The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-05-18
The Contract Grade.

Of more than passing interest, and of
Importance not entirely confined to the
grain trade, is the agitation at the
Chamber of Commerce for change in
the contract grade Of wheat in Minnie
,apolis. Three times this proposition
has been up, and twice before it was de-
feated., It's revival comes again only
slightly in advance of a similar move
at Duluth. The outcome will be watched
with interest and will be Of Importance
to both markets as regards the milling
trade, and also that branch of the grain
business that runs more largely to trade
in futures. - - 49,
AS is well known, Minneapolis has,
worldwide reputation for the quality of
her flour. Also she has high reputa-
ton as a grain market. There is but
one contract grade here, No. l northern.
When a purchase or sale Of wheat is
made for future delivery, be it July,
December or. May Of next year, it is
always understood that to make good
delivery No. l northern wheat must be
ten'dered. 1t is not so in other mar
kets. In, Chicago firm having sold
wheat for July delivery could deliver
upon such sale either No. l northern or
No. red winter wheat; also in New
York. In other export markets the
payment Of differential enables seller
to make good delivery with lower
grade. This proposition met defeat
here some time ago. Elevator men de-
sired the privilege Of rendering No. 2
northern on contract with Scent pen
atty, but largely thru the efforts of mil
lers it was voted down.
There is much to say on both sides of
the question. The millers claim that
the prestige of Minneapolis as a mar
ket where the buyer Of wheat will al
ways get just what he expects, is some
thing too valuable to lose. y. Moreover,
it is commended that changing the grade
will injure the milling trade. a A miller
may sell 10000 or $4,000 barrels Of flour
today for future delivery. Immediately
he buys July wheat or September wheat
as the case may be, in quantity equiva-
lent to the sale Of -four. He bargains
for No. l northern, and that he should
know that he is to get it is Of first i'm
portance to him. When the contract
natures it is not satisfactory to the
miller to have the seller tender him some
thing lower in grade, and offer him S
cents a bushel with it, for he cannot
grind the nickel, but he must have
wheat to make -four, and it must be
good wheat if he is to hold up the quail
ity Of his product.
Against this there is the undeniable
fact that the scarcity Of contract grade
is hurting the legitimate trade in fu-
lures. Buyers Of wheat for storage are
almost afraid to hedge it, for fear that
when loaded out for delivery, it might
not grade contract, and they find them
selves short wheat and in a sense "cor-
nered.' ,.a. 49,
| In the good old days when there was
| always great abundance Of the leading
speculative cereal, these troubles did
not exist, but the country has grown
and the wheat crop has not grown pro-
portionately, and for year or two past
the proportion Of high-grade wheat pro
| duced has been much smaller Such
conditions make it possible for Letter
or Gates to come into the markets and
run a corner and demoralize the legiti
mate trade, and even where there is no
corner, conditions often shape them.
selves so that short sellers are badly
squeezed, as in the present case of Min,
neapolis May wheat, selling this week
at $1.20 a bushel, because sellers had
expected to be able to deliver No. !
northern, only to find that there is so
little of it that they cannot get it
without paying a fancy price.
One thing is clear, there has got to
be a Encouragement Of some sort, or
trade in wheat futures will decrease in
stead of increasing, for men will hesitate
to put themselves in position where they
may lose heavily by squeeze or a cor.
ner, where, with wheat in their possess
sion, they, nevertheless may be caught
short because it does not grade up to
contract.
DR.. Dowie IS said to need money. How
humans!
l