The Washington times., 1936-11-11

very SGIO1lS.
Back of this lies the significant
fact that untitled orders for cloth
are so large. AS a recent Govern
ment bulletin puts it, indications
are that the unusually large vol
ume of untitled orders in domes-
tic mills increased
In other words, there is strong
tendency toward forward buying"
The general situation lines up
about as follows: The Govern
ment's estimates have gyrates so
wildly that it seems to the trade
wiser to assume a crop of around
u million bales. (The weather
has not been as Ideal" as the
alibi-hunting esimaters say, and
the ginnings, although rapid, to-
tailed only 9,8SO,OOO bales to No
vember -
Last season, the estimated
world consumption of American
cotton ran over 1875 million bales,
and this season starts at an even
higher rate. Exports are running
above year ago, and seem likely
to be in the neighborhood OF 6
million bales for the season. Our
domestic mills are operating at a
high rate, which promises to con-
sumo around 7Amillion bales.
Thus any crop under 13 million
bales would probably require
some reduction in carTyover.
A very notable fact is that the
markets for cotton goods show
independent strength" During
the time that the Government
experts" have been fumbling
their crop estimates higher and
higher, and raw cotton prices
have sagged, goods prices have
risen.
Incidentally, this means that
manufacturers earn larger gross
margins by turning raw cotton into
cloth, which insures continued
large consumption.
Passing to copper, we find an.
other case Of notable strength Of
demand.
Despite the fact hat the build.
ing industries have remainde so
backward, and the further fact
that world production capacity is
SO large, copper prices have risen.
They have risen in the fact Of
opposition by conservative pro-
ducers who have fought against a
runaway market.
After a struggle, the domestic
price advanced to ga cents. It
was then unanimously, but hest
family, raised to 10 cents. Now
it has been quickly jumped to 1012
cents, and there is talk of 12-cent
copper by the end of the year.
For long while now, the for
eign price of copper has led the
domestic market. The foreign
market affects sentiment here,
and more concretely it affects the
exports of scrap copper. Now the
foreign price is at this writing up
to 1885 cents, which tends to con-
firm ideas of further gains in the
domestic market.
Following the large domestic
soles of copper in October, we
find the November sales already
up to $4,000 tons, with metal sold
as far ahead as for March delivery.
Thus, again, we run into the
growing tendency to anticipate re-
quirements, and to buy for future
delivery. This Is one of the strong
est symptoms that boom conditions
may be developing. It is "bullish"
for the near future.
At such times, the question al
ways arises: Is the forward buy
ing" based on actual requirements
or is it speculative? Will it turn
out to have been wise or excessive?
Is it the final outbreak Of effec-
tive initiation?
It is, perhaps, too early to be
sure. The situation is not yet out
of hand. But we should watch
speculative markets carefully, and
should not forget economic law
and the lessons Of the past. My
guess is that New Era" under
the New Deal would be much the
same as the New Era" we had
under the Old Deal in 1929.