Evening star., 1948-02-11
US. Buying Protected
Trades Against Break
Grain Expert Claims
Market Wus One-Woy
Street Until Supplies
Exceeded Anticipation
Rp David Laurence


Exceeded Anticipation
By David Laurence
Without In any way implying
that there is anything unethical or
collusive about it, the truth is the
Government of the United States,
and the Agriculture Department in
particular, can affect the rise and
fall of grain prices while spectators
familiar with the habits and Gus
toms of Government can make
profitable guesses and trades.
The Government today is by far
the biggest single buyer of grains.
It's purchases In this crop year are
approaching 375, 900 900 bushels of
wheat. The plans Of the Govern
ment call for about 100000 bush
els additional for export. Every
body who studies the Marshall Plan
requirements and world food con-
ditions knows what must be bought.
When there Is q big demand and
a product is scarce, the price goes
up. When the demand drops of or
when the supply Is more than
enough or more than had been an
ticipated, the price drops.
Gives Support on Breaks.
A grain expert familiar with how
the Government operates has given
this correspondent an intimate pic
ture of the situation:
Government buying in the last
six. or eight months has supported
the market on breaks. This en-
couraged spectators to go in and
buy. They were almost provided
with q written guarantee that Gov
ernment would support the market
on the breaks and that they could
profit by any rises. 1t was a one
way street so long as 1t appeared
the supply-and-demand situation
would be tight.
"The Government bought wheat
In recent months all the way UP
from a little above 50 bushel to
about SO a bushel.
an the process, however, the
Government accumulated about all
of the wheat that its export pro-
gram called for. At the same time
1t gradually became evident that
there was going to be more grain
available than the forecasters had
predicted. Available supplies are
turning out to be about 100000, 600
bushels larger than anticipated.
That Is due to the fact that farmers
marketed livestock instead of feed
ing 1t out.
Nobody to Buy.
What really happened recently
was that spectators who owned
wheat started to take profits. They
gradually were becoming aware that
crop prospects in both Europe and
the United States were improved
over q few months or weeks ago.
When they tried to sell, there wasn't
anybody to buy. The Government
itself apparently had concluded that
the price was too high, although 1t
had bought much wheat above the
levels that prevailed Also, the Gov
ernment only wanted another u.s.
OO0, 900 bushels and it might get
that in an awful hurry if it offered
to buy all wheat offered at a set
price. .-..
~corn, as matter of fact, broke
first and hardest. That reflected
evidence of more corn on farms
than had been expected. 1
Grains broke and, as they broke,
buyers pulled back. But owners Of
grains, who had bought for a rise,
became panicky or saw their mar
gins disappear. They either were
forced to sell or dumped to get out
while the getting was good. Offer
ings were so heavy and buying Or
ders so few that trading on some
days was carried on for only a few
minutes. The price then had dropped
the limit and still nobody wanted
to buy.
Called Typical Panic"
"It is a typical panic in commod-
tiles. comparable to the one in Sc
curities back in 1929 However, this
time there are immense needs for
all commodities. The Government
is committed to support prices at &C
per cent Of parity. Government
also still has 100000 bushels oi
grain to buy when and If it feels
like entering the market again.
"The Government actually has
stopped buying for protracted pc
RODS several times In recent months
It was then that spectators were
having their fling. Government
would buy when the speculators
got tired and the market would
take another swing up. Now that
Government has done most of Its
buying, there is not the assured
support at this level of prices.
Secretary Anderson, answering a
question the other day in press
conference, repeated an earlier
statement that the Government
might raise its wheat and f1oul
goal to 500,000,0o0 bushels instead
of the earlier goal of 450,000,00C
bushels. This was interpreted in
the grain trade as an expression OF
intent to buy 50000,000 bushels
more wheat. Yet that statement
did not stop the decline once II
had got going.
THE fact is that supply and de-
wand &c coming nearer f0 bala0ce
In foods, as In other things, and
markets are quick to reflect that
fact. That's what they're for"
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