Evening star., 1934-01-01
OUTLOOK BRIGHT
FOR COMMODITIES
Basic Factors Plus FEEDER :
Activity Favor Still
Higher Prices.
(Bv Cambridge Associates }

When the full spread of the Roose-
welt recovery spread itself, it became ap-
parent that the key position was occu-
pied by the farmer. He it was and is
to whom the President looked TO supply
the buying power which should lift the
country out OF the slough of despond;
he whose buying power must be re-
vIved. To achieve this end the price
of commodities at their source must be
raised. The question now Is, what sue
cess have the Presidents policies
achieved, TO this We must add, what
is the outlook for the coming year?
Let us first consider the factors max
ing for higher prices which have moth
ing to do with governmental action.
The big cash crops have been reduced
in volume. regardless of the crop-controI
measure put into effect by the A A. A.
Particularly publicized in this respect
was the Spring wheat crop. However,
this tendency is largely offset by the
large carryovers in crops in which this
practice is possible.
World Situation Fair
World crops have not declined pro-
portionately in volume. However, in
competitive products such as rub
Der. the situation is considerably
when the collapse in the world market
was proceeding to the disruption OF
our own industry. The same applies
to sugar, where the world caryover is
reported to be IT million tons below
the previous year. This was the larg-
est decline in carryoyer In the history
of sugar.
Now let us look at the domestic situa-
tion-and see what the administration
has done and what 1t proposes TO do
in 1884
The crop-control measures put into
effect were greeted with considerable
degree of success in their early stages.
That they may not work out so sue
cessfully. notably in the case of cotton.
seems probable. The reduction in the
amount of land farmed has been
achieved substantially according to
schedule. but there is serious doubt that
this means anything like a proportionate
decline IN the volume Of commodities,
leaving the weather out Of consideration.
That some limitation will be achieved
seems probable, however, and thus an
important step will be taken toward
balancing OF production and consump-
ton domestically.
In the field Of the ferrous metals.
such as steel. there is not so much need
for price advances as there is for ade-
quate volume. Non-ferrous metals are
different. The building industry must
be relied upon to furnish the stimulat-
ing demand which will force them up.
This is because the automobile industry,
which will doubtless furnish a Consid-
cradle demand. cannot in itself hold the
price Of copper, for example, without
the aid Of other metal-using lines.
Rail Demand Possible.
A demand on the part of the railroads
is possible, however, if the Government
undertakes through the Reconstruction
Finance Corporation to provide the car
riers with the credits for additional Or
ders. Export prospects for the metals
are not too good. although prospects
are better than they were al the cor
responding time last year.
Turning to broader governmental poll
cies. We find two which would seem TO
have the power to raise prices in some
/ degree. The Governments gold-buying
policy, whatever its drawbacks in other
respects, eXerted a sufficient influence
TO arrest a decline at that time well
under way, and to reverse the trend in
some degree. This influence was none
the less real despite the fact that 1t was
largely psychological
The second influence is the definite
policy decided upon by the administra-
ton to open up foreign markets through
reciprocal trade agreements. This, while
not especially promising from the stand
point OF wholesale price revision upward,
IS a definitely sound. positive element
which is favorable to higher prices. Ag-
rlcultural commodities should especially
be favorably affected, as they should be
by distillery demand.
Summing up. therefore there seems to
be more elements favorable to higher
prices than unfavorable. Non-ferrous
metals appear to have the least bright
outlook, subject to modification if motor
demand is very large. while agricultural
commodities have the best prospects
over the entire stretch of 1884.