Evening star. [volume] (Washington, D.C.) 1854-1972, 1963-04-08
By DARDEN CHAMRLISS


commodity futures trading.
One observer calculated that
a commodity trader who called
each shot exactly right could
have run $500 into $185 900 in
nine months of recent sugar
price fluctuations.
It's a business where b a d
news can be good news, where
floods in Africa can make a
man millions here. and where a
recent market setback was at
tributed to a peace scare"
Some 10000 people are in
volved, buying and selling
guesses on what commodities
will cost a year from now.
A sprawling, big-money bust
ness, commodities trading en-
braces II major auction ex-
changes In IL United States
cities. The biggest, Chicago's
Board of Trade, turned over
$34 billion last year. Outlets
exist in almost every city, be-
cause most stock brokerage
firms also handle commodity
accounts.
Buyers Aren't Users
Commodities trading began
because farmers wanted money
for a crop still in the ground,
and because food packers want
to know in advance what their
costs would be.
1t involves contracts for a
stated amount of goods $1,000
bales of oats, 100 bales Of cot
tom to be delivered at a stated
time.
Growers and users balance
the actual product against these
paper orders to guarantee fu-
ture prices by hedging. It's SIM
liar to cancelling out a b d
football debt with an equal bet
on the opposite team.
But what makes the markets
work is people who don't give a
hang for the actual commodi-
ties, who are interested merely
In the ups and downs of the
prices of these contracts. They
buy and sell them for possible
fat gains or bad losses, always
getting out before any actual
delivery.
These men - the specula-
tors - are the ones who make
commodity trading glamorous,
because they can parlay a small
stake into a fortune almost
overnight. Recent wide price
swings have made this easier to
do. Outsiders with spare cash
have taken notice.
"All they hear about is the
big Killings" said one broker,
"and it attracts them like
flies"
How many newcomers have
been drawn into futures trad
ing?
John Pepion, executive vice
president Of the association Of
Commodity Exchange Firms,
says volume was UP q third
early this year and that new
corners accounted for part Of
this rise.
Reports of the Commodity
Exchange Authority Of the Ag-
riculture Department. the agen-
cy that policies trading in do
nestle commodities, show that
the percentage of small traders
has risen sharply. In cotton,
they now constitute about rs
per cent of the total against 81
last July. In potatoes, their
portion has risen from so per
cent to about 10.
One authority attributes the
quickened interest to publicity
given recent price swings, to
refugees from last years stock
market slump seeking a differ
ent outlet. and to the remark
able leverage" futures trading
provides.
Commodity trading may re-
quire as little as 10 per cent
cash margin, against the stock
markets SO. That means rela-
lively little money can make a
big splash.
A broker warns, however,
This business isn't every mans
cup OF tea. 1t takes CUTS, and 1t
takes money. A guy can get
wiped out before he knows what
hit him."
Caution Doesn't Pay
Another said "it's often the
little guy, the one with Just
a couple Of hundred dollars,
who wants to make the big
play. He figures a hundred
bucks isn't anything much, but
II he can run 1t up into the
thousands, then he's on his
way. And sometimes 1t works"
But usually 1t doesn't, and
brokerage houses have to steer
away customers who might
plunge In over their heads.
Brokers. also warn that the
futures business is no place for
sit-tight investors.
You've got to watch It close,
at least once a day." CON-
mented one broker. You've got
to be ready to take a fast loss
or take a fast gain. You can't
wait 1t out like you can stocks
or bonds"
After ALL" he continued,
when a contract for delivery
comes due, II comes due. You're
liable TO end up with so tons
OF raw sugar on your door,
STEP"
The trader has 10 watch
commodity prices In the paper.
And he has TO watch Wash