The weekly Oskaloosa herald. [volume] (Oskaloosa, Iowa) 1855-1885, 1872-08-22
a coaNeRIN GRAIN,
What Is It-Information for the Unnitia'
ted.
rEro,,, tho Prairie CitV Index

l HndI Is tI-InIOfUldpVu tOf huC Shihibo
! IFrom the Prairie City Index.]
| A great many of our farmers and
others are at loss to understand
what corner on wheat or any other
grain is. They are equally at loss
to understand why wheat can be
sold at $3.50 to $1.60 per bushel to
be delivered by August 81, when for
delivery on the LIST day Of Septem-
Der it will only bring $l.22. Since
we are SO frequently questioned about
this matter, and since every produc-
er as well as grain dealer is affect
ed by it, we will try to explain the
matter as clearly and fully as posi-
Bile.
In the Chicago and Milwaukee
markets especially wheat is sold not
only for immediate but future deliv-
cry. 1t is sold in 5000 bushels lots
and upwards. Written contracts are
signed and ten per cent. of the val
ne of the grain deposited in bank by
both parties to guarantee the sale
and purchase, which is equivalent
to advanced money. When wheat
is sold in July for August delivery it
is called selling short, the seller de-
pending upon buying the wheat in
the meantime to fill his bond con.
tracted and hoping to buy it for less
money and thus be ahead by the
amount OF the decline. 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 Sc
curity that he will fulfill his contract
to take or deliver the grain, as the
case may be, at the price.
A moments study will show any
one that market cannot be much
below the value of the product for
consumption, and that therefore the
tendency for speculation is to put it
up instead Of down. The fact then
that prices can be run far between
two values and very little below and
the further fact that the party selling
must furnish the article sold or for
felt the margins or earnest money
gives the power into the hands OF
the buyer. If strong parties buy
large quantities of wheat and it de-
clines and they are unwilling to
stand the loss, they buy up all the
contracts for future delivery they
can. Now suppose, as in this case,
they buy to 4, 1000, 900 bushels more
number two wheat forAugust deliv-
cry than can possibly be received, it
is plain that when the wheat is all in
they will not only own all of it but
have the contracts over and above
which the sellers cannot fill because
the wheat is in the hands of the
ring which holds it on purpose to
prevent them from filling their con-
tracts. The matter runs on until the
last Of the month when the ring or
corner suddenly bid the price up
very high and hold it there until the
Slst which establishes a price at 3
P. M, on the last day when all con-
tracts are forfeited and margins and
advanced money GO to the corner.
If there are 5000, 900 million bushels
forfeited contracts with 40 cents up
as margins, the ring would make ST.
100000, less what they have to lose
on the immense stock of wheat on
hand, which in most Gases 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 first in
stead of the last of the month, and
from this on it is question of mon
ey, weather, and receipts. Ifmore
goes in than the ring can 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 September contract
does not fill 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 near what it is
thought it will be worth.
In regard to this corner we will
just add this, that there can be no
object to carry it after the ring have
all the money the sellers have or
will part with as forfeits, for, by so
doing they would take large receipts
for no profit and certain loss.
Hence the extreme probability is
that when they have forced out all
the money they can get, and these
exhorbitant prices will soon do that
they will sell their wheat and let it
60. This is liable to occur any day
and when it does prices will GO
down from 10 to 40 cents in one day
Still if the weather should be I'M
favorable for threshing and the pros
poets for heavy receipts discourage
ing and parties refuse to settle, the
corner may run till August 81. But
there is no certainty in the matter
at all and the man who pins his faith
on either horn of the dilemma stands
at least one chance in two to one
beaten, while the shippers who does
not sell as fast as he buys stands
about two chances to lose TO one to
make.
THE NOBLE ARMY OF SOREHEADS.