormally 

large 

grain price differentials between country points and export delivery points. DE 

Ex. 22; Cordes I, 308; Corbin 1476-78; Hall II, 43-46; Hollander 3678-79; 

Johnson 781; Johnston 1763, 1778-79; Kattke 1149-52; Kubiak II, 85; L. Miller 

II, 449-50, 467; Morrison I, 285-87; McCaull 1353; R. Parrott 1152-53; Richards 

1240; C. Parrott 3904-5. 

15. Lake shipments of corn from Chicago during June, July, and August, 1973 

were larger than they were for corresponding periods in any of the prior six 

years. A total of 22.8 million bushels of corn were shipped from Chicago via 

the Lake during that period as compared to 16.4 million bushels during the same 

period of 1972. Shipments during July, 1973 alone were 2.2 million bushels 

larger than in July, 1972 and were the most for that month in the prior six 

years. DE Ex. 24. 

16. Chicago is situated between surplus and deficit areas of corn. In 1973, 

124,490,000 bushels of corn were received in Chicago -- 4,734,000 by barge, 

57,804,000 by rail, and 61,952,000 by truck. In 1973, there were 61,360,000 

bushels of corn shipped from Chicago, 53,268,000 bushels by lake and seaway, 

2,978,000 by Illinois waterway, 5,064,000 by rail and 50,000 by truck, leaving 

58,993,000 bushels for city consumption and unaccounted for. RE Ex. Bk. A, 

Hieronymus, p. 6; DE Ex. 14. 

17. CPC International, Inc. (CPC), and American Maize-Products Company 

(American Maize) each operate corn processing plants in the Chicago metropolitan 

area. These plants process a total of about 50 to 55 million bushels of corn a 
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year -- 20 million for American Maize, and between 30 and 35 million for CPC. 

DE Ex. 14; Westerbeck 1060; Richards 1239. 

18. The principal firms shipping corn from Chicago by lake vessels during 

July 1973 were Cargill, Inc. (Cargill) and Continental Grain Company 

(Continental). These two firms accounted for about 80 percent of all lake 

shipments. DE Ex. 49. 

III. Cash Prices

19. The U.S. Department of Agriculture quoted the following cash prices for 

No. 2 yellow corn in Chicago for the dates indicated. Futures price are shown 

for comparisons. 

26846 CASH JULY FUTURES SEPT FUTURES

Quotations (Settlement) (Settlement)

 2 230 1/4 222 3/4 209 3/4 

 3 237 3/4 229 3/4 214 1/2 

 5 225 3/4 219 1/4 204 1/2 

 6 218 1/2 212 1/2 201 1/4 

 9 220 1/4 212 1/4 203 1/2 

10 218 214 199 

11 233 224 209 

12 239 232 214 1/2 

13 246 3/4 241 3/4 222 3/4 

16 253 3/4 251 3/4 231 1/4 

17 246 245 1/2 223 1/4 

18 245 3/4 249 1/2 226 7/8 

19 258 3/4 259 1/2 236 7/8 

20 266 3/4 380 246 7/8 

23 278 1/4 256 7/8 

24 272 1/2 261 3/4 

25 282 271 3/4 

26 286 278 

27 273 268 

30 278 278 

31 288 288 

August 1978 CASH SEPT FUTURES

Quotations (Settlement)

 1 274 278 

 2 267 1/4 271 1/4 

 3 278 3/4 281 1/4 

 6 288 1/4 291 1/4 

 7 299 1/4 301 1/4 

 8 311 1/4 311 1/4 

 9 316 317 3/4 

10 300 3/4 327 3/4 

13 337 3/4 337 1/4 

14 339 3/4 347 3/4 

15 323 1/2 337 3/4 

16 315 1/2 337 3/4 

17 303 320 1/2 

20 304 1/2 311 1/2 

21 288 1/2 301 1/2 

22 279 1/2 291 1/2 

23 269 1/2 281 1/2 

24 279 1/2 290 

27 270 1/4 280 

28 259 1/4 270 

29 258 264 1/2 

30 248 1/2 254 1/2 
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August 1978 CASH SEPT FUTURES

 Quotations (Settlement)

31 250 1/2 250 3/4 

DE Exs. 4 and 6; RE Ex. A-E-2. 

20. On July 20, 1973, U.S. Department of Agriculture quotations for No. 2 

yellow corn were 257 to 258 at Kansas City, Kansas, 243 to 245 at Omaha, 

Nebraska, 260 to 261 at St. Louis, Missouri and 244 7/8 to 246 7/8 at 

Minneapolis, Minnesota. DE Ex. 6. 

21. Cash prices of grain are developed independently by the Agriculture 

Stabilization and Conservation Service of the U.S. Department of Agriculture in 

connection with its market activity. Its records show the following cash prices 

for No. 2 yellow corn in Chicago on the dates indicated: 

1973 

July 20 July 23 July 26 July 31

Delivered to Chicago 270 3/4 280 7/8 293 1/2 - Spot Prices 266 7/8 280 7/8 - 288 

FOB Vessel 276 7/8 291 7/8 - 318 

DE Ex. 73; Walsh 1535-42, 1551. 

22. On July 20, 1978, American Maize bid 267 for truck corn for delivery by 

July 28, 1973 Its highest bid during that month was 288 on July 31st. On August 

14, 1973, its bid was 337-3/4. DE Ex. 7. 

23. Shown below are bids for corn in Chicago by Cargill, Continental and 

Respondent IFB on the dates indicated: 

 

July 1973846 CARGILL CONTINENTAL IFB 

16 251 3/4 241 1/4 236 1/4 

17 245 1/2 233 1/4 229 

18 244 1/2 236 7/8 232 

19 246 7/8 246 7/8 242 

20 256 7/8 256 7/8 265 

23 266 7/8 266 7/8 267 

24 261 3/4 261 3/4 262 

25 271 1/4 248 272 

26 278 252 278 

27 263 244 1/2 248 

DE Ex. 7. 

24. Cash purchases of Grade No. 2 or 3 corn at Chicago during July and August 

1973, included the following: 

DATE BUYER AMOUNT PRICE 

July 18 American Maize 20 cars 243 3/4 

July 19 Farmers Grain 2,081 bushels 257 

July 20 American Maize 12 truckloads 9 rail cars 252 to 268 1/2 

July 20 Cargill 20,000 bushels 212-247 

July 23 American Maize 33 truckloads 60 rail cars 256 1/2 to 279 

July 23 IFB 360,000 bushels 276 

July 23 G H Miller 20,000 bushels 320 

July 25-27 Shatkin Trading Co 70,000 bushels 350 

July 26 Dixie Portland 5,000 bushels 317 

July 31 Shatkin Trading Co 10,000 bushels 350 

July 31 Shatkin Trading Co 7,000 350 

July 31 CPC 600,000 bushels 278 

July 31 IFB 25,000 bushels 283 

July 31 Cargill 35,000 291 1/4 

DE Ex. 9. 
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25. The U.S. Department of Agriculture cash corn quotations increased from an 

average of 132 in October, 1972, to 340 on August 14, 1973, and thereafter 

declined to an average of 247 for September, 1973. The average of these price 

quotations for the crop year 1972-73 was 191 compared to 123 for the 1972-73 

crop year. The 1972-73 price did not exceed 170 prior to the last week of 

April, 1973. RE Ex. Bk. A, Hieronymus, p. 11; DE Exs. 3 and 4. 

IV. Government Controls

26. On June 13, 1973, President Nixon ordered a freeze on the prices of all 

commodities and services offered for sale, with the exception of the prices 

charged for raw agricultural products. On June 27, 1973, the Nixon 

Administration, through the Department of Commerce, embargoed the export of 

soybeans, cottonseed and certain products thereof. On July 2, 1973, the embargo 

was replaced with licensing requirements which permitted the export of one half 

of the soybeans contracted for prior to June 13, 1973. The price of soybean 

futures fell from $ 10.80 per bushel on June 27, 1973 to a low of $ 6.30 on July 

9, 1973. RE Ex. Bk. B, Sec. 3. 

27. When the exportation of soybeans was embargoed on June 27th, the 

Department of Commerce warned that: "If there is any substantial increase in 

export demand for corn, which could be the case as a result of the controls 

being imposed today," it may be necessary to control exports of corn. RE Ex. 

Bk. B, Sec. 4 (Export Control Bulletin No. 8b, at 3). 

28. On July 18, 1973, after the close of trading on the CBOT, the White House 

issued a statement reading, in part: 

To relieve the extreme high prices of feeds, which have an important effect 

on prices of meat, poultry, eggs, and dairy products, we have placed limitations 

on the export of soybeans and related products until the new comes into the 

market. These limitations will remain in effect for that period. But permanent 

control of exports is not the policy of 

this Government, and we do not intend at this time to broaden the controls 

beyond those now in force. To a considerable degree, export controls are selfdefeating as an anti-inflation measure. * * * Unless present crop expectations 

are seriously disappointed, or foreign demands are extremely large, export 

controls will not be needed. However, reports of export orders for agricultural 

commodities will continue to be required. Our policy must always be guided by 

the fundamental importance of maintaining adequate supplies of food at home. 

RE Ex. Bk. B, Sec. 3. 

29. At a news conference on July 18, 1973, involving Secretary of the 

Treasury George P. Shultz, this question and answer were reported: 

Question. Why didn't you just declare some limitation on exports now so you 

would immediately know that you would have plentiful supplies on the market? 

Secretary Shultz. We have controls on soybeans and soybean derivatives for 

this year's crop. We think that is appropriate, and they will stay. We will 

continue to monitor exports and collect information in the program that has been 

put into effect and managed by the Commerce Department, so we will have 

knowledge of what the situation is. 

We think at this moment of time if the crops are as good, or possibly a 

little better, than those forecasts, and if the world demand is as it has been 

forecast, we will be able to manage without export controls. But we will 

monitor it, and as the President says in his message, you must observe the 

fundamental principle that we must provide adequate food at home. 

Having said that, I think it is undesirable -- if it can be avoided, it is 

undesirable to put controls on exports. * * * 

RE Ex. Bk. B, Sec. 3. 
Page 9 

V. 1973 Corn Futures Contracts

30. There were five futures contracts for the 1972-73 corn crop traded on the 

CBOT. Identified by the month in which they expired, they were December, 1972; 

March, 1973; May, 1973; July, 1973; and September, 1973. DE REQ I, 3. Each 

futures contract covered 5,000 bushels. DE REQ I, 4. 

31. In July, 1978 (with the exception of July 20), the daily trading limit 

for corn contracts was 10 cents above or below the previous day's closing price 

(or settlement price if there was a closing range). DE REQ I, 6. On July 19, 

1978, the CBOT Board of Directors removed the 10-cent daily trading limit on the 

July contract, effective July 20, 1973. DE REQ I, 7. Futures trading in the 

July, 1973, corn contract terminated on July 20, 1973, at approximately 12:00 

p.m. CDT. DE REQ I, 29. 

32. From June, 1972 to December, 1972, the July 1973 contract traded at a 

premium over cash quotations for No. 2 yellow corn at Chicago, as reported by 

the U.S. Department of Agriculture. Thereafter, with the exception of such 

quotations for June 14, July 18 and 19, 1973, the cash quotations were higher 

than the July futures prices. DE Exs. 3 and 3A; DE REQ II, 220-222; Mielke 50-

52. 

33. During June and July, 1973, the July contract traded at generally 

increasing premiums over the September contract. On June 1, 1973, the July 

contract closed approximately 9 1/2 cents over the September, and increased to 

22 5/8 cents on July 18 and 19, 1973. DE Ex. 5. 

34. The July contract was up the limit (10 cents) during the trading session 

or at the close on June 4, 5, 11, 12, 18, 19, 21 and July 2, 1973. It was down 

the limit during the sessions or at the close on June 7, 8, 14, 15, 26, 27, 28, 

and July 5, 1973. It was bid limit up on July 11, 12, 13, 16 and 19, 1973. The 

closing price on July 19 was 259 1/2 cents. RE Ex. Bk. B, Sec. 10. 

35. Open interest in the July corn contract was 70,015,000 bushels on June 

30, 1973. At the end of trading on July 19, 1973, the open interest was 

17,130,000 bushels. The average open interest for the last day of a July 

contract for the years 1963 through 1976, excluding 1973, was 6,676,000 bushels. 

DE Ex. 37. 

VI. Relation of Cash and Futures Prices

36. Many grain cash transactions are priced in relation to futures prices. 

The difference between the cash price and the futures price is the basis. In a 

basis transaction, the contract specifies the price as so many cents above or 

below a particular futures contract, as for example "5 over the July" or "5 

under the July." The price is fixed at a later time, generally at the buyer's 

option, by applying the basis, plus or minus, to the price of the futures 

contract on the day the price is fixed. McCaull 1362; Johnston 2081-82. 

37. Where a contract specifies a price in dollars and cents per bushel the 

transaction is referred to as a flat price transaction. Flat price transactions 

and basis transactions for which the price has been established are referred to 

as fixed price transactions. Basis transactions for which the price has not 

been established are unfixed price transactions. The actual fixing of the price 

of a basis transaction can be done in two ways. Normally, the buyer 

selects the day on which the price of the contract is fixed. If the buyer is a 

hedger with his own futures account, he may "give up" futures to the seller at 

any price they agree upon, normally a price within the trading range of that 

futures contract on that day. This is a noncompetitive transaction done outside 

the pit ("ex pit"), although it is carded by the brokers and cleared through the 

clearing firms of the two parties much like any transaction which occurred in 

the pit. The account of the cash corn buyer shows a sale of corn futures at the 

agreed price and the account of the cash corn seller shows a purchase of corn 
Page 10 

futures at the agreed price. Secondly, if the buyer is not a hedger and does 

not have a futures account, he may instruct the seller to go into the pit and 

buy futures to price the contract. The seller then buys the futures for his own 

account and the price of the contract is fixed at the level where the futures 

are bought (plus or minus the basis). McCaull 1362; Johnston 2130-31; L. Miller 

796; Hall II, 39; Kubiak II, 75-76 and 87; Kummer II, 592; Pratt II, 305-6, 310-

11, 314-17. 

38. Futures contracts enable grain traders to offset the risks of 

fluctuations in the market price of the cash commodity. If, for example, a firm 

owns a quantity of corn, bought at a fixed price, and the market price falls, 

the inventory decreases in value, which represents a loss to the company. 

Similarly, if it has sales of corn at a fixed price for delivery in the future 

which it has not yet covered with purchases and the market price rises, 

diminished profits or losses result. R. Parrott 165, 171; McCaull 1361; 

Johnston 2080. 

39. To avoid these risks, a long cash position (inventory plus fixed price 

purchases) can be hedged by selling futures contracts in an equivalent amount. 

Therefore, if the price declines, the loss on the cash side is compensated for 

by a credit in the futures account. Any difference between the loss on the cash 

side and the credit on the futures side results from a change in the basis. 

McCaull 1363, 1395; R. Parrott 166-68; Kubiak II, 76; Pratt II 309; Johnston 

2081. 

40. A short cash position (fixed price sales) can be hedged by taking an 

equivalent long position in the futures market. If the basis does not change, 

movement of the market price, up or down, will have no economic effect on the 

company's position. McCaull 1361-62; R. Parrott 167-68; Kubiak II, 77. 

41. Unfixed price purchases and sales are not hedged; until the price is 

fixed only the basis is established and there is no risk associated with changes 

in the market price. McCaull 1361; McElmury II, 105. 

42. When the price of one of the transactions is fixed, price risk is 

created. If the purchase price is fixed first, the trader has a fixed price 

purchase (long cash position) which he hedges by selling futures. The short 

futures position will be held until the price of the sale is fixed at which time 

it is offset. Pratt II, 310-11. 

43. When the price of a sale is fixed first, the trader has a fixed price 

sale (short cash position) which is hedged by purchasing futures. That long 

futures position is maintained until the unfixed price purchase of corn is 

priced. If between the two pricings the market price of corn increases there 

will be a loss on the cash side of the transaction and on gain on the futures 

side. If the market price of corn drops between the two pricings, the gain will 

be on the cash side and the loss on the futures side. McCaull 1364; Pratt II, 

319-21. 

44. Traders do not necessarily hedge individual transactions. Many 

transactions, long and short, cash and futures, offset each other. Therefore, 

combined (or net) positions may be hedged and individual cash transactions 

cannot be identified in the hedged position. McCaull 1417; Johnston 2084. 

VII. Deliveries

45. Futures contracts on the CBOT can be satisfied or liquidated by (1) an 

opposite and offsetting transaction in the same contract prior to the expiration 

of trading in that contract, or (2) by delivery of the specified quantity of the 

commodity by the seller and its receipt and payment by the buyer during the 

delivery month in conformity with the rules and regulations of the CBOT. DE REQ 

I, 31. 

46. Corn is graded by U.S. Department of Agriculture standards as No. 1, 2, 

3, 4, 5 or sample grade. There are five grade factors: test weight per bushel, 

moisture; broken corn and foreign material; heat damage; and total damage. Corn 

of lower grades because of high moisture content, broken corn and foreign 
Page 11 

material, or damage, can be up-graded. Moisture can be removed by drying, and 

broken corn and foreign material can be screened out. Corn which is of low 

grade because of a high percentage of damaged corn can only be upgraded by 

blending it with low-damage corn in order to reduce the total percentage of 

damaged kernels. Miller 793-94,808-11; Raskin 356-64; Bubnis 3989; RE. Ex. Bk. 

B, Sec. 8. 

47. Deliverable grades include only corn graded No. 1, 2 or 3, for which 

warehouse receipts have been issued and registered with the CBOT Office of the 

Registrar. There is a "non-deliverable and/or ungraded" category that combines 

into one total, "non-deliverable 

corn," which is corn of No. 4, No. 5 and sample grade for which warehouse 

receipts are issued and registered, and "ungraded" corn which is corn of any 

grade for which warehouse receipts have been issued and registered, but which 

are later cancelled. The Registrar's Office characterizes this "ungraded" corn 

as "free again." It is corn of known grade in an elevator and could include corn 

of both deliverable and non-deliverable grades. It could be re-registered and 

then considered "deliverable" or "non-deliverable" depending upon the grade. 

Shipments from an elevator are taken from the "ungraded" or "free grain" 

category. Clark I, 217-42; Kozlowski 633; L. Miller II, 457-60; RE Ex. Bk. E, 

Sec. 1. 

48. The month in which a futures contract expires is the delivery month and 

deliveries can be made by a short at any time from the first of the month to the 

last business day. Trading ceases at noon on the eighth day before the last 

business day of the delivery month. Prior to that time a long receiving a 

receipt may redeliver by taking a short futures position. Any positions 

remaining open after the expiration must be settled by delivery on or before the 

last business day of the month. DE REQ I, 29, 32, 33. 

49. A short, choosing to offset a corn futures position by delivery, does so 

by tendering through his clearing firm warehouse receipts for corn in an 

elevator regular for delivery on the CBOT. During the last three days of the 

delivery month, No. 1, 2 and 3 corn may also be delivered on track in cars 

consigned to an elevator regular for delivery. The warehouse receipts must be 

for No. 1, 2 or 3 yellow corn in 5,000 bushel lots. No. 2 yellow corn is 

deliverable at contract price, which is the settlement price of the future on 

the day delivery is made. If delivery is made after trading in the contract 

ceases, the contract price is the settlement price on the last day of trading. 

No. 1 yellow corn is deliverable at a one cent premium to the contract price, 

and No. 3 yellow corn at a 1 1/2 cent discount. DE Ex. 1; Hieronymus 4089-90; 

Helmuth 1646-47, 1786-88. 

50. Ordinarily, a buyer of corn will pay a higher price for cash corn than 

for long futures contracts because the buyer cannot specify the warehouse at 

which delivery will be made, the date of delivery, or the precise grade of corn 

on a futures contract. Therefore, most futures contracts do not culminate in 

delivery. Kottke 1161-1164. 

51. Traders make or take delivery when they calculate that to be the most 

economic source of supply or the best market for their commodity, considering 

the individual circumstances and commitments of the trader. Among the firms 

following this practice are Continental, Dreyfus, Bunge Corportion, Farmers 

Union Grain Terminal Association IFB, Goldkist, Inc., Ralston-Purina Company, 

and Early & Daniel. Kottke 1165, 1230, 1234; C. Parrott 3873-75; McCaull 1355, 

1380-81; Kerwin 1669, 1674-75; Werner II, 100-01; Johnston 2092-93; Gaston 3370, 

3381-82; Corder 301-03; 3176; Coonrod II, 368-69; Pratt 312-13. 

52. In 1973, the Commodity Exchange Authority published reports of the stocks 

of grain in deliverable position for the CBOT futures contracts in exchangeapproved and federally licensed warehouses. These reports were released each 

Tuesday and reflected stocks in position the preceding Friday. They showed 
Page 12 

deliverable, and non-deliverable and/or ungraded stocks. The reports for July, 

1973, and August 3, 1973, contained the following data on corn supply: 

July 6 July 13 July 20 July 27 August 3

(Thousands of bushels) 

Deliverable Grades 3,953 4,336 4,511 5,183 3,935

Non-deliverable and/or Ungraded 7,688 6,768 7,596 7,162 7,770

Total 11,641 11,104 12,107 12,345 11,705

DE Exs. 16 and 47; Kass 862-865. 

53. Ownership of corn in exchange-approved warehouse on July 20th was as 

follows: 

Owner Deliverable Non-Deliverable Ungraded Total 

Grades Grades (thousands of bushels) 

Continental Grain Co 3,235 191 1,620 5,046

Commodity Credit Corp 421 366 * 11 798

National Starch ** 340 313 - 653

Indiana Farm Bureau 228 - 656 884

Cargill, Inc 88 3,724 689 4,501

Louis Dreyfus 42 90 * 132 

Edmund O'Connor 25 - - 25

Cottonwood Ranch 25 - - 25

Lamson Bros Customers *** 20 - - 20

William O'Connor 10 - - 10

Dixie Portland - 14 - 14

Total 4,434 4,569 * 3,105 * 12,108

* Commodity Credit Corp. owned 366 thousand bushels and Louis Dreyfus 

Corp. owned 90 thousand bushels in the Calumet elevator. This total of 456 

thousand bushels is known to have consisted of about 327 thousand bushels 

of non-deliverable grades and about 129 thousand bushels of ungraded corn, 

but it was not possible to determine how much of each type of corn was 

owned by each firm. 

** Stocks of corn owned by National Starch were of a special variety 

called "waxy maize." 

*** The four customer accounts were Powers Bros. Farm, Josen, & Susan 

Hallwas, Richard Allison, and Wm. Lehmann. Each received futures delivery 

of 5,000 bushels on July 16th and redelivered on July 23rd. 

DE Ex. 48. 

54. Differences between these ownership figures and those shown in the stock 

report were caused by subsequent revisions in the figures of Continental Grain 

Co. Kass 887. Ownership of the stock is not public information and was 

determined by DE during its investigation. Kass 887-893. 

55. On July 20, 1973, the Commodity Credit Corporation (CCC) owned 349,000 

bushels of deliverable corn at New York Central Elevator and 658,000 at the Belt 

Elevator. Since both of these elevators are not regular for delivery their 

receipts are not tenderable in satisfaction of the CBOT delivery requirements. 

Transfer of grain from these elevators to elevators designated regular for 

delivery by the CBOT would cost 14 to 18 cents per bushel. American Maize also 

owned 381,000 bushels of waxy maize corn at the New York Central Elevator. DE 

Ex. 46. 

56. According to records maintained by the CBOT there were 6,471,000 bushels 

of corn received in Chicago between July 19 and August 1, 1973. Between the 

same dates, 3,577 bushels of corn were shipped from Chicago. DE Ex. 86; RE Ex. 

65; DE REQ II, 125. 

57. Shown below are: settlements, including re-deliveries; the open interest 

at the opening of trading on the last day of trading; total and deliverable 
Page 13 

stocks as of the last Friday preceding the last day of trading, in relation to 

the July corn futures contract for the years 1967 through 1974. See page 24A. 

VIII. Warehouses

58. To be "regular for delivery" on the CBOT (i.e., its receipts may be 

tenderable to satisfy delivery requirements) a warehouse elevator must be 

located within the Chicago Railroad Switching District, and located on one or 

more rail lines. DE Ex. 1. 

 

 

(Thousands of Bushels) 

(1) (2) (3) (4) (5) (6) (7) (8) 

JULY DELIVERY OPEN TOTAL DELIVERABLE %(2) % (2) % (5) 

CONTRACT SETTLEMENTS INTEREST STOCKS STOCKS of (4) of (5) of (3)

1967 5,555 11,140 5 572 2,800 99.7 198.4 397.8

1968 7,300 3,745 12,940 7,149 56.4 102.1 52.4

1969 11,475 10,675 7,430 5,537 154.4 207.2 192.3

1970 1,570 5,215 7,136 3,421 22.0 45.9 152.4

1971 2,805 9,005 8,689 7,177 32.3 39.1 34.3

1972 21,060 3,565 13,354 10,376 157.7 202.9 379.8

1973 2,290 17,130 12,107 4,511 18.9 50.8 379.8

1974 10,170 7,990 4,701 2,935 216.3 346.5 272.5

RE REQ 203, Attachment B. 

59. In July 1973, the elevators regular for delivery of corn on the CBOT, 

were the following: 

Cargill Elevator -- Operated by Cargill with a rated capacity of 

23,720,000 bushels, capable of loading vessels 

with a draft up to 26 feet. 

Continental Elevator B -- Operated by Continental with a rated capacity of 9,188,000 bushels, capable of loading 

vessels with a draft up to 26 feet. 

Continental Elevator C -- Operated by Continental with a rated capacity of 6,750,000 bushels, capable of load 

ing vessels with a draft of up to 26 feet. 

Gateway Elevator -- Operated by IFB with a rated capacity of 

6,750,000 bushels, capable of loading ves 

sels with a draft of up to 26 feet. 

Calumet Elevator -- Operated by Dixie Portland Flour Mills Inc 

with a rated capacity of 4,800,000 bushels, 

capable of loading vessels with a draft of up 

to 20 feet. 

Rock Island Elevator -- Operated by Garvey Grain Company with a 

rated capacity of 3,800,000 bushels, capable 

of loading vessels with a draft of 26 feet. 

Santa Fe Elevator -- Operated by Garvey Grain Company with a 

rated capacity of 1,800,000 bushels, capable 

of loading vessels with a draft of 13 feet. 

DE REQ I, 11, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23. 

60. A holder of a receipt issued by the Santa Fe Elevator may require that 

elevator, at its expense, to make the grain available at a warehouse capable of 

loading vessels of ordinary draft (of 20 feet). Burke 1125-26. 

61. There were two federally licensed warehouses in Chicago which were not 

located on water and were not regular for delivery: the Belt Elevator operated 

by Carey Grain Corporation and New York Central Elevator operated by Farmers 

Grain Dealers Association of Iowa. DE REQ I, 12 and 25. 

IX. 1973 Corn Transactions of IFB
Page 14 

62. In January and April, 1973, IFB entered into several export contracts 

requiring it to ship corn, in June, July and August, 1973, from Baltimore (three 

contracts of one million bushels each), and from Chicago (five contracts for 

600,000 bushels each, and one for 800,000 bushels). The contracts called for 

No. 3 yellow corn, maximum moisture of 15.5 per cent, which is considered 

standard export quality. By July 20, 1973, it had outstanding commitments of 

2,796,400 bushels to be shipped from Chicago and 2,491,445 bushels from 

Baltimore. RE Exs. Bk. A, Hieronymus p. 85, A-F-1 and A-F-2. These export 

commitments, plus 1,629,000 bushels in domestic corn sales resulted in a total 

short cash position of 6,916,845 bushels on July 20, 1973. RE Ex. A-F-7. 

63. On July 20, 1973, IFB had 4,070,000 bushels of corn in inventory and 

transit, plus 

 

1,263,000 bushels of country purchases. However, a substantial portion of this 

was of subgrade quality, rendering its cash position net short. It also had 

6,032,000 bushels of new crop purchases. An exhibit showing the cash and 

futures positions of IFB for each trading day in July and August, 1973, 

developed by its expert witness, Dr. Thomas A. Heironymus, is included as an 

appendix to this report. RE Exs. A-F-3, A-F-4 and A-F-7. 

64. During 1973, IFB entered all of its futures orders through Illinois 

Cooperative Futures Company, a registered futures commission merchant. It 

maintained three accounts there: 

Gold Proof Elevator -- Account Number 1160 

Indiana Grain -- Account Number 1190 

Feed Division -- Account Number 1191 

DE REQ I, 39 and 41. 

65. On July 2, 1973, the Gold Proof Account held a short position of 

1,690,000 bushels of corn in the July contract. By July 18, 1973, this position 

was reduced to 550,000 bushels which represented a hedge against unpriced sales, 

basis the July contract. On July 19, 1973, the account was reduced by 360,000 

bushels through an ex-pit transfer, July for September futures, with Indiana 

Grain Account No. 1190, at a price of 37 over the September, thereby changing 

the unfixed sales from basis the July future to basis the September future. As 

of 11:02 a.m. on July 20, 1973, the remaining positions in the Gold Proof 

Account had been closed through sell orders at prices no higher than 291. DE 

Exs. 30, 31, 33B, 40; DE REQ I, 89 to 121. 

66. The Feed Division Account No. 1191 held a long position in the July 

contract of 75,000 bushels on July 2, 1973, but this was entirely liquidated by 

July 6, 1973. DE Ex. 33C. 

67. Principally in issue in this proceeding are transactions in the Indiana 

Grain Account No. 1190. After the close of trading on July 2, 1973, Indiana 

Grain Account No. 1190 held a long position in the July contract of 795,000 

bushels. From July 2 through July 9, 1973, Indiana Grain entered only 5 orders, 

all to purchase July corn futures at a specified price. Each of these orders 

was for a quantity less than 100,000 bushels. DE Exs. 30, 31 and 33A. On July 

10, 1973, respondents entered two spread orders to buy a total of 4,100,000 

bushels of the July contract and sell a like amount of the March, 1974 corn 

futures contract at 14 cents premium over the March for the Indiana Grain 

Account. One of these orders -- for 1,100,000 bushels -- was filled, increasing 

the Indiana Grain long position in the July 1973 contract and increasing its 

short position in the March 1974 contract. The second order was cancelled. At 

the close of trading on July 10, 1973, the Indiana Grain Account held a long 

position in the July contract and a short position in the September and other 

deferred contracts. DE Exs. 30, 31 and 33A; Johnston, 1911. 

68. On July 11, 1973, respondents entered an order to purchase 2,490,000 

bushels of the July contract and sell a like quantity in the September at a 
Page 15 

premium of 14, July over September, for this account. That order was filled at 

July prices ranging from 219 to 221 and at September prices ranging from 204 to 

205. DE Ex. 31. Later in the day on July 11, 1973, respondents entered 5 

spread orders, each with instructions to buy 500,000 bushels of September 

futures, and to sell 500,000 bushels of July futures, at successive premiums of 

22 cents, 23 cents, 24 cents, 25 cents and 26 cents, July over September, for 

the Indiana Grain Account. These orders were good until cancelled, but they 

were not filled because the market did not reach the spreads specified. On July 

11, 1973, the July contract closed at 15 cents per bushel above the September. 

DE Exs. 2 (p. 19) and 31. 

69. On July 12, 1973, respondents cancelled the 5 spread orders to liquidate 

2,500,000 bushels in the July contract at permiums of 22 to 26 cents, entered on 

July 11, and replaced them with an order to buy 2,500,000 bushels of September 

corn futures, and to sell 2,500,000 bushels of the July contract, at a premium 

of 31 cents July over September. This new order to liquidate 2,500,000 bushels 

of Indiana Grain's July position was not filled but remained open. On July 12, 

1973, the midpoints of the closing range for the July and September corn 

contracts were 232 and 214 1/2, respectively. DE Exs. 2 (p. 19) and 30. 

70. On July 17, 1973, those spread orders to liquidate 2,500,000 bushels in 

the July contract were outstanding. On that date they were cancelled, and 5 

spread orders were entered, each with instructions to buy 500,000 bushels of 

September futures and to sell 500,000 July futures at successive premiums of 33 

cents, 34 cents, 35 cents, 36 cents and 37 cents, July over September These new 

orders to liquidate 2,500,000 bushels of Indiana Grain's July position were not 

filled and remained open. On July 17, 1973 the midpoints of the closing range 

for the July and September corn contracts were 245 1/2 and 223 3/4, 

respectively. DE Exs. 2 (p. 19) and 31. 

71. On July 19, 1973, upon learning that the price limits would be removed 

from the July contract on July 20, 1973, respondents cancelled the spread orders 

to liquidate 2,500,000 bushels in the July contract, at premiums of 33 to 37 

cents, entered on July 17, 1973. On July 

 

19, 1973, the midpoints of the closing range for the July and September corn 

contracts were 259 1/2 and 236 7/8, respectively. DE Exs. 2 (p. 19) and 30; 

Johnston, 2123-4, 2142. 

72. Between July 11 and July 19, Indiana Grain filled a number of orders to 

buy small (less than 100,000 bushels) quantities of the July contract, which 

further increased its long position in the July contract. These orders were 

entered to fix the price of cash sales made by Indiana Grain basis the July 

contract. DE Ex. 31; Johnston, 2129-32. 

73. At the close of trading on July 19, 1973, IFB held a net long position in 

the July contract of 4,705,000 bushels. (Indiana Grain's position was long 

4,895,000 bushels and Gold Proof's short position was 190,000 bushels). This 

position, the largest held by any trader in the July contract, represented 27.5 

per cent of the long open interest. DE Exs. 30, 32, 33 and 34. 

74. Before 11:02 a.m. on July 20, 1973, Gold Proof had completely liquidated 

its short position in the July contract. Therefore, Indiana Grain Account No. 

1190 was the only account of IFB which then held a position in the July 

contract. DE Exs. 40 and 33B; DE REQ I, 108-110, 112-120. 

75. At 8:53 a.m. on July 20, respondents entered a spread order to buy 

2,250,000 bushels of September futures, and sell a like quantity in the July 

contract, at a premium of of 47 1/2, July over September, for the account of 

Indiana Grain. This order was later cancelled, and at 9:15 a.m., prior to the 

opening of trading respondents entered four spread orders as follows: 

Order Number Instructions on Order (Thousands of Bushels) 

70489 Buy 500 Sept. corn, Sell 500 July corn; July + 44 1/2 

70490 Buy 500 Sept. corn, Sell 500 July corn; July + 47 1/2 
Page 16 

70491 Buy 500 Sept. corn, Sell 500 July corn; July + 52 1/2 

70492 Buy 750 Sept. corn, Sell 750 July corn; July + 551/2 

DE Ex. 40. 

76. These orders were later modified, by reducing the spread premium by about 

2 1/2. At about 9:59 a.m., respondents entered an order to sell 150,000 bushels 

in the July contract at 300. The July contract was trading at about 282 or 283 

when this order was entered. DE Ex. 40; Johnston 1997, 2142-5; Catron, 1595, 

1606-8; Warning, 1705. By approximately 11:24 a.m. on July 20, 1973, three of 

the spread orders were filled as follows: 

Price Per Bushel At Which Order Was Filled

Time Report 

of Execution

Order Number July Future September Future Spread Premium was made 

70489 288 246 42 10:51 a.m. 

70490 291 246 45 11:26 a.m. 

70491 297 246 51 11:37 a.m. 

 

DE Exs. 39 and 40; RE Ex. A-G-2. 

77. The Indiana Grain Account then held a long position in the July contract 

of 3,395,000 bushels which represented about 62 per cent of the long open 

interest. Indiana Grain had one spread order (No. 70492) to buy 750,000 

September and to sell 750,000 July at a premium of 53 cents, July over 

September, and one price order to sell 150,000 July at 300, in the corn pit 

which had not been filled. The price order was filed between 11:26 a.m. and 

11:33 a.m. The spread order was filled between 11:26 a.m. and 11:28 a.m. DE Ex. 

34, 39 and 40; RE Ex. A-G-2. 

78. The July contract reached 370 for the first time at about 11:39 a.m. on 

July 20, 1973. At some time between 11:30 a.m. and 11:40 a.m., Mr. William 

Catron, called Respondent Johnston from the exchange floor to inform him of what 

was happening in the market, and explained that the July contract was having a 

hard time liquidating, that there were vacuums in it, and that there was a lack 

of sell orders in the pit. Mr. Catron also advised Respondent Johnston that the 

price was in the 370 range. Respondent Johnston then instructed Mr. Catron to 

sell 100,000 bushels at 370, 375, 380, 385, and 390, respectively, for a total 

of 500,000 bushels. Based upon these instructions Mr. Catron entered the 

following orders: 

 

 

Time Order Instructions on Order 

Order Number was entered (Thousands of bushels) 

70783 11:38 a.m. Sell 100 July corn at 370

No Number -- Sell 100 July corn at 375

70784 11:39 a.m. Sell 100 July corn at 380

70787 11:40 a.m. Sell 100 July corn at 385

70786 11:40 a.m. Sell 90 July corn at 390 

These orders were received at one time by Mr. Catron and written up by him as 

fast as he could and sent to the pit. All were executed, except for 5,000 

bushels of the last order. DE Exs. 39 and 40; RE Ex. A-G-2; Johnston, 1998-9; 

Catron, 1595, 1597, 1611-14 and 1619. 

79. After the close of trading on July 20, 1973, respondents held a long 

position of 2,010,000 bushels, on which it received delivery. DE Exs. 17 and 

34. 
Page 17 

80. Respondents received receipts for 1,470,000 bushels in Continental 

Elevators Band C; 90,000 bushels in Cargill Elevator; 425,000 bushels in Calumet 

Elevator; and 25,000 bushels on track. DE Ex. 51. 

81. The corn in Calumet Elevator could not be applied to export contracts 

without being moved to an elevator with a draft of 26 feet. It was sold FOB 

Calumet Elevator. The 90,000 bushels in the Cargill Elevator was traded along 

with 15,000 bushels in the Calumet Elevator, for 85,000 bushels in the 

Continental Elevator, and 20,000 bushels received on track, which was moved into 

IFB's Gatway Elevator. DE Ex. 51; Johnston 2160-64. 

82. All but 198,706 bushels of the corn stored in the two Continental 

Elevators were used to fill export contracts. That quantity was sold to a buyer 

on an existing contract to complete the loading of a vessel. RE Ex. A-F-1; 

Johnston 1940. 

X. Other Traders

83. The open interest to be resolved on the last day of trading in the July 

1973 corn futures contract was 17,130,000 bushels. The evidence identified all 

of the major positions, and accounts for 14,030,000 bushels of the open long 

positions. Of that number, 11,135,000 bushels were reported to the CEA to be 

hedge positions. There were the following: 

Indiana Grain (IFB) 4,895,000

Louis Dreyfus Corp. 4,145,000

Continental 1,890,000

Ohio Farmers Grain Corp. 105,000

Stotler & Co. 100,000

DE Ex. 34; RE Exs. Bk. D-I, Sec. 17, 21, 27, Bk. A, Hieronymus, 79-80. 

84. The positions of reporting speculators totaled 2,395,000. They were the 

following: 

William O'Connor 600,000

John F. McKerr 525,000

John T. Gelderman & Co 385,000

Hennessy & Associates 310,000

Theodore Hartly 225,000

Mid-States Terminals 200,000

Farmers Grain & Supply 150,000

RE Ex. Bk. D-I, Sec. 23, 24, 25, 26, 27, Bk. A, Hieronymus, 73-76; DE Ex. 34. 

85. The identified short positions of 100,000 bushels or more at the opening 

of trading on July 20, 1973, totaled 15,760,000. They were the following: 

Sumitomo Shoki America, Inc. 4,420,000

Bunge Corporation 2,405,000

Cargill, Inc. 1,950,000

Peavey Company 1,520,000

Con Agra 1,170,000

Central Soya 780,000

Pillsbury Company 650,000

Cook Industries 430,000

Early & Daniels 345,000

Illinois Grain 335,000

R. F. Cunningham 310,000

Far Mar Co., Inc. 280,000

Gold Proof Elevator (IFB) 190,000

Ralston Purina 175,000

General Mills Inc. 150,000

B. C. Christopher & Co. 150,000

Farmers Union Grain Terminal Association 150,000

Evans Milling Co 150,000

Farmers Grain Dealers Assoc. of Iowa 100,000

Tabor & Co. 100,000
Page 18 

With the exception of 925,000 bushels for Sumitomo Shoki America Inc. 

(Sumitomo), all of the short positions were reported as hedges. None of the 

shorts, except Cargill, owned deliverable corn. RE Ex. Bk. D-I, Secs. 23, 24, 

25, 26, 27, Bk. A, Hieronymus, 73-76; DE Ex. 34. 

86. More than 4 million bushels of the short positions held at the opening of 

trading on July 20 represented hedges on corn that had been sold at unfixed 

prices, basis the July, which had not been priced. These positions included 

most of the short positions of Far Mar. Co.; Farmers Union Grain Terminal 

Association; Farmers Grain Dealers Association of Iowa; R. F. Cunningham; 

Pillsbury Company; Early and Daniel; Gold Proof Elevator; Illinois 

 

Grain Corp.; Central Soya and Cargill. The holders of these short positions 

could not offset them until the purchasers of the corn priced the contracts. 

Kubiak II, 77-78; Corbin 1479; Donnelly 374; Coonrod II, 367-68; Pratt 305-07; 

Kummer 591-94, L. Miller 819-22; Resp. Ex. A, Hieronymus, 40-43, 76-77, 105; 

Johnston 1960-61, 2134. 

87. There were 2,225,000 bushels of corn delivered on the July 1973 corn 

contract, with 65,000 of these bushels being redelivered, making a total of 

2,290,000 bushels that was satisfied by delivery, as follows: 

Account Initial Deliveries Redeliveries Total 

(1000 bushels) Continental 1,600 -- 1,600

Pillsbury Co. 350 -- 350

Cargill, Inc. 100 -- 100

Henry Bartelstein 70 30 100

Edmund O'Connor 25 -- 25

Cottonwood Ranch 25 -- 25

Bache & Co. 20 -- 20

Lamson Bros. Customers -- 20 20

J. Kinsman/L. Standafer 20 -- 20

Peavey Co. -- 15 15

George Redman 10 -- 10

Farmers Elevator Co. 5 -- 5

Total 2,225 65 2,290

DE Ex. 17. 

88. Deliveries on the July contract were received as follows: 

Account Received Redelivered * Final Receivers 

(1000 bushels) Indiana Grain (IFB) 2,010 -- 2,010

Louis Dreyfus Corp. 200 -- 200

Hennessy & Assoc. 25 25 -- Lamson Bros. Customers 20 20 -- Peavey Co. 15 15 -- Bache & Co. 10 -- 10

Oliver Ecles 5 5 -- Paul Blesi 5 -- 5

Total 2,290 65 2,225

* Includes corn that was redelivered by the receiver and corn received 

on delivery which was sold in the cash market to someone who "redelivered" 

it on the July future. 

DE Ex. 17. 

89. The Louis Dreyfus Corp. (Dreyfus), the largest long, other than the 

respondent, is a grain dealer operating on a worldwide scale. It exports grain 

from the Gulf; the Atlantic Coast, including Baltimore; the St. Lawrence at Port 

Cartier; and the Great Lakes, including Duluth-Superior, Milwaukee, Chicago, and 

Toledo. In 1973 the company had physical facilities at Port Cartier, Baltimore, 
Page 19 

New Orleans, and Houston. Grain is originated in the interior for shipment to 

ports and is bought from other firms at ports. The company's emphasis is on 

overseas sales, arrangements for transportation, and supervision of the loading 

processes. Dreyfus buys from other exporters and often uses the facilities of 

other exporters for loading. RE Ex. Bk. A, Hieronymus, p. 56; Robinson (I) 145, 

148-151, 164-166 and 170. 

90. By 11:24 a.m. on July 20, 1973, Dreyfus' long position was reduced to 

480,000 bushels. It sold 5,000 bushels at 300 and spread 275,000 to the 

September contract at a spread of 65. It took delivery of the 200,000 bushels 

partially 

to meet immediate requirements to load a vessel in Chicago. On July 19, 1973, 

Dreyfus had a short cash old crop corn position out of the Greak Lakes of 

2,020,000 bushels. RE Exs. Bk. D-II, Sec. 16, A-E-37, 23 and 25. DE Exs. 34, 

70, 71 and 72. 

91. Dreyfus' long position was a hedge against export sales. Until July 19, 

it had considered standing for delivery of a substantial amount, if not all, of 

its position in the July futures contract. The large price rise of the July 

future, relative to the September future, on July 20, made it more economical to 

move its long hedge position into the September futures and to shift the 

fulfillment of some of its sales commitments to other ports. During July and 

August, 1973 Dreyfus shipped a total of 1,296,000 bushels of corn from Chicago 

by lake vessel including the 200,000 bushels it received through delivery on the 

July future. On July 19 and 20, Dreyfus purchased a total of one million 

bushels of corn from Continental FOB Duluth-Superior. DE Exs. 49 and 53; RE 

Exs. 3 and 48; McCaull 1358-61, 1380-82, 1385, 1390, 1392 and 1408. 

92. Continental is one of the nation's two largest grain exporting firms. It 

has extensive interior acquisition offices throughout the United States. It has 

export elevators at Portland, Oregon; Beaumont, Texas; Westwego, Louisana; 

Norfolk, Virginia; two at Chicago, one at Milwaukee, Wisconsin, one at Superior, 

Wisconsin, and a lease arrangement with the Three Rivers Elevator in Canada. 

Continental's, North America division has three principal regions, Chicago, St. 

Louis and Kansas City, which operated numerous elevators and facilities 

throughout the central United States. Kottke 1134-36; 1189-94; DE Ex. Bk. A. 

Hieronymus, 66-67. 

93. On July 20, 1973, Continental changed from a net long position in the 

July contract of 1,890,000 bushels at the beginning of the day to a net short 

position of 1,600,000 bushels at the close of trading. Although Continental's 

long position at the beginning of trading represented about 11 percent of the 

long open interest, Continental had already agreed to transfer 1,050,000 bushels 

of its long position to Cargill to fix the price of that quantity of corn 

purchased from Cargill at the Gulf. The remainder of its long position was 

liquidated after the July-September spread exceeded 35 cents. As the price of 

the July contract increased, Continental initially sold one million bushels for 

delivery. By about 11:24 a.m. it had obtained a short position in the July 

contract of 1,090,000 bushels. When the contract went higher it sold (net) an 

additional 510,000 bushels for delivery, including 130,000 bushels at prices of 

370, or higher. DE Ex. 34, 66 and 67; Kottke 1158-60, 1164. 

94. Continental purchased 180,000 bushels of corn warehouse receipts (stored 

at Calumet Elevator) from the CCC at 281 on July 23, 1973. Of these, 

Continental delivered 105,000 bushels to partially satisfy its futures position, 

sold 70,000 bushels at 350 to Henry Bartelstein, and sold 5,000 bushels at 317 

to Dixie Portland. Continental also delivered, in satisfaction of its short 

position, 1,495,000 bushels from its stock of corn stored in Continental 

elevators "B" and "C". Walsh, 1545; Wilson, 1624-27. 

95. To make delivery of its short position, Continental was required to shift 

a portion of its export program away from Chicago and, as a result, it incurred 
Page 20 

added expenses for demurrage, overtime, and activities related to the changed 

circumstances. Kottke 1167-1169. 

96. Continental shipped from Chicago 3,730,000 bushels of corn in July and 

2,371,000 bushels in August, 1973. DE Ex. 49. 

97. On July 20, 1973, Continental had 5,046,000 bushels of corn in its two 

Chicago elevators, 3,235,000 of which was graded No. 3, or better. DE Ex. 48. 

98. Continental sold 1,000,000 bushels of corn FOB Duluth-Superior on July 19 

and 20, 1973, at a basis of 35 over the September futures price. Kott 1157. 

99. Sumitomo is an American subsidiary of a large Japanese trading company. 

Headquartered in New York and engaged in exporting corn and other commodities 

from the United States, it has no physical grain facilities in this country. It 

buys corn FOB vessels at U.S. ports and sells it CIF a foreign port. In July, 

1973, it owned no corn inventory and its cash position consisted entirely of 

priced and unpriced purchases and sales. Documents of record indicate that its 

entire short futures position was speculative, though only 925,000 bushels were 

so reported. Its 204 reports show that it held no net cash position in July and 

August, 1973; its priced purchases equalled its priced sales, and its unpriced 

purchases equalled its unpriced sales. RE Exs. 20, 21 and Bk. A, 64-65 and A-E41. 

100. Sumitomo traded through the clearing firm of Louis Dreyfus-A.C. Israel 

Commodity Corp. (Dreyfus-Israel), a partnership of Dreyfus and A.C. Israel. 

Kozlowski 599. On July 20, Sumitomo was short 3,920,000 bushels of corn and 

Dreyfus was long 3,440,000 bushels in their respective accounts at DreyfusIsrael. RE Ex. Bk. A, Hieronymus 109-110. DE Ex. 34. On July 20, three JulySeptember spread transactions, totaling 1,275,000 bushels were cleared 

 

through Dreyfus-Israel in which Dreyfus and Sumitomo were on opposite sides. 

Two transactions, each involving 500,000 bushels were accomplished at spreads of 

33 1/8 cents, premium the July. This was the smallest premium of any JulySeptember traded on July 20 Kozlowski 671-726; RE Exs. 23, 24, 25, 29 and 30. 

101. The July price on both transactions was 280 -- the lowest price at which 

the July contract traded on that day. All of the floor orders for both sides of 

the transactions are time stamped two to nine minutes after 9:50:30 a.m., which 

was the last time at which July corn traded at 280. RE Exs. 24, A-G-2; DE Exs. 

39, 70, 71. The CBOT time and sales report shows a spread at the price of these 

transactions at 10:26:40 a.m. DE Ex. 39. The pit slip for that quotation, time 

stamped 10:26:40, bears a handwritten note, "Insert spread at 9:56." The Dreyfus 

floor orders are time stamped 9:55 a.m. and 9:57 a.m. According to the CBOT time 

and sales report, July corn traded at 285 from 9:54 a.m. to 10:02 a.m. and 

during the same period September corn traded in a range of 246 to 246 7/8. RE 

Ex. 25, A-G-2. 

102. The third spread transaction between Sumitomo and Dreyfus was done at a 

July premium of 65 cents over the September. The Dreyfus floor order was time 

stamped at 11:37 a.m. and the Sumitomo floor order at 11:50. That spread was 

done at a July price of 310 and a September price of 245. 

103. On July 20, Sumitomo closed its July short position and sold 4,025,000 

bushels of September corn, of which it reported 2,000,000 bushels (the 

speculative limit) as speculative, although its cash position had not changed 

since it had reported 925,000 bushels of its position as speculative. RE Exs. 

Bk. D, Part I, Sec. 20 and A-E-41. 

104. On July 20, Sumitomo expanded its short position by selling an 

additional 105,000 bushels of corn at 290. The entire July position of Sumitomo 

was closed before the trading ceased on July 20, more than 4 million bushels of 

which were spread to the September contract. When the futures price of 

September corn increased to 347 3/4 on August 14, these positions were offset. 
Page 21 

The firm lost about $ 3.7 million on the transactions. RE Exs. Bk. A, 

Hieronymus, P. 66, Bk. D, Part I, Sec. 20. 

105. Bunge Corporation (Bunge) is a major grain export company. Export sales 

are made primarily from its New York office. Interior branch offices acquire 

grain and arrange logistics to ports. Exports of corn are made through 

facilities on the Great Lakes, the East Coast, and the New Orleans Gulf area. 

RE Ex. Bk. A, Hieronymus, pp. 61-62. 

106. Bunge offset its entire short position on July 20. All but 275,000 

bushels were covered before 11:24 a.m. DE Ex. 34. 

107. Cargill, Inc. (Cargill) is one of the two largest grain companies in the 

United States. It estimates that it does about 25 percent of the U.S. grain 

export business. Miller II 445. It owns and operates country elevators, 

interior merchandising offices, terminal elevators at all major markets, export 

elevators at most U.S. ports, owns and operates a river barge line, has a large 

number of leased rail cars under its direct control, has branch offices or 

agents in 25 to 30 countries, and operates shipping and receiving grain 

facilities in numerous places abroad. The Central region includes Illinois, 

northwestern Indiana, and southern Wisconsin, with offices located in Chicago, 

Gibson City, Tuscola, Peoria, Illinois, and Milwaukee, Wisconsin. RE Ex. Bk. A, 

Hieronymus, p. 71. 

108. Of the 1,950,000 bushels in the Cargill position, 1,050,000 bushels were 

held for pricing a cash sale to Continental. Futures were exchanged with 

Continental to liquidate that portion of Cargill's position. Cargill had closed 

all but 90,000 bushels of the remainder of its position before 11:26 a.m. on 

July 20 at prices under 300. The balance was covered at prices of 305 and 317. 

Upon receiving a telephone call reporting a one-day delay in the arrival of a 

vessel, Cargill's trader entered an order to sell 100,000 bushels at about 11:40 

for 325. Before the order was executed, the price rose to 340, at which price 

the order was executed. Cargill made delivery on the 100,000 bushels. DE Ex. 

34. Miller 803-804, 820, 824 and 838. 

109. Its elevator unloaded 3,321,000 bushels of corn in July, of which 

2,150,284 bushels graded No. 3 or better. RE Ex. Bk. E, Sec. 1. 

110. Between July 16 and July 31, Cargill sold over 1.6 million bushels of 

cash corn in Chicago, including 1,200,000 bushels of No. 2 yellow corn to CPC, 

half of which was for delivery in August. DE Ex. 9. 

111. The Pillsbury Company (Pillsbury) is a commodity merchandising 

subsidiary of a large vertically and horizontally integrated company. Its 

various offices buy corn from county elevators and sell to processors, feed 

manufacturers, and exporters. It operates between 25 and 30 facilities in the 

Midwest. Most of its corn merchandising is in the central Corn Belt to the 

south and southeast. RE Ex. Bk. A, Hieronymus, p. 43. 

112. Pillsbury's July 20 position was reduced to 100,000 bushels by 11:24 

a.m. Most of the closed positions represented pricings on cash 

 

sales made basis the July future. DE Ex. 34; Coonrod II, 367. 

113. When the price of July corn became volatile in the last half hour of 

trading, Pillsbury sold 150,000 bushels at 350 for the purpose of making 

delivery. A few minutes later, when the July price declined sharply, Pillsbury 

began buying back the short position since it could do so at a profit without 

making delivery. It bought 25,000 bushels at 325, 10,000 at 315 and 80,000 at 

300. Minutes later when the price advanced again, Pillsbury sold 95,000 at 330, 

5,000 at 335, 10,000 at 340, 100,000 at 380 and 95,000 at 390. When July corn 

expired, Pillsbury was short 350,000 bushels, on which it made delivery. DE Ex. 

34; Coonrod (11) 369-72; RE Ex. Bk. A, Hieronymus, p. 43-45; RE Ex. Bk. D-II, 

Sec. 8. 
Page 22 

114. To make delivery, Pillsubry diverted corn from other merchandising 

channels, including corn in transit from Iowa, and a CCC purchase at Roberts, 

Illinois. Coonrod 2194-98. 

115. Henry Bartelstein delivered a total of 100,000 bushels on the July 

contract. Mr. Bartelstein had not intended to make delivery but, through his 

own error, held a short July position of 100,000 bushels at the close of trading 

on July 20, 1973. In order to offset this position, Mr. Bartelstein made the 

following purchases through Shatkin Trading Co.: 

(1) 70,000 bushels of corn warehouse receipts (in storage at Calumet) from 

Continental at 350 on July 25 or 27, 1973; 

(2) 10,000 bushels of corn warehouse receipts (in storage at Continental "B") 

from Hennessy & Associates at 350 on July 31, 1973; 

(3) 5,000 bushels of corn on track from A.E. Staley at 350 on July 31, 1973; 

and 

(4) 15,000 bushels of corn on track from Hennessy & Associates at 280 on July 

31, 1973. 

DE Exs. 9, 11 and 17; Bartelstein, 1469-71; Eckles, 1681-82; Wilson, 1625-26; 

Mailers, 1049-51. 

116. Edmund O'Connor and Cottonwood Ranch each delivered 25,000 bushels on 

the July contract. This was corn that they owned in store Chicago regular 

elevators. DE Exs. 17, 47 and 48. 

117. Bache and Co. delivered 20,000 bushels on the July contract as did four 

customers of Lamson Bros. Neither Bache nor the four customers of Lamson Bros. 

intended to make or take delivery. Through an error, Bache delivered 20,000 

bushels on the July contract on July 16, 1973. Bache purchased the warehouse 

receipts that they delivered from Continental on July 16, 1973 at 263, 15 over 

the July futures price. This delivery was received by four customers of Lamson 

Bros. and they redelivered their warehouse receipts on July 23, 1973. DE Exs. 

7, 9 and 17; Wilson, 1623; Okayama, 1810-3; Kass, 962-3. 

118. J. Kinsman and L. Standafer, two customers of G. H. Miller, each 

delivered 10,000 bushels on the July contract. To meet their short position in 

the July contract, they purchased corn from Pillsbury on July 23, 1973, through 

G. H. Miller at 320. At the price of 320, Pillsbury was willing to divert corn 

from its other merchandising channels. DE Exs. 9 and 17; Coonrod, 1298-1300. 

119. Peavy delivered 15,000 bushels on the July contract. Through an error, 

the CBOT clearing records showed the Peavey house account had a short position 

in the July contract of 30,000 bushels and Peavey's customers had a long July 

position of 30,000 bushels after the expiration of trading on July 20, 1973. 

This error occurred when a sale of 30,000 bushels in the July contract for a 

customer cleared as a house trade. The customers received delivery of 15,000 

bushels on July 27, 1973. After the error was discovered, the Peavey house 

account redelivered this corn on July 30, 1973. The remaining house position 

was transferred to the customer records at the CBOT clearing house, thus 

liquidating the remaining customer and house positions. DE Exs. 17 and 34; 

Kozlowski, 517-20. 

120. George Redman delivered 10,000 bushels on the July contract. Rather 

than offset his short futures position at what he considered an artificially 

high futures price, Mr. Redman purchased 10,000 bushels of corn in 

Mitchellville, Iowa, trucked it to the Calumet elevator and delivered it on July 

31, 1973. Mr. Redman went to great lengths to find a regular elevator willing 

to accept his corn for delivery. He was charged 10 cents for elevation and 

transit billing and was required to provide, without compensation, an extra 200 

bushels (2 percent) to Dixie Portland to cover potential shrinkage. Despite his 

difficulties and costs, Mr. Redman was able to offset his short position in the 

July contract at a total cost of less than 280 per bushel. Mr. Redman had never 

delivered on any futures contract before July, 1973, nor has he delivered since 

that time. DE Exs. 9, 11 and 17; Redman, 1315-28. 
Page 23 

121. Farmers Elevator Co. of Elmore, Minnesota (Farmers) delivered 5,000 

bushels on the July contract. On July 20, 1973, Mr. Myron Johnson, manager of 

Farmers, saw the price of the July contract rise to what he considered to 

 

be an "astronomical level," 370. He then instructed his broker to sell one 

contract if the July contract returned to the 370 level. Mr. Johnson's order 

was filed prior to the close of trading on July 20, 1973. Farmers owned 

deliverable grade corn at its elevator in Elmore and with its own trucks was 

able to deliver 5,000 bushels at Cargill's elevator. Cargill charged Farmers 16 

cents per bushel for elevation, handling and paperwork associated with making 

delivery. Farmers actually trucked to Chicago about 7,600 bushels and was paid 

261 3/4 less weighing and inspection charges on the overage. Mr. Johnson 

believed that 261 3/4 was a fair price for his corn in Chicago in that he was 

bidding 210 to 225 for No. 2 yellow corn in Elmore and the normal price 

relationship for corn during the summer of 1973 was 35 to 40 less in Elmore than 

in Chicago. Farmers was able to make about 100 on the corn delivered on the 

July contract but would not have delivered corn in Chicago if the futures had 

not reached the high levels reported. DE Ex. 17; Johnson 775-88. 

122. Hennessy and Associates (Hennessy) received delivery of 25,000 bushels 

because of an error in a customer account which was absorbed by the Hennessy 

house account. Hennessy sold 25,000 bushels to Shatkin Trading Co. for the 

account of Mr. Bartelstein on July 31, 1973 at 280 and 350. DE Exs. 9, 11 and 

17; Mailers, 1049-51. 

123. Four customers of Lamson Bros. each received delivery of 5,000 bushels 

on July 16, 1973, and sold July futures prior to the close of trading in the 

July contract on July 20, 1973. Each of the Lamson Bros. customers redelivered 

their corn on July 23, 1973. DE Ex. 17. 

124. Bache and Co. received delivery of 10,000 bushels as a result of an 

error, when a customer's short position in the July contract was over-filled by 

10,000 bushels on July 20, 1973. Bache accepted the long futures position into 

an error account and received delivery on July 27 and July 30, 1973. Bache was 

unable to sell the warehouse receipts at a price representative of the closing 

price on the July contract, so they were eventually redelivered on the September 

contract. DE Ex. 17; Okayama, 1814. 

125. Oliver Eckles received delivery of 5,000 bushels on the July contract. 

Mr. Eckles did not intend to take delivery and thought he had liquidated all of 

the 10,000 bushels long position which he had established on July 11, 1973. 

After the close of trading on July 20, 1973, Mr. Eckles discovered that he had a 

long position and received delivery of 5,000 bushels on July 31st through A. E. 

Staley Co. On the same day, Mr. Eckles sold the corn to Shatkin Trading Co. 

through A. E. Staley Co., for the account of Mr. Bartelstein at 350. DE Exs. 11 

and 12; Eckles, 1679-82. 

126. On July 27, 1973, Paul Blesi received delivery through Garnac of 5,000 

bushels on the July contract also as a result of an error. Mr. Blesi instructed 

his broker to sell the corn for him and on July 27, 1973, the warehouse receipts 

received by Blesi were sold by Garnac to Continental at 266 1/2. DE Exs. 11 and 

17; Blesi, 768-73; Wilson, 1628. 

Discussion of Facts and Law

Although manipulation is not defined in the Act, its proscription has been 

upheld against constitutional attacks as being void for vagueness, Bartlett 

Frazier Co. v. Hyde, 65 F.2d 350 (7th Cir. 1933), cert. denied, 290 U.S. 654 

(1933), and its content has been discussed in numerous administrative and court 

decisions. See e.g., Cargill, Inc. v. Hardin, 452 F. 2d 1154 (8th Cir. 1971), 

cert. denied 406 U.S. 932 (1972), aff'g Cargill, Incorporated, et al., 29 Agric. 

Dec. 880 (29 A.D. 880) (1970); Volkart Brothers, Inc. v. Freeman, 311 F.2d 52 

(5th Cir. 1962), rev'g Volkart Brothers, Inc., et al., 20 Agric. Dec. 306 (20 

A.D. 306) (1961); G. H. Miller & Co. v. United States, 260 F.2d 286 (7th Cir. 
Page 24 

1958), cert. denied, 359 U.S. 907 (1959) aff'g G. H. Miller & Co., 15 Agric. 

Dec. 1015 (15 A.D. 1015) (1956); Great Western Food Distributors, Inc. v. Brannan, 201 F.2d 476 (7th Cir. 1953) cert. denied, 345 U.S. 997 (1953), aff'g 

Great Western Food Distributors, Inc., et al., 10 Agric. Dec. 783 (10 A.D. 783) 

(1951); General Foods Corp. v. Brannan, 170 F.2d 220 (7th Cir. 1948), rev'g 

General Foods Corporation, 6 Agric. Dec. 288 (6 A.D. 288) (1947); Hohenberg 

Bros. Company and Julien J. Hohenberg, [1975-1977 Transfer Binder] COMM. FUT. L. 

REP. Co(CCH) P 20,271 (1977); Vincent W. Kosuga, et al., 19 Agric. Dec. 603 (19 

A.D. 603) (1960); Fox Deluxe Foods, Inc., et al., 18 Agric. Dec. 582 (18 A.D. 

582) (1959); Landon v. Butler, et al., 14 Agric. Dec. 429 (14 A.D. 429) (1955). 

Citations below to the Cargill, Volkart, G. H. Miller and Great Western cases 

are to the court opinions. 

Briefly, manipulation involves an artificial price, intentionally caused by a 

participant or participants in the market. The issues constituting manipulation 

are not easily separated, even for purposes of analysis. Intent, for instance, 

must be inferred from all of the circumstances surrounding the questioned 

activity, and "cause" must also be examined in the context of other factors. 

The issue of whether an artificial price occurred in the July, 1973, corn 

contract on July 20, 1973, will be considered first. 

I. Artificial Price

On July 20, 1973, the price of the July 1973 contract rose from 259 1/2, 

limit bid at the close of the previous day, to a high of 390, and a 

 

settlement price of 380. DE contends that the prices reached on July 20 were 

artificial to the extent that they exceeded 300. In support of its position, DE 

offers a comparison of those prices with cash bids, market quotations, cash 

sales prices, and other price data. It is shown that the highest bids for 

Chicago corn in July 1973 were those of American Maize. Its bid on July 20 was 

267; its highest bid for the month was 288. Respondents' highest cash bid 

during July 1973 was 283. The highest U.S. Department of Agriculture quoted 

cash price for corn in July 1973 was 288. The highest cash price quoted by the 

CCC in July 1973 was 318 FOB Chicago on July 31. Corn was purchased in Chicago 

during the first two days of August by CPC at about 280. American Maize had 

purchases on July 23 at prices ranging from 256 1/2 to 279. The highest price 

it paid in July was 292. The highest July price paid by Cargill was 291 1/4. 

Respondents made purchases on July 23 at 276. 

Excluded from consideration by DE were sales of deliverable corn in 

warehouses approved for delivery on futures contracts in the quantities and at 

the following prices, on the days indicated: 

July 23 -- 320 -- 20,000 bushels

July 25 -- 350 -- 70,000 bushels

July 26 -- 317 -- 5,000 bushels

July 31 -- 350 -- 10,000 bushels

The price rise on July 20 was 110 1/2 to 123 1/2 over the closing price on 

July 19 (259 1/2) and was the largest price rise in the years 1963 through 1976 

on the last day of trading in the July contract. The next largest price 

movement on the last day of trading in the July corn contract was a 10-cent 

decline in 1974. During the same period the largest July over September spread 

on the last day of trading was 26 7/8, other than 1973, when the spread was 123 

1/8 to 143 1/8. 

Respondents question the probative value of some of the price comparisons of 

DE, and dispute its exclusion from consideration of the July prices over 300. 

In addition, respondents contend that many of the bids relied upon by DE were 

nominal and that there is no showing that transactions occurred at quoted 

prices. They further point out the exceptional value that futures-delivered 

corn would have to an exporter; such corn is of guaranteed export quality (No. 3 

or better), in warehouses accessible to shipping vessels, and available in 

quantity on a date certain. These arguments are not refuted, but nevertheless 
Page 25 

they cannot be accepted as a full explanation of the futures prices that were 

reached in the last 35 minutes of trading on July 20. Nor do respondents rely 

entirely on such considerations; rather they posit a concept of artificiality 

different from that of DE. 

Respondents argue that an artificial price cannot result where each market 

participant exercises reasonably responsible business judgment under the 

circumstances and acts in a manner consistent with its own economic interest. 

In respondents' view, only if a participant acts in a manner inconsistent with 

his own economic interest, and with his responsibility, can a distorted or 

artificial price result, and then only if the position of that participant is 

large enough to substantially influence the price. Under this definition, other 

factors of manipulation are subsumed into the issue of artificial price. The 

cases, however, recognize artificiality of price, apart from culpable activity. 

Great Western, supra, 201 F.2d at 479. 

Even if respondents' definition of artificial price is accepted, an 

artificial price occurred here, at least if their contentions are also accepted 

that the shorts (particularly Sumitomo, who held a large position) were 

imprudent and irresponsible in holding their positions until the last day of 

trading when they had no capability or intention of making delivery. Under this 

view, the shorts were responsible for any artificial prices that were reached on 

July 20. 

Somewhat alternatively, respondents argue that no artificial prices occurred. 

According to this analysis, corn supplies were scarce, for the reasons stressed 

by DE, and discussed elsewhere in this opinion, rendering it difficult to 

purchase quality corn in Chicago during the summer of 1973. Despite this, 

future prices remained 15 to 20 below the cash value of corn in Chicago. 

Respondents maintain that Chicago prices were relatively lower than prices at 

other points, that corn was being drawn to other points, and therefore, that 

Chicago prices had to rise to a level which would cause farmers to sell their 

corn, cause exporters to move commitments to other ports, and cause users to 

delay purchases. However, the threat of export controls on corn, and price 

controls restrained prices. Respondents claim that so long as the cash value of 

corn exceeded futures prices, the economically rational action of a hedged 

trader needed corn was to buy futures, and stand for delivery. It is argued 

that to have 

 

bought cash corn, and sold futures to close the hedge, in those circumstances, 

would have widened the basis even further, and would have been contrary to the 

interest of the market, as well as the interest of the participants. Thus, it 

is contended that those traders holding a long position were acting responsibly 

to the market by standing for delivery, and thereby raising the futures prices. 

Respondents perceive the liquidation difficulties of this market as caused by 

the short period of time within which these adjustments were made, and aver: 

If the shorts wait until the last 35 minutes of trading to indicate that they 

are not prepared to deliver, when it is virtually too late for long hedgers to 

begin making adjustments and too late for the market to find economic value with 

the participation of all potential sellers, then value has to be determined by 

those who do participate, on the basis of their best analysis of what that 

quantity and quality of corn, in that location and time frame, is worth, given 

the time limitations within which they must reach a decision. 

Brief, p. 65. 

Respondents cite the testimony of Dr. Hieronymus to refute the cash price 

comparisons of DE, where he stated in reference to the closing minutes of 

trading on July 20: "What was really the economic value of warehouse receipts 

for corn? I don't think it's represented by some concept of a cash price. . . 

. I doubt if there was one bushel of corn traded during that 35 minute period, 

of cash corn." Brief, p. 63. 
Page 26 

However, the tests of artificiality offered by DE here were accepted by the 

court in Cargill, 452 F.2d at 1167-70. The court referred to an artificial price 

as one "which does not reflect basic forces of supply and demand." Id. at 1158, 

1168 (emphasis supplied). It seems to follow, definitionally, that prices, 

concededly caused in part by time constraints incident to the liquidation of a 

futures contract, are not reflective of "basic forces of supply and demand." n3 

Thus, it must be found that the price of the July corn futures contract on July 

20 was artificial. This finding does not require a rejection of respondents' 

account of the events surrounding the liquidation of the contract. In fact, 

their account is accepted as accurate at least to this extent: the open position 

on the last day was large. When it developed in the last 35 minutes of trading 

that the existing shorts were determined not to deliver, prices became volatile. 

Prices in the next contract month, September, were locked up the limit, and were 

thus of limited guidance in ascertaining the cash value of corn. Therefore, 

uncertainty reigned; longs were uncertain at which price they could obtain cash 

corn if they gave up their right to delivery, and shorts were uncertain what 

price they would have to pay for corn to make delivery. When trading was 

completed it was evident that prices had gone higher than was warranted by the 

basic forces of supply and demand, although a sharp upward trend was obviously 

present. 

n3 It cannot be assumed, however, that cash prices are always more 

competitively determined than futures prices, even when the latter develop 

in an expiring contract. According to unrefuted testimony, the cash prices 

of corn in Chicago are heavily influenced by the purchases of one firm, 

American Maize, a manufacturer who is able to pass its raw material costs 

through in the prices of its finished products. Westerbeck 108; 1106-1107; 

Johnston 1799; Hollander 3670. 

It does not follow that the artificial level was reached at 300 as claimed by 

DE. This figure was arrived at by considering pre-July 20 cash prices, but 

excluding from consideration later July cash prices that were over 300 on the 

grounds that they were related directly or indirectly to the futures delivery 

obligations of the purchasers. Also excluded from consideration were higher 

futures and cash prices that reached 347 3/4 and 340, respectively, on August 

14. It is somewhat arbitrary to conclude that the higher August prices cannot 

be considered since we are in any event retrospectively determining what price 

would have reflected basic supply and demand at the time. The September futures 

contract was repeatedly locked up the limit in the days following July 20. It 

is thus apparent that the July 20 futures prices reflected an acceleration in 

the upward price movement. When it is considered that the 347 3/4 September 

futures price on August 14, anticipated possible deliveries as late as September 

30 and, thus, contemplated new crop supply, it is evident that the prices on 

July 20 were not as far out of line as DE's comparisons suggest. 

Where futures prices have ranged from 259 1/2 for the July contract on July 

19 to 347 3/4 on August 14 for the September contract, any precise figure 

separating artificiality from non-artificiality on July 20 is necessarily 

arbitrary. The futures prices on July 20 exceeded any relevant cash or futures 

price. The highest cash price shown was 350, though it was probably not a price 

reflecting basic forces of supply and demand since only 10,000 bushels were sold 

at that price. It must nevertheless be affirmed that the July futures price was 

to some extent artificial on July 20. 

 

II. Causation

When a futures market tapers toward expiration with declining open positions 

it necessarily becomes oligopolistic and oligopsonistic since the actions of any 

participant affect price. The last contract bought and sold is 100 percent of 

the market. Therefore, it cannot be gainsaid that if respondents had offered to 

close their futures positions at 300, or less, the market results would have 

been different. Similarly, if the existing shorts had made delivery, the 
Page 27 

results would have been different. Still further, if the owners of the cash 

corn had made it available to the futures market, directly or indirectly, at 300 

or less, the results would have been different. Thus, respondents' activity 

must be deemed a "cause," along with others, of the artificial prices that 

occurred. But it is clear that the term "cause" in manipulation cases refers to 

more than the determination of which must be derived from conduct occurring 

within the context of a specific market and surrounding conditions. 

This conclusion is implicit in the perceptive definition of manipulation 

offered by Dr. John W. Helmuth, DE's expert witness, who defined manipulation as 

"the socially unacceptable exercise of the capacity to affect price." Whether 

the exercise of the capacity to affect price is socially unacceptable (which is 

interpreted to mean legally unacceptable) can be determined only by considering 

the questioned activity along with the circumstances in which it occurred. The 

trading activity of respondents, and the context of that activity is discussed 

below. 

III. Intent

The manipulation cases recognize that "intent" is a necessary element in the 

offense of manipulation, but the concept remains somewhat elusive. Intent must 

be inferred from conduct; at the same time, the culpability of the conduct 

depends on the intent which accompanies it. 

The Commission dealt with the subject in Hohenberg, in light of the Court 

opinions, and at least two distinct standards emerged. First, it is stated that 

manipulation is "conduct intentionally engaged in resulting in an artificial 

price . . . ." COMM. FUT. L. REP. P 21,477. This is substantially the standard 

claimed by DE to be applicable here. 

On the other hand, the Commission also stated in Hohenberg that: 

A finding of manipulation in violation of the Act requires a finding that the 

party engaged in conduct with the intention of affecting the market price of a 

commodity (as determined by the forces of supply and demand) and as a result of 

such conduct or course of action an artificial price was created. 

Id. at 21,477. The Commission further stated that attempted manipulation is 

"the performance of an act or conduct which was intended to effect an artificial 

price." Id. The standard reflected in these statements is urged by respondents 

to be applicable here. 

The difference in the two standards can be demonstrated by an example. If a 

trader with a long position stands for delivery of a commodity in an amount four 

times that of known deliverable supply (which DE claims occurred here) solely 

for the commercial purpose of obtaining the commodity to meet its sales 

obligations, and an artificial price results therefrom, that trader could be 

found guilty of manipulation under the first standard, but not under the second. 

The conduct may have been intentionally engaged in, but not for purpose of 

effecting an artificial price, though that result might have been expected. 

While there is language in Hohenberg to support both standards, it seems 

probable that the more general standard of intent would be applied in the 

example posed, and no specific intent to effect an artificial price would be 

required. This conclusion is supported by the assertion of the Commission that 

a showing that questioned activity is "consonant with prudent business 

practices" is not in itself sufficient to refute an allegation of attempted 

manipulation. Id. at 21,478. It is believed that a trader may be presumed to 

have foreseen the consequences (artificial prices) of his conduct, and therefore 

to have "intended" those consequences, even though his conduct was commercially 

motivated. Cf. Cargill, supra, 452 F.2d at 1163. In any event, an endeavor 

will be made in the discussion that follows to apply that standard. 

IV. Market Dominance

DE argues that respondents' long futures position was dominant, and that 

this, with the alleged lack of delivery supply available to the shorts, and 
Page 28 

various orders entered by respondents late in the trading on July 20 caused the 

price to reach artificial levels. Dr. Helmuth made an economic analysis of the 

market and respondents' trading, and concluded that they held a dominant 

position and that, therefore, they caused the artificial prices that occurred. 

His analysis was based on an assumed availability for delivery of 511,000 

bushels of corn. 

DE does not contend that respondents were in any manner responsible for the 

claimed absence of deliverable supply. It attributes that to transportation 

shortages, lack of elevator 

 

capacity (both resulting from heavy export shipments), and quality problems with 

the corn that is normally tributary to Chicago. But DE argues that the 

respondents exploited these economic circumstances. 

V. Respondents' Futures Position

The total open interest at the opening of trading on July 20 was 17,130,000 

bushels. Respondents held a net long position of 4,705,000 bushels, or 27.5 per 

cent of the total. At about 11:24 a.m., the open interest in the contract was 

approximately 5,490,000 bushels, of which respondents held 3,395,000 bushels, or 

61.8 percent of the total. However, respondents had two unexecuted orders in 

the pit, one a spread order to sell 750,000 bushels in the July contract, and to 

buy that amount in the September contract, at a spread of 53 cents, July over 

the September, and a sell order for 150,000 bushels at 300. These orders were 

filled by 11:33 a.m., thereby reducing respondents' position to 2,495,000 

bushels. Another 485,000 bushels of their position were sold, but only after 

the market reached 370. They received 2,010,000 bushels on delivery. 

VI. Deliverable Supply

As indicated, the resolution of allegations of manipulation involving the 

exercise of market dominance -- activity sometimes referred to as "corners" or 

"squeezes" -- requires a determination of the amount of the physical (cash) 

commodity available for delivery in satisfaction of the futures contracts. 

The complaint herein alleges that "there was an insufficient supply of 

deliverable grades of corn in deliverable position," and that this was known by 

respondents. The complaint further alleges that the stocks of deliverable 

grades available for delivery amounted to approximately 511,000 bushels. 

DE arrives at its deliverable supply figure as follows: The CEA published 

figures showing the total amount of corn in Chicago on July 20, 1973 was 

12,107,000 bushels, of which 4,511,000 bushels were of deliverable grades. DE 

determined the ownership of virtually all of this corn in its investigation. It 

found that of the deliverable grades, Continental owned 3,235,000 bushels, 

Cargill owned 88,000 bushels, Dreyfus owned 42,000 bushels, and respondents 

owned 228,000 bushels. The deliverable corn owned by these firms was eliminated 

from the deliverable supply on the grounds that it was "committed" to export and 

was not available for delivery on the futures market at economic prices. In 

addition, DE determined that 340,000 bushels of deliverable corn, owned by 

National Starch were of a variety called "waxy maize," which has a premium value 

above regular corn. That corn was also deleted from the deliverable supply. 

These deletions totalled 3,933,000 bushels, leaving a remainder of 501,000 

bushels. To this was added 10,000 bushels delivered on the contract by an 

individual, making the total of 511,000 bushels, alleged as the available corn 

of deliverable grades. 

DE argues that Respondent Johnston received and studied both the CEA and CBOT 

stocks of grain reports, and "therefore" was aware of the amount of deliverable 

grades of corn in Chicago and that "the stocks which were in Chicago elevators 

were likely committed to export." However, the ownership of the corn stocks was 

not published. Thus, if the owners' commitments were known it could not have 

been from the stock reports. 
Page 29 

DE further argues that Respondent Johnston was aware of export movements 

generally and the transportation and elevator shortages caused by it, as well as 

the quality problems with the corn crop, and for these reasons knew that the 

Chicago stocks of corn "could very well have been committed to export sales." 

It is upon these generalizations that DE proposes to eliminate from the 

deliverable supply the bulk of corn listed as deliverable in published reports. 

That the conditions described by DE with respect to transportation, elevator, 

and crop quality problems existed is not disputed. But it cannot be inferred, 

in the absence of any specific showing of commitments, that the entire stock of 

corn owned by Continental, for example, was committed to export in a manner that 

precluded its availability for delivery on the futures market at non-artificial 

prices. In fact, there are some rather specific matters of record that 

demonstrate that Continental's corn was not so committed. On July 19 and 20, it 

sold Dreyfus 1,000,000 bushels of export corn for loading at Duluth-Superior. 

Although this corn was not a part of the "deliverable supply," it was available 

to satisfy Continental's export commitment, and could have been substituted for 

Chicago corn for export purposes. Additionally, Continental sold over 1,000,000 

bushels of corn on the futures market on July 20, at prices considered 

"economic" by DE. (Another 600,000 bushels were sold at higher prices.) Thus, 

the theory upon which DE's calculations of deliverable supply are based is 

refuted by clearly established facts. 

DE also proposed to delete 88,000 bushels of corn from the deliverable supply 

owned by Cargill. That firm sold 100,000 bushels of futures corn on July 20. 

Its trader was on the exchange floor when trading became volatile and happened 

to receive a telephone call informing 

 

him that a vessel expected shortly in Chicago would be delayed one day. He 

thereupon sold one day's loading. This would appear to indicate that Cargill's 

corn delivery capability was committed. However, in the days following July 20, 

Cargill sold large amounts in Chicago of corn of good quality. This is not 

consistent with DE's grounds for excluding Cargill's deliverable corn from the 

deliverable supply. 

It developed during the hearing that Dreyfus did have an immediate demand for 

export corn. If this fact had been known by traders at the time there would, 

perhaps, be a basis for excluding the deliverable corn of Dreyfus from the 

deliverable supply. But this could not have been specifically known, and as 

discussed, the inference of non-availability, based on corn movements generally, 

is unwarranted. For similar reasons the exclusion of "waxy maize" from the 

deliverable supply is not proper. 

DE seeks to impute to respondents knowledge of corn stocks as published by 

the CEA and the CBOT, while at the same time denying that they were entitled to 

rely on the data published there. If it were shown that respondents, in fact, 

had the knowledge that DE imputes to them, the latter's position would be more 

viable. 

There can be no dispute that the deliverable corn held by respondents should 

be excluded from the deliverable supply since the purpose of ascertaining the 

amount of deliverable supply is to determine the extent of respondents' market 

dominance. 

There were possible sources of deliverable supply not included in the 

published data as deliverable. Some of the corn registered as undeliverable 

might have been upgraded and rendered deliverable. Respondents claim as much as 

60 to 80 percent of such corn could have been made deliverable. DE argues that 

this estimate is too high and that in any event there was not sufficient time 

between July 20 and 31, when delivery was required, for any upgrading to be 

accomplished. 

There was corn of deliverable grades in elevators not regular for delivery 

amounting to 1,007,000 bushels. For this corn to be delivered on the futures 
Page 30 

market, it would have had to be transferred to an elevator designated regular 

for delivery at an estimated cost of 14 to 18 cents per bushel. 

Additionally, from July 19 to August 1, 1973, 6,471,000 bushels of corn were 

received in Chicago. (About 3,600,000 bushels were shipped from Chicago in the 

same period.) DE proposed to exclude from the deliverable supply all of the corn 

received in Chicago during this period, even though it could not find the 

disposition of an estimated 410,000 bushels, all of deliverable quality. 

Cargill's elevator received 1,071,591 bushels of corn in this period, of which 

74.2 percent was graded No. 3 or better. Continental's elevators received 

1,651,366 bushels of corn in the same period of which 64.1 percent were graded 

No. 3 or better. 

Respondents contend that the deliverable supply of corn in Chicago was ample 

to meet its delivery demands. DE argues that there is a blatant inconsistency 

in respondents' claim that there was a large amount of corn available for 

delivery, while claiming that corn supplies were scarce. However, it is 

undisputed that large quantities of corn were in Chicago, as well as moving to 

and from Chicago. By DE's showing, over 6,471,000 bushels were received in 

Chicago during the period July 19 through August 1, 1979, while during the same 

period, 3,569,000 bushels were shipped from Chicago. The CEA reported that 

there were 4,511,000 bushels of deliverable corn in deliverable positions on 

July 20. On July 27 that figure had increased to 5,183,000 bushels. It must be 

recognized that while ownership changes with delivery, delivery does not remove 

a commodity from the deliverable supply. 

As indicated, the conduct of respondents must be evaluated in its context. 

Therefore, the information available to them at the time must largely be 

controlling in arriving at the amount of deliverable supply. It is concluded 

that such figure should be set at no lower than 4,616,000 bushels, derived as 

follows: 4,434,000 bushels, the published deliverable supply, minus 228,000 

bushels, the amount owned by respondents, plus 410,000 bushels, received in 

Chicago between July 20 and 31 and, as conceded by DE, not shown as committed. 

Although the latter figure is retrospectively developed, respondents could 

reasonably have anticipated that some corn would be received in Chicago in that 

period. Obviously, in view of the other possible sources of supply -- including 

corn stored in non-regular warehouses (1,007,000 bushels), total corn received 

in Chicago between July 20 and August 1, 1973 (6,471,000 bushels), and a portion 

of the "non-deliverable" or "ungraded" corn in warehouses regular for delivery 

(a total of 7,674,000 bushels) -- 4,616,000 bushels is a minimal figure. 

VII. Combined Cash Supply and Futures Positions

It is not disputed that market dominance must be determined by conjointly 

considering both the cash supply of the commodity and the futures positions. 

Professor Bromberg analyzed 

 

the commodity manipulation cases and found: 

Although the decisions have not stated it in so many words, they sense that 

the most precise index of a corner is the proportion of shorts who must deal 

with the cornerer, and this is a function of the combined position. 

Specifically, this index is the number of shorts (which always equals the number 

of longs) minus the independent longs (i.e., not controlled by the cornerer) 

minus the independent cash supply, all divided by the number of shorts. 1 

Bromberg, Securities Law: Fraud, Sec. 4.6, p. 82,330. 

Professor Bromberg concludes that where "[all] the shorts can satisfy their 

obligations by dealing with the independents who hold longs or cash supplies 

there can be no corner." Id.

If the Bromberg formula is applied here, as of 11:24 a.m., the result would 

be a factor of -0-% n4 (5,490,000 (number of shorts) minus 2,095,000 

(independent longs), minus 4,616,000 (independent cash supply) divided by 
Page 31 

5,490,000 (number of shorts)). No short was compelled to deal with respondents 

to satisfy its obligations. And this leaves out of consideration the unexecuted 

orders to sell 900,000 bushels. 

n4 Bromberg uses -0-% as the practical equivalent of a negative 

fraction. 

In Cargill, the respondent held virtually all of the deliverable cash 

commodity, and at the opening on the last day of trading held about 24 percent 

of the open futures positions. By 11:53 a.m., it held 62 percent of the open 

futures positions. 452 F.2d at 1160. This was found to be a dominant and 

manipulative position. In G. H. Miller the accused respondents held 100 percent 

of the open futures positions on the last day of trading, and 72 percent of the 

cash commodity. Id. at 289. This was also held to be a dominant and 

manipulative position. In Great Western, respondent held at the opening on the 

last day of trading, 74 percent of the futures positions and 51 percent of the 

deliverable supply. This too was found to be a dominant and manipulative 

position. 

Thus, the leading cases, where manipulation has been found, differ materially 

from the instant proceeding in the degree of domination over the combined 

futures positions, and cash supplies not controlled by the alleged manipulators. 

It is, therefore, concluded that respondents' position was not dominant at 

11:24 a.m., when DE claims the futures prices became artificial. However, 

manipulation may be effected, or attempted, by persons who do not hold a 

dominant position. See Hohenberg, COMM. FUT. L. REP. supra at 21,477. 

Therefore, the additional allegations of DE concerning respondents' trading 

activity and the intent thereof must be considered. 

VIII. Market Abuse

DE refers to commentaries on the futures markets which emphasize that most 

futures contracts are not closed by delivery. From this, DE infers that an 

"abuse" of the futures market generally results when a long stands for delivery, 

as here, and that excessive deliveries will destroy a futures contract. This 

reasoning much too facilely makes the transition from description to 

proscription, and provides no guidance on when delivery is proper. 

It will undoubtedly be found that where a contract has been terminated 

because of excessive deliveries that there has been an imbalance in the 

contract, rendering it more attractive to one side or the other to make or take 

delivery, and the disadvantaged side has declined to participate. It will also 

undoubtedly be found that most contracts are not closed by delivery because 

neither side finds it economical to do so. This differs from imputing a moral 

or legal taint to taking (or making) delivery, regardless of the economics 

involved. 

It is difficult to perceive how longs can be prohibited from taking delivery 

without seriously impairing the viability of a contract. Legal action taken to 

protect a contract by constricting or prohibiting delivery may introduce a 

serious imbalance in the contract, and bring about the result which is sought to 

be avoided. (The difficulties inherent in any administratively imposed 

settlement price are demonstrated in the above discussion of artificial price.) 

In Hohenberg, the Commission approved the making of delivery for the purpose of 

obtaining the best price. It would be incongruous to hold that shorts may make 

delivery but longs may not take delivery. 

Substantial deliveries occur in virtually every contract. The total 

deliveries on the July, 1973 corn contract were 2,225,000 bushels, including 

retenders. This was the smallest amount for any corn contract in the years 

1971-72 or 1972-73. The largest amount of deliveries, including retenders, in 

that period was 48,230,000 bushels in the May, 1972 contract. There were 

20,250,000 bushels delivered on the September, 1973 contract. The deliveries on 

the July, 1973, contract were the smallest on any July corn contract for the 

years 1967 through 1974. 
Page 32 

DE points out that the shorts who made delivery changed their logistical 

plans to do so, and thereby incurred additional costs. However, it is not shown 

that they suffered financial losses by making delivery, or that any corn was 

brought to Chicago for futures delivery purposes for which there was not a 

commercial need. 

It is not entirely clear from DE's position what it considers would have been 

the proper course of conduct for respondents in this market. Respondents, for 

instance, are criticized for not bidding more aggressively for cash corn in the 

summer of 1973. In response, respondents state that the futures price was more 

attractive, and that higher bids would only have drawn corn of less than 

exportable quality, which would not have filled their needs. If it is to be 

held that all traders, in the face of attractive futures prices in relation to 

cash prices, are legally obliged, nevertheless, to bid higher in the cash 

markets, to avoid tainting the futures market with deliveries, the economic 

nexus between cash and futures markets will have been severed. In fairness to 

DE, this is not quite their position, but that is the implication of its 

criticisms of respondents' low bidding for cash corn. The criticisms are not 

valid. 

DE also seems to imply that respondents should have switched their plans for 

taking delivery when the cash and futures prices converged on July 20. However, 

it was, and is, very difficult to determine when this occurred. As previously 

discussed, respondents take the position that convergence did not take place 

until the closing minutes of trading when it was too late to change acquisition 

plans covering over two million bushels of corn. 

In its initial brief, at 44, DE stated: "Respondent Johnston further knew 

that guaranteed deliverable grade corn was not available in Chicago at prices 

slightly above the July contract." This is not disputed by respondents. In 

fact, it is precisely their position. However, in its reply brief, at 73, DE 

asserts that, "Respondents' basic assertion about the cash-futures price 

relationship during July 1973 is not entirely accurate and needs more careful 

scrutiny . . . ." (Emphasis supplied). There follows a discussion of the 

academic writings which show that, for economic reasons, cash and futures prices 

never quite converge. This has been adverted to elsewhere herein as the reason 

for most futures contracts being offset, and not closed by delivery, and is not 

in dispute. 

DE then argues that the closing price of the July contract on July 19 was 

higher than all of the various Chicago cash corn prices except FOB vessel 

prices, and those prices were exceeded on July 20 by the futures prices. The 

USDA quotation for July 19 was 258 3/4, while the futures price closed at 259 

1/2. Thus, DE seems to take the position that while the cash and futures prices 

converged on July 19, corn was not available at those prices. It is not a 

viable position; price is a function of quantity. If corn was available at 

those prices we are then confronted with the question of why the shorts did not 

buy it to satisfy their futures contracts instead of paying up to 390 to cover 

their positions. 

That corn was not available in quantity at the prices relied on by DE is 

shown by the transactions between Continental and Dreyfus, FOB Duluth-Superior 

at 35 over the September futures price, which was locked up the limit on July 19 

at 236 7/8, resulting in a flat price of 271 7/8. These transactions covered a 

substantial quantity of corn -- one million bushels -- and involved large 

sophisticated firms. Such sales would not have taken place if the corn had been 

available in Chicago at 258 3/4 or 259 1/2, the USDA quotation, and the closing 

price on July 19 of the July contract, respectively. It should be noted also 

that Dreyfus took delivery of 200,000 bushels of corn on July 20, despite the 

futures prices on that day. 

Necessarily, there was a convergence of cash and futures values during the 

trading of July 20. However, respondents' claim that it came too late for them 
Page 33 

to alter their acquisition plans seems entirely reasonable, considering the 

volatile prices in the closing minutes of the contract. It cannot, therefore, 

be found that their failure to settle their position instead of taking delivery 

was per se an abuse of the markets or manipulative. 

IX. Shorts

It seems unavoidable that in examining the responsibilities of the longs in a 

futures market that the responsibilities of the shorts should also be 

considered. As previously discussed, respondents argue that the price 

fluctuation that occurred near the close of the market on July 20 was caused by 

the irresponsible actions of the shorts, who stayed in the market into the last 

day of trading, even though they had no delivery capability. Particular mention 

is made of Sumitomo, a major short. That firm was short 4,420,000 bushels at 

the opening on July 20 and was short 1,955,000 bushels at 11:24 a.m. It had no 

delivery capability and was determined not to make delivery. Virtually every 

trade witness in this 

 

proceeding characterized such action as "irresponsible" or "imprudent." n5 

n5 Sumitomo does not come off very well in this proceeding. Its 

position in the considered market was reported as a hedge. Though DE 

attempts to provide grounds for supposing the validity of that report, the 

position was clearly speculative. Moreover, any rational basis for the 

position is difficult to perceive. With corn supplies tight, and cash 

prices higher than the futures prices, ultimate convergence of the two was 

almost certain to occur at a higher level, resulting in a loss in any short 

futures position. The apparently speculative element was the possibility 

of government controls, which would have curtailed export shipments and 

precipitated a drastic price reduction. However, on July 18, the 

government issued statements, which, although equivocal, virtually assured 

that the anticipated action would not be taken before the July 1973 corn 

contract was liquidated. On July 19, the July corn contract was locked the 

limit up, which prevented liquidation of large amounts of the open 

interest. On July 20, Sumitomo actually increased its short position by 

105,000 bushels, before beginning to liquidate, and still held a short 

position of 1,955,000 bushels at 11:24 a.m. Further more, the record leaves 

little doubt that 1,250,000 bushels of its position were offset in a noncompetitive trade with Dreyfus. When officials of Sumitomo were later 

questioned about their futures trading activity in July 1973, their answers 

were evasive and contradictory. 

DE argues that the shorts have, in any event, a right to offset their 

positions at "non-artificial" prices. As applied here, the corollary of this 

asserted "right" of the shorts is a "duty" on the part of the longs to forfeit 

their right to take delivery. The equity of this position is not easily 

perceived where parties have entered into, or continue in agreements, to make 

and take delivery, respectively, in the face of known conditions of supply and 

demand. With no alleged change in those conditions, and no claim that the longs 

have affected them, the shorts are to be relieved of their obligation to 

deliver. This implies that the futures market is too delicate to register 

supply and demand forces, and is something other than an economic institution. 

The position seems to rest on the belief that no significant sacrifice would 

be imposed on the longs since they may obtain the commodity sought by futures 

delivery through purchasing it on the cash market at "non-artificial" prices. 

However, if the shorts purchase the cash commodity for futures delivery, the 

futures agreements are left inviolate, and futures prices retain their economic 

significance. 

In Volkart, the court's opinion was construed as imposing virtually an 

unlimited duty on the shorts to make delivery unless the longs had interfered 
Page 34 

with the shorts' ability to deliver. See Note, The Delivery Requirement; An 

Illusory Bar to Regulation of Manipulation In Commodity Exchanges, 73 Yale L. J. 

171 (1963). This note interpreted Volkart as removing any prohibition against 

"squeezes," which were defined as activity where the futures market alone is 

dominated. Id. at 176. The alleged manipulator in Volkart had a very small 

interest in the cash commodity, but held futures contracts amounting to 12,100 

bales of cotton out of an open interest of 13,400 bales. There was a 

deliverable supply of about 5,000 bales. To be available for delivery, the 

cotton had to be certificated; the court held the shorts should have taken steps 

to have more cotton certificated prior to the last day of trading, when it was 

too late to complete the procedure. 

The Cargill court was highly critical of the Volkart decision. It cited, and 

offered criticisms of the Volkart opinion similar to those set forth in the law 

journal note to the effect that squeezes would no longer be regulated if Volkart

states the law. n6 

n6 It should be pointed out that DE's position here implicitly assumes 

the invalidity of Volkart in that the primary offense with which the 

instant respondents are charged is standing for delivery for an amount of a 

commodity in excess of the alleged deliverable supply. It is reasonably 

clear that this would not be an offense under Volkart. The criticisms of 

the Cargill court were not necessary for its decision since the respondent 

before it had controlled virtually all of the available cash commodity, 

which was not the case in Volkart. Thus, the law which respondents are 

charged with violating is far from clear in view of the two latest court 

decisions on the subject. 

The Volkart court was clearly motivated by the belief that regulation of 

situations like that before it would impair the legitimate functioning of the 

futures market by relieving the shorts of their obligation to make delivery. An 

attempt was made in the Note to strike a balance between destructive regulation 

on the one hand, and the complete abandonment of any prohibition of squeezes, on 

the other. These proposals, as applicable here, are discussed below. 

X. Delivery Purpose

The note states ( Id. at 184-85): 

If a trader's prolonged refusal to offset holdings can reasonably be 

characterized as a hedge for a spot sale not covered by a corresponding spot 

purchase until late in the delivery month, a court should not infer an intent to 

manipulate. Equally, a trader's actions might be interpreted as an ordinary 

reaction to unusually low futures prices. In this situation, it is to be 

anticipated that traders will hold either for delivery, if the imbalance is a 

protracted one, or until the closing of the futures-spot price gap. In short, 

where a refusal to offset is consistent with normal market conduct, such a 

refusal cannot be the basis for a finding of manipulation. 

Cf. Hohenberg, COMM. FUT. L. REP., supra at 21,478. 

Respondents contend that delivery was taken here to meet their cash 

commitments. 

During the hearing DE attempted to establish, in its cross-examination of 

Respondent Johnston, that the cash commitments of respondents had been renegotiated and, thus, respondents' commitments to deliver corn were not as 

claimed. The contracts allegedly modified were between respondents and one of 

their customers, Agro Company of Canada, Ltd. (Agro), and called for No. 3 corn. 

However, DE's contention was apparently abandoned on brief, and in its proposed 

findings it offered the following: 

As of July 13, 1973, Indiana Grain had unshipped export corn sales of about 

2.8 million bushels from Chicago for shipment by mid-August and owned only 
Page 35 

150,000 bushels of corn grading No. 3 yellow or better in Chicago. Although 

Indiana Grain needed over 2 million bushels to meet its export commitments from 

Chicago, they did not express their demand for corn in the cash market until 

after July 20, 1973. 

There was no finding proposed that these commitments were less than 

commercially firm. 

The respondents filed with their initial brief a motion for judgment, or 

alternatively, to dismiss the complaint, based in part on DE's failure during 

the hearing to furnish them a copy of a letter written by Agro to DE which 

seemingly contradicted DE's position that the Agro contracts had been modified. 

(DE was subject to a procedural order requiring it to provide respondents with 

all evidence in its possession of an exculpatory nature. Respondents contended 

that the letter was exculpatory, and DE's failure to supply it was prejudicial 

to them.) 

In response to that motion, DE did not reply directly to the issue raised, 

but rather counterattacked by renewing its allegations that "prior to July 20, 

1973, Respondents had reached an agreement or understanding with Agro that 

export shipments would be delayed and/or lower quality corn could be substituted 

for contract grade corn, [and] that Respondents' need for corn was not as acute 

as they would like this court to believe." 

Although a copy of the letter in question should have been furnished to the 

respondents, n7 DE's failure to do so did not constitute grounds, considered 

with other issues raised, for granting respondents' motion. The motion was, 

accordingly, denied, but respondents were given an opportunity to reply to the 

renewed allegations of DE. The matter has been reviewed in some detail, n8 and 

no evidence is found to support DE's assertions as to the existence of a general 

agreement to ignore the terms of the contracts with Agro. It appears that prior 

to July 20, one contract was partially modified to allow No. 5 corn to be 

substituted for No. 3, but this hardly supports DE's contention that a general 

agreement was reached to abandon the contractual terms. As the respondents 

show, the corn in question was being shipped to Europe by Agro, and contractual 

modifications would have affected those shipments. Doubtless there were efforts 

on all sides to be reasonable, but that does not entail the general abrogation 

of the agreements. 

n7 The letter was marked for identification as respondents' Exhibit 63, 

but their offer of it into evidence was denied since it was not sworn to 

and was offered for the purpose of proving the truth of the matters it 

asserted. 

n8 To support its position, DE refers to shipments made on a vessel 

named Fifth Avenue, from Chicago on or about June 29, 1973, which was 

partially loaded with No. 5 corn. This vessel was originally nominated to 

receive soybeans, but government controls intervened, reducing the amount 

of soybeans that could be loaded. IFB and Agro entered into a new contract 

for 106,000 bushels of No. 5 corn to fill the vessel. DE claims that 

instead, Agro should have demanded that No. 3 corn be supplied under a 

contract number 6002. However, the Fifth Avenue was destined for Glasgow, 

Scotland, and the contract 6002 was being shipped by Agro to Rotterdam, 

Holland. 

DE also refers to shipments by a vessel, Ondine, loaded between July 9 

and 12, 1973. Agro originally requested that about 270.000 bushels of No. 

3 corn be loaded against contract 6002 on that vessel, but in fact only 

72,400 bushels were loaded. Corn gluten feed pellets were loaded instead. 

The shipping dates stated for contract 6002 were July 1 to July 20. The 

remainder of the corn covered by this contract was loaded on or about 

August 8, 1973, with storage charges assessed on 196,000 bushels from July 

21 through August 7, 1973. There is no basis for the contention that this 

contract was modified before July 20, or later. 
Page 36 

DE argues that shipments under a contract number 5633, required to be 

shipped out of IFB's Locust Point Elevator at Baltimore, were delayed by 

agreement. When space became available on July 6, 1973, on a vessel named 

Himmerland, Agro and IFB entered into a new contract for sample grade corn 

rather than loading all of the No. 3 corn under contract 5633. However, it 

appears undisputed that respondents were entitled to 10 days' notice for 

loading at this port. Thus, the notice could only have been complied with 

by delaying the vessel, which sailed on July 11. On July 9, notice for 

loading was given, and instructions for loading were received by IFB on 

July 17 on another vessel, Celerina. On July 18, an agreement was reached 

to substitute No. 5 corn for No. 3 under contract 5633 insofar as the 

loading of Celerina was concerned. A similar substitution for the balance 

of the contract was made in September, along with a partial substitution on 

another contract, number 5776. The remainder of the applications to that 

contract were No. 3 corn. 

Thus, on July 9, 1973, respondents' export corn commitments for shipment 

prior to August 31, 1973, were 2,868,800 bushels from Chicago and 5,656,245 

bushels from Baltimore. On July 12, these commitments were 2,796,400 bushels 

and 5,287,845 bushels, respectively. Since these commitments were required to 

be met before the availability of a new crop, they are termed "old crop" 

commitments. Respondents held a long cash position, consisting of inventory, 

transit and country purchases, amounting to 6,215,000 bushels. However, a 

 

substantial portion of this corn was subgrade and not tenderable in satisfaction 

of export contracts, which required grade 3 or better. Dr. Heironymus computed 

the amount of sub-grade corn held by respondents as 4,826,000 bushels on July 9. 

That left only 1,389,000 bushels of corn to satisfy the stated commitments. 

Although these figures are estimates, their substantial accuracy is not 

challenged by DE. As indicated, DE asserts that on July 13, respondents owned 

only 150,000 bushels of corn graded No. 3 or better in Chicago. In the position 

statement developed by Dr. Heironymus, he subtracted the subgrade corn from "old 

crop" and added it to "new crop" on the theory that it could not be delivered in 

satisfaction of the old crop commitments, but could ultimately, through mixing, 

cleaning or other processing, be delivered against new crop commitments. 

(Appendix, Lines 4 and 16.) 

On July 9, respondents had a July futures position of 1,010,000 bushels 

(Appendix, Line 14). With the subgrade corn considered as new crop, their 

overall old crop position, cash and futures, was short 4,646,000 bushels 

(Appendix, Line 16), while the new crop overall position was long 4,643,000 

bushels. (Appendix, Line 30.) Short futures positions were held in the 

September, December and March contracts against new crop purchases. 

On July 10, 1973, respondents entered two spread orders to buy a total of 

4,100,000 bushels of July corn futures and to sell that amount of March, 1973, 

corn futures at a premium of 14 over the March contract. One such order for 

1,100,000 bushels was filled. The other order was cancelled. 

On July 11, respondents entered a spread order to purchase 2,490,000 bushels 

of July futures and sell the same amount of September futures at a premium of 14 

cents, July over September. This order was filled. As a result of these 

orders, respondents' long position in the July contract was increased to 

4,685,000 bushels on July 11, and their short position in deferred contracts was 

increased by the same amount. The effect of this was to move the hedge against 

a substantial portion of the sub-grade corn to deferred months, and replace it 

with a long futures position against old crop commitments. DE agrees that under 

CEA regulations, then governing, as well as under present Commission 

regulations, respondents' futures position was properly classified as a hedge. 

Reply Brief, Fn. 179 n9. 

n9 The reference in Note 178 to the spread order executed on July 11 is 

mistaken. The testimony cited concerned spread orders entered later that 
Page 37 

would have offset the July 11 order that was executed. Koslowski, 563, 

567. 

It is concluded from the foregoing that respondents had an apparent 

commercial purpose for the corn taken on delivery. This militates against the 

claim that they took delivery for manipulative purposes. The disposition of the 

delivered corn is discussed following a consideration of certain orders, some of 

which did, and others would have, if executed, partially closed respondents' 

July futures position by offset instead of by delivery. 

XI. Spread Orders and Hedging

On July 11, 12, and 17, respondents entered spread orders that would have 

offset 2,500,000 bushels of its long July position and the same amount of its 

short September position. These orders were placed away from the market at 

increasing spreads of July over September, and were not executed. The 

unexecuted spread orders of July 11 were entered after the order covering 

2,490,000 bushels had been executed at a spread of 14. The later orders were 

entered at spreads of 22 to 26. On July 12, those orders were cancelled, and an 

order with a spread of 31 was entered. On July 17, that order was cancelled, 

and replaced by five orders at spreads of 33 to 37. DE contends that these 

orders were unrelated to respondents' hedging transactions, that they reflected 

an intent to manipulate the July 1973 corn futures contract, and refute the 

claim of respondents that they needed corn to meet cash commitments. 

On February 10, 1974, Respondent Johnston was interviewed about the July 1973 

corn futures contract by two Commission employees, Mr. John R. Mielke and Ms. 

Martha Shaw Kozlowski. Respondent Johnston was then questioned about, among 

other matters, the described spread orders. A report of the interview was 

prepared, based on notes taken during the interview and other documents, 

including the orders. Exhibit 54, but after prolonged controversy during the 

hearing and the submission of written briefs thereon, DE's request for its 

admission into evidence was denied. n10 

n10 DE was required to serve on respondents all exhibits it intended to 

present at the hearing on or before March 15, 1976. DE served and filed 

exhibits in response to that order. Nevertheless, additional exhibits were 

received at the hearing upon a showing of reasonable grounds for their not 

having been produced in accordance with the prehearing order. The grounds 

offered for not having previously furnished Exhibit 54, were that the 

interviewers, who were appearing as witnesses at the hearing, were unable 

to recall from memory, even as refreshed by their notes and the interview 

report, what was stated on numerous subjects during the interview. Exhibit 

54 was offered as "past recollection" recorded. Of course this rule merely 

allows a document into evidence in a court proceeding that might otherwise 

be excluded by the hearsay rule; it does not require the admission of 

documents for which there are other grounds for excluding. (Under the 

Federal Rules of Evidence such a document could only be read into the 

record, but not admitted as an exhibit, unless offered by an adverse party. 

Rule 803(5).) Counsel for DE did not indicate when he had discovered the 

loss of memory by his witnesses, and considering that admission of the 

document would place into the record statements of witnesses who would be 

unable to withstand cross-examination thereon, I determined that DE had not 

justified its failure to previously identify the document as an exhibit 

 

Since the matter has been pursued on brief, the document has been examined 

and the arguments of the parties have been reconsidered. To avoid any 

contention that the result in this proceeding rests in any respect on that 

disputed evidentiary ruling, the prior ruling is reversed, and the interview 

report, DE Exhibit 54, along with the interviewers' notes which are marked as 

DE's Exhibits 55 and 58, are hereby received. n11 
Page 38 

n11 DE has similarly pursued on brief, objections to a ruling on DE 

Exhibit 68. Although admission of that would not affect the outcome of 

this proceeding, the prior ruling excluding it is affirmed. I am convinced 

that the witness involved did not suffer from loss of memory; he chose not 

to affirm his prior statements. 

As previously stated, the interview report refers to the spread orders 

entered by respondents on July 11, 12, and 17. One such reference is the 

following paragraph: 

The orders entered by Indiana Grain on July 11 and 12, 1973, were spreading 

and not hedging transactions. Mr. Johnston stated, "We try to make a little 

extra money through these spreads." To do a good job in hedging it is important 

to place the hedge in the correct month, so Mr. Johnston moves the hedge back 

and forth against their cash position. 

This is a somewhat puzzling paragraph since it is apparent that the dichotomy 

between "spreading" and "hedging" assumed in the first sentence has no general 

validity, and the view is attributed to Respondent Johnston in the last sentence 

that moving the hedge back and forth against a cash position (which is 

accomplished by spread orders) is doing a good job of hedging. The interview 

notes show that the first sentence was an interpretation, and probably a 

misinterpretation, of part of Respondent Johnston's answer to a question as to 

how the spread orders related to his hedging program. The complete question and 

answer, as recorded in Mr. Mielke's notes (RE Ex. 58) is as follows: 

Question: How do all of the orders just discussed which were entered on July 

11 and 12 relate to your hedging program? 

Answer: They don't. We try to make a little extra money through these 

spreads. We move our hedges back and forth. To do a good job in hedging you 

have to be in the correct month, so I move hedges back and forth against the 

cash; I never exceed the cash position, however. Profits in futures 

transactions can be used to cushion our cash transactions if we have to pay more 

to get the cash grain. 

Although the apparent assertion that the spread orders were not "related" to 

respondents' hedging program stands in complete contradiction to the remainder 

of the answer, DE predicated a good portion of its case on the claim that the 

spread orders were unrelated to hedging. When Respondent Johnston refused to 

affirm at the hearing that he had told the interviewers that the spread orders 

were unrelated to respondents' hedging program, DE sought to impeach him based 

on "his" prior inconsistent statement. 

On brief, the parties have offered divergent concepts of hedging, but their 

respective positions now differ from that which would have been expected from 

the foregoing. 

Respondents argue that "[it] is elementary that the purpose of hedging is not 

to make a profit." They quote Baer and Saxon in Commodity Exchanges and Futures 

Trading (1949), at 203-04, to the effect that: 

Hedging is not used to make a profit, either speculative or otherwise, but to 

insure one already existing or to limit a loss already threatened. . . . 

* * * * Its object is not to return a speculative profit, for the reason that 

any profit derived on the futures merely equalizes or offsets a loss which has 

been incurred on a transaction or market position in the physical market or vice 

versa. * * * 

They also quote from the textbook of Dr. Hieronymus, Economics of Futures 

Trading, where he states that "the hedger is concerned about basis rather than 

price . . . price is of no concern to him," and further where he declares that 

hedgers are "nulls in the market with regard to price. They take no net 

positions and so have no effect on prices." Respondents contend, therefore, that 

as hedgers, they cannot be found to have manipulated futures prices. 
Page 39 

DE argues in its reply brief that the position of respondents is not valid 

and the precepts upon which it is based are false. They also quote from Dr. 

Hieronymus' book, including a passage where he explicitly refutes the views of 

Baer and Saxon relied on by respondents, and states that hedgers "do not hedge 

to avoid risk but, rather, to make a profit" and again where he states that 

"[the] essence of hedging is speculation in basis." 

DE quotes other writers n12 to the same effect, including Hoffman who wrote 

that "the interest of the hedger is centered entirely in the relative changes 

occurring between cash and futures prices" and Holbrook Working who stated that 

hedging is undertaken "in the expectation of a favorable change in the relation 

between spot and futures prices." 

n12 Working. Futures Trading and Hedging. American Economic Review, p. 

326 (June 1953): Hoffman, Futures Trading Upon Organized Commodity Markets,

pp. 418-419 (1932); Paul, "Treatment of Hedging in Commodity Market 

Regulation." at 5 (U.S.D.A. Tech. Bul. No. 1538 (1976)). 

It seems fairly clear that hedging in practice does not, as asserted by Baer 

and Saxon, consist of establishing and maintaining a static position analogous 

to insurance, but rather conforms to the trading strategy described by other 

authorities, including Dr. Hieronymus, quoted by DE. One writer summarizes the 

latter concept as follows: n13 

While hedging does provide an opportunity to share risks with speculators or 

to fix processing margins, it is used by grain holders primarily to earn a 

trading profit. According to Holbrook Working, hedging is a form of arbitrage 

which is undertaken most commonly in expectation of a favorable change in the 

relation between cash and futures prices. The fact that risks are less with 

hedging than without is often a secondary consideration. T. A. Hieronymus 

defines hedging as speculating in cash-futures relationships. 

n13 Hugh J. McDonald, Understanding and Using the Commodity Futures 

Market, at 13 and 14. Cooperative Extension Service, N.D. State 

University. 

Inherent in such hedging activity is the shifting of futures positions from 

one contract to another, not only in relation to the "basis" or cash-futures 

price relationships, but in relation to the price spread between contracts. 

Such shifting of hedges is accomplished by spread orders. 

While DE has shown that the description of hedging set forth in respondents' 

brief by their counsel is inconsistent with the opinions of various authorities, 

including respondents' expert witness (whose views may not be internally 

consistent), and has refuted respondents' argument that a hedger is incapable of 

affecting futures prices, it has thereby largely removed any grounds for its 

contention that the scaled-up spread orders entered between July 11 and 19 were 

unrelated to hedging and therefore reflect an intent and effort to manipulate 

the market; spread orders are entirely consistent with the speculating-in-basis 

concept of hedging now supported by DE. 

These orders reflect a constantly changing appraisal of the advantages to a 

hedger of holding a July position as opposed to one in the September contract, 

and a willingness to change positions at varying spreads where cash and futures 

prices were rising. On the one hand the July contract was a possible source of 

cash deliveries, but on the other hand, that contract would have been most 

susceptible to a drastic decline in price if an embargo on corn exports, 

considered possible in light of an earlier embargo on soybeans, had been 

imposed. 

DE seems to have the belief that the tendency and purpose of such orders were 

necessarily to move the market in the direction of the prices stated in the 

orders. However, the testimony is that those orders were held at the order 
Page 40 

desk, unstamped, and not sent to the pit. If the market had approached the 

prices stated, the orders would have been stamped and sent to the pit. When the 

first set of spread orders was entered, the open interest in the July contract 

was 49,650,000 bushels. In total, these orders covered 2,500,000 bushels, or 

approximately five per cent of the open interest on that day. The percentage 

increased to about 15 per cent of the open interest on July 19, but there is no 

reason to suppose the effect or purpose of the orders changed with the decline 

in the open interest. There appears to be nothing unusual in having orders in 

place in the event of sudden changes in the July-September spread, which could 

have occurred in one day. 

DE quotes from the administrative decision in Volkart, 20 Agric. Dec. 305, 

336 (20 A.D. 305, 336) (1961), rev'd on other grounds, Volkart Bros. Inc. v. 

Freeman, 311 F.2d 52 (5th Cir. 1962), where it is stated: "offers of sales of 

futures ahead of market prices and by means of a scale-up in prices do not 

indicate use of long contracts for procurement purposes." It is far from clear 

that the "offers" referred to there were unstamped orders as here. The opinion 

indicates that the trade was aware on the last day of trading of the size of the 

position held by the Volkart respondents. Id. at 318. It is not clear from the 

opinion but it is likely that if the position was known before the last trading 

day, the "offers" were also known to the trade. More significantly, those 

orders, unlike those here in issue, would have closed the alleged hedge with no 

change in a cash position, rather than shift the hedge to another contract. The 

implication in the administrative decision is that if those respondents had 

stood for delivery their contention would have been credible. This is not DE's 

position here. 

The investigators testified that Respondent Johnston stated, during the 

interview, in reference to these spread orders, that "he [Johnston] got braver 

and braver and upped 

 

the ante." Respondent Johnston testified that those words were not a part of his 

vocabulary. Though repeatedly stressed by DE, it is not entirely clear what 

deduction is proposed to be drawn from the statement, assuming words of that 

import were used. It is clear that respondent Johnston became increasingly 

bullish on the July contract; this is stated in the interview. But in no event 

can such a statement be deemed that of a trader in control of the market, and 

set on a predetermined course. Rather it reflects the caution of one reacting 

to outside events, including the market. 

In summary, it cannot be found that the entry of spread orders ahead of the 

market on July 11, 12 and 17 had any effect on the market, or evinced an intent 

to manipulate the market. 

XII. Final Trades on July 20th

As discussed, those earlier spread orders were not filled. The orders 

entered on July 17 were outstanding on July 19, when the CBOT removed the daily 

price limits. Either on July 19, or on July 20 before the market opened, those 

orders were cancelled, and respondents entered a spread order to sell 2,250,000 

bushels of corn in the July contract, and to buy 2,250,000 bushels in the 

September contract. Before the open of trading on July 20, that order was 

cancelled, and replaced by four spread orders in the same contracts covering 

2,250,000 bushels of corn at spreads ranging from 44 1/2 to 55 1/2, July over 

September. These spreads were subsequently reduced by about 2 1/2. At about 

9:59 a.m. respondents also entered an order to sell 150,000 bushels of July corn 

at 300. All of these orders were filled by 11:33 a.m. 

Thereafter, Respondent Johnston was called by his floor trader and informed 

that the market was having trouble liquidating, that there was a shortage of 

sell orders in the pit, and that the price was about 370. It is not clear 

whether this price was a bid or sales price. Respondent Johnston immediately 

entered four orders for 100,000 bushels each and one for 90,000 bushels, at 

successive prices of 370, 375, 380, 385 and 390. These orders were filled at 
Page 41 

prices of 370, 380, 385 and 390. The latter was a partial fill, 85,000 bushels 

of the 90,000 bushel order. DE places a great deal of emphasis on these orders 

as evincing a manipulative intent. The market had reached 370 when they were 

entered, but had not reached the higher prices. The argument is that these 

orders caused the higher prices. Respondent Johnston stated that they were 

entered to help the market liquidate, but that he did not care whether they were 

filled. DE suggests that this logic is inexplicable. But actions are often 

taken with conflicting motives. The decision to enter these orders was made in 

a matter of seconds upon receipt of a telephone call. That Respondent Johnston 

wanted to do something toward alleviating the difficulty of the market, without 

jeopardizing his firm's interest, is entirely believable. At that time, he 

could not be sure if, or at what price, he could timely obtain the cash corn 

represented by the futures position. The liquidating prices on the futures 

market were not reassuring on this point. 

Thirty-five fills at prices of 370 or higher occurred in this market. Nine 

of these fills related to these five orders of respondents. The price at the 

time they were entered was already far above what DE claims was an artificial 

level. The culpability of placing the five orders hinges on the legitimacy of 

respondents' taking delivery, for if they had stood for delivery, the market, 

concededly, would have gone higher. Therefore, these orders, having a reverse 

effect on the market from taking delivery, cannot be deemed to be a greater 

offense. Shorts made the decision to pay these prices to respondents and to 

other longs rather than attempting to obtain corn for delivery. In retrospect, 

that appears to have been a miscalculation, but it is not proof of a 

manipulative intent of respondents at the time. 

Respondents argue that if they had primarily been motivated to seek a profit 

on their futures position, they would have liquidated more of their position 

instead of taking delivery on the bulk of it. DE counters this with an 

argumentative analogy that by respondents' reasoning a bank robber holding up 

only one teller in a bank would not have intended to rob the bank because other 

tellers were not robbed. This analogy casts more heat than light. When 

respondents, faced with an apparent opportunity to highly profitably liquidate 

their position, liquidated only one fifth of the position, they demonstrated a 

commercial need for the corn. 

As stated, respondents took delivery of 2,010,000 bushels of corn on the 

July, 1973 corn futures contract. The settlement price of 380 was paid for this 

corn. There was a compensating credit in their futures account amounting to the 

difference between the purchase price of the position and the settlement price. 

Thus, the only profit derived by respondents from the artificial prices on July 

20 accrued from the five orders entered in the closing minutes of the contract. 

Although the Commission found in Hohenberg that a profit motive was not an 

essential element of manipulation, it did recognize that possible profit was a 

factor to be considered. It cannot be found that the motive of respondents' 

trading here was to reap a profit from artificial futures prices. 

DE takes the position that respondents intended from early July to liquidate 

a portion of their position after the prices became artificial. There is no 

evidence to support this, and it is contradicted by the credible testimony of 

Mr. Catron and Respondent Johnston, who agreed in their description of the 

circumstances in which these orders were entered. For the reasons stated, it is 

found that they did not evince a manipulative intent. 

XIII. Disposition of Deliveries

The cited law journal note points out that the manner of disposing of a 

commodity received on delivery is a significant factor in determining whether 

there was a manipulative intent present in standing for delivery. Id. at 185. 

In satisfaction of their short position, respondents received 1,470,000 bushels 

of corn stored in Continental elevators, 90,000 bushels stored in Cargill's 

elevator, and 425,000 bushels stored in the Calumet elevator. They received 

delivery of 25,000 bushels on track. Respondents traded the Cargill corn and 
Page 42 

15,000 bushels of the Calumet corn for 85,000 bushels in the Continental 

elevator, and 20,000 bushels on track. All but 198,706 bushels of the corn in 

the Continental elevators was used to fill existing contracts. The 198,706 

bushels were sold to an existing buyer to complete the loading of a vessel 

carrying corn sold under existing contracts. The 25,000 bushels received on 

track and the 20,000 bushels on track taken in the trade were moved into their 

Gateway elevator. 

All but 15,000 bushels of the corn received from the Calumet elevator was 

sold under contracts made after July 20. The testimony of Respondent Johnston, 

which is uncontradicted, is that the Calumet elevator was not a "good water 

house," i.e., could not accommodate vessels having a draw of over 20 feet, and 

respondents' contracts required the corn to be accessible by larger vessels. 

Because of the dry condition of the corn, it would have lost grade if it had 

been transferred to another elevator. Thus, Respondents' disposition of the 

corn received on delivery here was entirely consistent with the commercial 

purposes for which they claim it was taken. 

XIV. Statement of Intent

DE relies on various statements of Respondent Johnston which allegedly 

reflect an intent to manipulate the July, 1973 corn futures market. For 

instance, early in July, he told Mr. Catron, who was Executive Vice President of 

Illinois Cooperative Futures Company, and received the trading orders of 

respondents on the CBOT floor, and Mr. Clayton Johnson, a CBOT member, that he 

planned to take delivery of corn to meet his sales commitments. During the 

interview with the CEA investigators, Respondent Johnston made statements that 

he had intended to take deliveries for that purpose. He also stated in that 

interview that if he could have bought cash corn economically he would have done 

so. Thus, although his intention to take delivery was not quite as fixed as DE 

depicts it, clearly his intention was formed during July that unless conditions 

changed, delivery would be taken. 

DE's argument on these statements rests on its premise that it is generally 

reprehensible to take delivery on a futures contract. The premise is too broad; 

whether taking delivery is proper depends on the surrounding circumstances, 

which have been discussed. The intention to take delivery does not aggravate 

those circumstances. 

DE also refers to statements made to Mr. Catron requesting him to maintain a 

record of all of his orders because Respondent Johnston expected the CBOT to 

investigate his trading in the July corn futures contract. It is not selfevident that an individual, conscious of committing wrongful acts, would request 

an independent party to preserve a written record of those acts. The request is 

just as consistent with the belief that a complete record of all of the trading 

activity would reveal that no impropriety had been committed. 

DE claims that the following statement, which is attributed to Respondent 

Johnston in the interview report, reveals a foreknowledge of the results of his 

trading: "He [Respondent Johnston] said that at $ 3.80 per bushel they would not 

take delivery of any more corn than the bare minimum because a minute or two 

later corn would be worth a dollar a bushel less." There is nothing in this 

statement to indicate that Respondent Johnston foresaw that the price would 

reach 380 before it occurred. That would have required prescience, indeed. 

Rather, the statement reveals that he was not certain at what price corn would 

actually be available. In the same interview, Respondent Johnston stated that 

when, on July 19, the price limits were raised in the July contract for the 

following day, he "thought the July/September price spread might increase by 10 

to 20 cents per bushel over the spread on July 19." That spread on July 19 was 

about 23; July was 259 1/2; September was 236 7/8. Since the price limits were 

not removed on the September contract, it could not have exceeded 246 7/8 on 

July 20. Therefore, a 20-cent increase in the spread could not have resulted in 

a price of over 289 7/8 (246 7/8 plus 43) for the July contract. This indicates 

that the price expected by Respondent Johnston was well within the range 

 
Page 43 

 

of non-artificial or economic prices even as conceived by DE. 

XV. CEA Notices

DE proffered as evidence two exhibits consisting of notices sent to 

respondents concerning the March and May, 1973 soybean contracts. Upon 

objection, the exhibits were not accepted into evidence because they referred to 

markets of remote relevance to this proceeding, and tended to raise inferences 

about respondents' trading that could have been refuted only by an examination 

of their trading in those markets. DE argues on brief that the exhibits should 

be received for the limited purpose of showing that respondents were aware that 

the CEA regarded large long positions in an expiring contract as a possible 

device of manipulation. 

The statements in the exhibits referred to large long positions held by IFB 

in previous soybean contracts, and stated that the CEA was concerned about those 

positions, and that if any indication of artificial prices were found IFB would 

be investigated to see if there was any evidence of price manipulation. 

Upon reconsideration of the ruling made during the hearing, these exhibits 

will be accepted for the purpose requested. But in considering those exhibits, 

it must be noted that no similar notice was given here. The two notices, which 

conveyed the knowledge that the CEA regarded large long positions in an expiring 

contract as a possible device of market manipulation, do not demonstrate that 

the CEA viewed respondents' position here as potentially manipulative. In fact, 

the absence of a notice here when notices had been sent on previous occasions, 

provided respondents with some grounds for thinking that the CEA did not view 

their long position as unduly large in the July, 1973 corn contract. 

XVI. Final Summary

In final summary, as the foregoing discussion has shown, prices in the CBOT 

1973 corn futures contract reached artificial levels on July 20, 1973. DE's 

claim that the standing for delivery by respondents was the legal cause of these 

artificial prices rests largely on DE's further claim that the bulk of the 

reportable deliverable supply was unavailable for delivery on the futures 

market. The evidence offered to support the latter contention consists mainly 

of data on the heavy corn export movements at the time. There were, however, 

cash transfers of ownership of corn throughout the period and futures deliveries 

were, in fact, made. Indeed, there were more deliveries made at prices under 

300, which DE concedes were non-artificial prices, than DE claims were available 

for delivery. Thus, heavy export movements of corn are not proof that corn was 

unavailable for delivery on the futures market. At bottom, DE's claim is that 

the futures market cannot work where supply and demand are unusual. This cannot 

be concluded even on the basis of the events in issue here. 

DE argues that the entry by respondents of scaled-up spread orders during 

July 1973 reflects an intention to manipulate the market. However, as shown, 

the entry of these orders was entirely consistent with the theory of hedging now 

embraced by DE. DE also lays heavy emphasis on the liquidation orders entered 

by respondents in the last twenty minutes of trading. The circumstances in 

which these orders were entered belie DE's contention that they reflected an 

intent, formed earlier in July, to manipulate the market. 

The remainder of DE's claims are clearly makeweight, and without merit. 

Accordingly, the following conclusions are entered. 

Conclusions of Fact and Law

1. The prices in the CBOT July 1973 corn futures contract reached artificial 

levels on July 20, 1973. It is not possible to state precisely at what price 

this occurred. 
Page 44 

2. The trading of respondents was not a culpable or legal cause of the prices 

that were reached in that contract on July 20. 

3. Respondents did not attempt or intend to cause the prices that were 

reached, and could not reasonably have foreseen that such prices would be 

reached because of their activity. 

Order

It is ordered that the complaint in this proceeding be, and it is hereby, 

dismissed. 

APPENDIX 

 

EXHIBIT A-F-7 POSITION RECORD OF INDIANA GRAIN DURING JULY AND AUGUST, 1973 

DIVIDED BETWEEN OLD AND NEW CROP, 000 bushels 

Line June 29 July 2 July 3 July 5 July 6 July 9 

Old Crop 

 Cash Long Inv. & Transit 1 3,756 3,769 3,769 3,893 3,970 4,082

 Country Purchases 2 2,471 2,286 2,352 2,226 2,232 2,133

 Total 3 6,227 6,055 6,121 6,119 6,202 6,215

 Subgrade 4 4,714 4,629 4,662 4,706 4,778 4,826

 Net 5 1,513 1,426 1,459 1,413 1,424 1,389

 Short Locust Pt. Exp. 6 2,787 2,787 2,787 2,787 2,787 2,787

 Gateway Exp. 7 3,231 3,231 3,231 3,231 3,231 2,869

 Other 8 1,633 1,637 1,638 1,656 1,607 1,931

 Total 9 7,651 7,655 7,656 7,674 7,625 7,587

 

 Cash Position 10 S6,138 S6,229 S6,197 S6,261 S6,201 S6,198 Unpriced Purch. 11 59 59 76 76 76 76

 (gives) Unpriced Sales (takes) 12 857 857 796 796 615 618

 Net Cash Position 13 S5,340 S5,431 S5,477 S5,541 S5,662 S5,656

 Futures 

 July 14 L 735 L 795 L 795 L 830 L1,010 L1,010

 Net Position 15 S4,605 S4,636 S4,682 S4,711 S4,652 S4,646 New Crop Cash Inv. (subgrade) 16 4,714 4,629 4,662 4,706 4,778 4,826

 Purchases 17 5,355 5,366 5,389 5,402 5,463 5,503

 Total 18 10,069 9,995 10,051 10,108 10,241 10,329

 Sales 19 7,947 7,947 7,947 7,947 7,947 7,947

 Cash Position 20 L2,122 L2,048 L2,104 L2,161 L2,294 L2,382

 Unpriced Purch. 21 10 10 10 10 10 0

 (gives) Unpriced Sales (takes) 22 6,971 6,971 6,971 6,971 6,971 6,971

 Net Cash Position 23 L9,083 L9,009 L9,065 L9,122 L9,255 L9,353 

 Futures 

 Sept 24 S1,560 S1,575 S1,610 S1,610 S 115 S 130

 Dec 25 S3,845 S3,735 S3,745 S3,755 S3,455 S3,280

 March 26 L 960 L 960 L 960 L 960 S1,035 S1300

 May 27 
Page 45 

 Line June 29 July 2 July 3 July 5 July 6 July 9 

 July 28 Net 29 S4,445 S4,350 S4,395 S4,405 S4,605 S4,710

 Net Position 30 L4,638 L4,659 L4,670 L4,717 L4,650 L4,643

 Net Company Position 31 L 33 L 23 S 12 L 6 S 2 S 3 

 

 

>100> >101> 

Line July 10 July 11 July 12 July 13 July 16 

1 4,137 4,261 4,317 3,902 4,024

2 2,085 1,966 1,891 1,842 1,732

3 6,222 6,227 6,208 5,744 5,756

4 4,849 4,897 4,906 4,507 4,557

5 1,373 1,330 1,302 1,237 1,199

 6 2,787 2,491 2,491 2,491 2,491

7 2,869 2,869 2,797 2,797 2,797

8 2,320 2,568 2,595 2,167 2,142

9 7,976 7,928 7,883 7,455 7,430

 

10 S6,603 S6,598 S6,581 S6,218 S6,231 

11 63 53 44 3 3

12 555 555 555 345 345

13 S6,111 S6,096 S6,070 S5,876 S5,889

 14 L2,160 L4,685 L4,680 L4,910 L4,910

15 S3,951 S1,411 S1,390 S 966 S 979

 16 4,849 4,892 4,906 4,507 4,557

17 5,510 5,545 5,520 5,580 5,691

18 10,359 10,437 10,476 10,087 10,248

19 7,947 7,947 8,947 8,947 8,947

20 L2,412 L2,[ILLEGIBLE TEXT]90 L1,529 L1,140 L1,301

21 0 1 1 0 0

22 7,371 7,371 8,371 6,626 6,626

23 L9,783 L9,860 L9,899 L7,766 L7,927 24 S 245 S2,745 S2,875 S2,935 S3,110

25 S2,485 S2,485 S2,495 S1,665 S1,720

26 S3,195 S3,195 S3,195 S2,320 S2,320

27 28 

29 S5,925 S8,425 S8,565 S6,920 S7,150

30 L3,858 L1,435 L1,334 L 846 L 777 

31 S 93 L 24 S 56 S 120 S 202

Line July 17 July 18 July 19

1 3,762 3,933 3,983

2 1,604 1,434 1,345

3 5,366 5,367 5,328

4 4,256 4,314 4,313

5 1,110 1,053 1,015

 6 2,491 2,491 2,491

7 2,797 2,797 2,797

8 1,730 1,725 1,657

9 7,018 7,013 6,944 
Page 46 

Line July 10 July 11 July 12 July 13 July 16 

10 S5,908 S5,960 S5,929 11 3 3 3

12 285 120 0

13 S5,626 S5,843 S5,932 

14 L5,040 L5,205 L4,895

15 S 586 S 638 S1,037

 

16 4,256 4,314 4,313

17 5,713 5,770 5,819

18 9,969 10,084 10,132

19 9,947 9,947 9,947

20 L 22 L 137 L 185

21 0 0 18

22 6,686 6,731 6,821

23 [ILLEGIBLE TEXT],708 L6,868 L6,988 24 S3,160 S3,225 S2,865

25 S 720 S 730 S 730

26 S2,320 S2,275 S2,275

27 28 29 S6,200 S6,230 S5,870

30 L 508 L 638 L1,118 

31 S 78 0 L 81 

 

 

Line July 20 July 23 July 24 July 25 July 26 July 27 July 30 July 31

1 4,070 4,193 3,378 4,496 4,584 4,614 5,120 5,157

2 1,263 1,740 2,588 1,512 1,463 1,976 1,767 1,463

3 5,333 5,933 5,966 6,008 6,047 6,590 6,887 6,620

4 4,345 4,714 4,438 4,862 4,916 5,520 5,562 4,879

5 988 1,219 1,528 1,146 1,131 1,370 1,325 1,741

 6 2,491 2,031 2,031 2,031 2,031 2,031 2,031 2,031

7 2,797 2,797 2,747 2,797 2,797 2,797 3,012 3,012

8 1,629 2,129 1,178 1,190 1,137 1,226 1,215 825

9 6,911 6,957 6,006 6,018 5,965 6,054 6,258 5,868 

10 S5,923 S5,738 S4,478 S4,872 S4,834 S4,684 S4,933 S4,127

 11 2 2 2 2 2 2 2 2

12 0 0 0 0 0 0 0 0

13 S5,925 S5,740 S4,480 S4,874 S4,836 S4,686 S4,935 S4,125 

14 L2,010 L1,990 L 940 L 940 L 940 L 470 L 195 0

15 S3,915 S3,750 S3,540 S3,934 S3,896 S4,216 S4,740 S4,125 

16 4,345 4,714 4,438 4,862 4,916 5,520 5,562 4,879

17 6,032 6,371 6,658 6,785 7,360 7,485 7,659 7,957

18 10,377 11,085 11,096 11,674 12,276 12,705 13,221 12,836

19 9,947 9,947 9,947 9,947 9,948 9,948 10,948 10,948

20 L 430 L1,138 L1,149 L1,727 L2,328 L2,757 L2,273 L1,888

21 18 221 121 121 121 121 121 121

22 6,821 6,921 6,921 6,921 6,921 7,041 8,256 8,360

23 L7,233 L7,838 L7,949 L8,527 L9,128 L9,677 L10,408 L10,127 

24 S 650 S1,210 S1,410 S2,495 S3,695 S3,695 S2,320 S2,275
Page 47 

Line July 20 July 23 July 24 July 25 July 26 July 27 July 30 July 31

25 S1,120 S2,130 S2,255 S1,445 S1,940 S1,940 S2,185 S2,505

26 S2,275 S2,275 S1,935 S1,935 S1,725 S1,325 S1,325 S1,325

27 

28 29 S4,045 S5,615 S5,600 S5,875 S7,360 S6,960 S5,830 S6,105

30 L3,188 L2,223 L2,349 L2,652 L1,768 S2,717 L4,578 L4,022

 31 S 727 L1,527 S1,191 S1,312 S2,128 S1,499 S 162 S 103

 

 

 

Line Aug. 1 Aug. 2 Aug. 3 Aug. 6 Aug. 7 Aug. 8 Aug. 9 Aug. 10 Aug. 13

1 5,614 5,614 5,578 5,595 4,756 4,844 4,848 4,837 5,007

2 1,337 1,354 1,323 1,303 1,381 1,235 1,222 1,244 1,093

3 6,950 6,968 6,901 6,898 6,137 6,079 6,070 6,081 6,100

4 5,774 5,785 5,735 5,740 5,026 5,027 5,023 5,025 5,096

5 1,176 1,183 1,166 1,158 1,111 1,052 1,047 1,056 1,004

 6 1,031 1,031 1,031 1,031 1,031 1,031 1,031 1,031 1,031

7 3,207 3,207 3,207 3,406 3,406 3,121 3,121 3,121 3,121

8 1,786 1,789 1,759 1,731 829 1,005 929 893 902

9 6,024 6,027 5,997 6,168 5,266 5,157 5,081 5,045 5,054 

10 S4,848 S4,844 S4,831 S5,010 S4,155 S4,105 S4,034 S3,989 S4,050 11 1 1 1 1 1 0 0 0 0

12 0 0 0 0 0 0 0 0 0

13 S4,849 S4,845 S4,832 S5,011 S4,156 S4,105 S4,034 S3,989 S4,050 

14 0 0 0 0 0 0 0 0 0

15 S4,849 S4,845 S4,832 S5,011 S4,156 S4,105 S4,034 S3,989 S4,050 16 5,774 5,785 5,735 5,740 5,026 5,027 5,023 5,025 5,096

17 8,192 8,382 8,492 8,851 9,184 9,497 9,730 10,046 10,151

18 13,966 14,167 14,227 14,591 14,210 14,524 14,753 15,071 15,247

19 11,948 11,948 11,948 11,948 11,948 15,948 17,573 17,573 17,573

20 L2,018 L2,219 L2,279 L2,643 L2,262 S1,424 S2,820 S2,502 S2,326

21 121 121 121 121 263 263 293 293 198

22 9,360 8,359 8,356 8,356 8,356 12,048 12,508 12,518 12,518

23 L11,257 L10,457 L10,514 L10,878 L10,355 L10,361 L9,395 L9,723 L9,994 

24 S2,420 S2,370 S2,370 S2,160 S2,260 S2,165 S3,105 S3,955 S4,055

25 S2,485 S2,005 S1,920 S2,855 S3,395 S3,695 S1,375 S1,375 S1,375

26 S1,325 S1,325 S1,325 S1,325 S1,325 S1,325 S1,325 S 475 S 475

27 L 820 L 820 L 820

28 29 S6,590 S5,700 S5,615 S6,340 S6,980 S7,185 S4,985 S4,985 S5,085

30 L4,667 L4,757 L4,899 L4,538 L3,375 L3,165 L4,410 L4,738 L4,909 31 S 181 S 88 L 67 S 473 S 781 S 929 L 376 L 749 L 859 

Line Aug. 14 Aug. 15 Aug. l6 Aug. 17 Aug. 20 Aug. 21 Aug. 22 Aug. 23

1 4,944 4,963 5,064 5,150 4,980 5,001 5,035 4,545

2 849 961 847 902 1,098 1,073 1,046 1,038

3 5,793 5,924 5,911 6,052 6,078 6,074 6,081 5,583

4 4,909 4,986 5,016 5,123 5,075 5,080 4,935 4,652
Page 48 

Line Aug. 14 Aug. 15 Aug. l6 Aug. 17 Aug. 20 Aug. 21 Aug. 22 Aug. 23

5 884 938 895 929 1,003 994 1,146 931 6 1,031 1,031 1,031 1,031 1,031 1,031 1,031 1,031

7 2,906 2,906 2,906 2,906 2,376 2,376 2,376 1,790

8 798 757 703 688 987 1,247 1,228 1,327

9 4,735 4,694 4,640 4,625 4,394 4,654 4,635 4,148

 10 S3,851 S3,756 S3,745 S3,696 S3,391 S3,660 S3,489 S3,217

 

11 0 0 0 0 0 0 0 0

12 0 0 0 0 0 0 0 0

13 S3,851 S3,756 S3,745 S3,696 S3,391 S3,660 S3,489 83,217 14 0 0 0 0 0 0 0 0

15 S3,851 S3,756 S3,745 S3,696 S3,391 S3,660 S3,489 S3,217

 16 4,909 4,986 5,016 5,123 5,075 5,080 4,935 4,652

17 10,235 10,336 10,542 10,694 10,845 10,957 11,105 11,190

18 15,144 15,322 15,557 15,817 15,920 16,037 l6,040 15,842

19 17,573 17,573 17,573 17,573 17,573 17,573 17,573 17,573

20 S2,429 S2,251 S2,0l6 S1,756 S1,653 S1,536 S1,533 S1,731

21 198 198 198 198 198 198 200 200

22 12,518 11,623 11,623 11,548 11,548 9,873 9,873 9,890

23 L9,891 L9,174 L9,409 L9,594 L9,697 L8,139 L8,l40 L7,959

 24 S4,055 S4,055 S4,055 S4,030 S4,030 S2,620 S2,170 S2,170

25 S2,525 S1,710 S1,710 S2,420 S2,630 S1,940 S2,570 S2,570

26 S 475 S 475 S 475 S 475 S 475 S1,325 S1,325 81,375

27 L 820 L 820 L 820 L 820 L 820 L1,445 L1,445 L1,445

28 L 10 L 10 L 10 L 10 L 10 L 10 L 10 L 10

29 S6,225 S5,410 S5,410 S6,095 S6,305 S4,480 S4,610 S4,660

30 L3,666 L3,764 L3,999 L3,499 L3,392 L3,658 L3,530 L3,299

 31 S 185 L 8 L 254 8 197 L 1 S 1 L 41 L 82 

 

 

Line Aug. 24 Aug. 27 Aug. 28 Aug. 29 Aug. 30 Aug. 31

1 4,582 4,620 4,403 4,445 4,445 3,809

2 942 917 879 833 838 819

3 5,524 5,537 5,282 5,278 5,283 4,628

4 4,633 4,653 4,438 4,451 4,454 3,924

5 891 884 844 827 829 704 

6 1,031 1,031 1,031 1,031 1,031 1,031

7 1,790 1,518 1,518 1,518 1,050 1,050

8 1,258 1,533 1,098 1,081 1,533 790

9 4,079 4,082 3,647 3,630 3,614 2,871 10 S3,188 S3,198 S2,803 S2,803 S2,785 S2,167 

11 0 0 0 0 0 0

12 0 0 0 0 0 0

13 S3,188 S3,198 S2,803 S2,803 S2,785 S2,167

 14 0 0 0 0 0 0

15 S3,188 S3,198 S2,803 S2,803 S2,785 S2,167

 16 4,633 4,653 4,438 4,451 4,454 3,924

17 11,267 11,315 11,384 11,832 11,852 11,862
Page 49 

Line Aug. 24 Aug. 27 Aug. 28 Aug. 29 Aug. 30 Aug. 31

18 15,900 15,968 15,822 16,283 16,306 15,786

19 18,573 18,573 18,753 18,753 18,753 18,570

20 S2,673 S2,605 S2,931 S2,470 S2,447 S2,784

21 200 200 200 600 600 600

22 9,640 9,550 9,550 9,550 9,550 9,550

23 L6,767 L6,745 L6,419 L6,480 L6,503 L6,166

 24 S1,170 S1,145 S1,150 S1,180 S 710 S 710

25 S2,675 S2,640 S2,640 S2,910 S2,345 S1,605

26 S1,375 S1,375 S1,375 S1,425 S2,475 S2,885

27 L1,445 L1,440 L1,365 L1,365 L1,365 L1,365

28 L 10 S 165 S 165 S 165 S 165 S 165

29 S3,675 S3,885 S3,965 S4,320 S4,330 S4,000

30 L3,092 L2,860 L2,454 L2,160 L2,173 L2,166

 

31 S 96 S 338 S 349 S 643 S 612 S 1 

LOAD-DATE: August 6, 2008 
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