Buchanan County bulletin. [volume] (Independence, Iowa) 1869-1891, 1872-09-13
A CORNER IN GRAIN.
What it Ts-Informatlon FOR the
Uninitiatod.

A great many of our farmers and
others are at n loss to understand
what a corner on wheat or any other
grain is. They are equally at a loss
to understand why wheat a be
sold at $3.50 to $l.6O per bushel to
be delivered by August 81, when
for delivery on the first day of Sep
TENDER, it will only bring $l.22.
Since we are SO frequently qucs
toned about this matter, and since
every producer as we'll as grain
dealer is affected by it, we will try
to explain the matter as clearly and
fully as possible.
In the Chicago and Milwaukee
markets especially wheat is sold not
only for immediate but future de-
livery. It is sold in 5000 bushel
lots and upwards and written on
tracts are signed and ten per cent.
of the value of the grain deposited
in bank by both parties to guarantee
the sale and purchase, which is
equivalent to advance money.
When wheat is sold in July for Au-
gust delivery, it is called selling
short, the seller depending upon
buying the wheat in the meantime
to fill his bond contract and hoping
to buy it for less money and thus
be ahead by the amount of the de-
cline in the wheat, The buyer of
course expects that the grain will
advance and that he will make the
advance. Whenever the wheat or
other grain declines or advances so
that the ten per cent. first deposited
is exhausted, ten per cent. more
must be advanced by the losing
party as security that he will fulfil
his cotract to take or deliver the
grain, as the case may be, at the
price.
A moments study will show any
one that a market cannot be much
below the value of the product for
consumption, and that therefore the
tendency of speculation is to put it
up instead of down. The fact then
that prices a be run far between
two values and very little below,
and the further fact that the party
selling must furnish the article sold
or forfeit the margins or earnest
money, gives the power into the
hands Of the buyer. If strong par
ties buy large lots of wheat and it
declines and they r unwilling to
stand the loss, they buy up all the
contracts for future delivery they
can Now suppose, as in this case,
they buy 100000 to 1900, 900 more
number two wheat for August de-
livery than can possibly be re-
ceived, it is plain that when the
wheat is all in they will not only
own all Of it, but have these con.
tracts over and above which the
seller cannot fill because the wheat
is in the hands of the ring which
holds it on purpose to prevent them
from filling their contracts. The
matter runs on until ncar the last
of the month when the ring or cor
c suddenly bid the price up very
high and hold it there until the
31st, which establishes the price at
8 P. NJ, on the last day when all
contracts are forfeited and the mar
gins or advance money go to the
corner. Ifthere + 100000 bush
els forfeited contracts with 40 cents
up as margins, the ring wonld
make Sl,2OO,OOO, less what they
have to lose on the immense stock
Of wheat on hand, which in most
cases breaks the men who run the
corner
In this case, the parties who were
short got scared and began to bid
up, and hence wheat advanced at
the first instead Of the last of the
month, and from this on it is a
question of money, weather, and
receipts. If more goes in than the
ring ear pay for they break. If
they get so much that the loss on
the wheat more than equals the
money forfeited to them, they break
or lose heavily. But before they
break they generally bankrupt the
other side.
The reason for the difference be-
tween August 3lst, and September
LIST, is that a September contract
does not fill 4 contract to deliver in
August, and hence as there is no
manipulation in September contracts
as yet, the wheat is selling for that
month at something nea what it is
thought it will be worth.-Prairie
city Ader.