Commodities

Traveling down the long black road on the Annalist's commodity price index, the statistical wayfarer comes to a fork in April 1933. The left fork leads sharply up the rise which followed abandonment of gold. The right fork, which looks like a half-forgotten detour on the price map, is an index in terms of old gold dollars. This index shows that as a group hogs, corn, cotton, sugar, many another commodity, actually continued to decline until almost the end of last year, hardly moved off bottom until this spring. But by last week the Annalist index "in U. S. dollars" was pushing into the highest ground in more than three years. Despite a sudden rush of profit-taking which once again tumbled wheat below $1 per bushel and unsettled all cereals, corn soared to 58-c- (last year: 45-c-). Three successive winters favorable to chinch bugs had raised Corn Belt infestation to menacing proportions. Officials had counted as high as 5,000 pests to the square foot. Furthermore, the swarming insects were deserting drought-withered grains and grasses for the nearest succulent growth--principally corn. Continuous rains in the southeast and no rains at all in the southwest held cotton around 12-c- per Ib. The Mississippi Plant Board reported an average count of 119 boll weevils to the acre, against 75 the week before, 323 year ago. Prospects of a reduction in breeding stock and mounting feed prices boosted topnotch hog prices to the best level since October ($5 per cwt.), cattle prices to the highest since September 1932 ($10.25 per cwt.). But few if any of the gaunt animals that shuffled into the stockyards last week qualified for these prime prices.

Nine-cent copper was preceded by the broadest buying in months (see p. 56). Cocoa trading (5 1/2-c- per Ib.) was the heaviest of the year. Hides were strong, and sugar hit a four-year high at 1.88-c- per pound for May futures. Wool was inactive at 90-c- per Ib. Silver trading has slowed to a practical standstill since announcement of a proposed 50% tax on all profits derived from sales of bullion to the Government, and the price has hung around 45-c- per ounce. Side by side with climbing commodity prices this spring has been an expanding public interest in commodity speculation. Many a New York Stock Exchange house has garnered more commissions from its seat on a commodity exchange than from its Big Board membership. Eastman, Dillon & Co. lately rearranged the chairs in its Chicago office to face the commodity board instead of the stock board. Grain brokers, cotton brokers, sugar brokers, produce brokers, hope to capitalize on the fact that, so far, they have escaped the rigid Federal regulation of their fellow stock brokers. Minor commodities, as yet unexploited, were being investigated. Quicksilver, now selling at $75 per flask of. 76 Ib., was suggested as a good inflation hedge. Bernard E. ("Sell 'Em Ben") Smith, brash and jovial stockmarket operator, lately returned from a trip around the world full of good words for shellac and pepper. Though he personally inspected the habits of the Far Eastern lac beetle, he had apparently been influenced by a group of London speculators who call themselves the "Crusaders" and whose sworn purpose is to make the world "commodity conscious." Nothing much ever happens marketwise in either black or white pepper and nothing at all in shellac since the Japanese cornered the market in 1924. Shellac sold as low as $9.15 per cwt. during the Depression, is now $28.80 but the shrewd men from Mincing Lane cannot forget that shellac was once squeezed to $200. There is no futures market in shellac or pepper in the U. S. but Ben Smith would like to see one. This was not the first time that Ben Smith had warmed up to a commodity. Early in Depression when all other prices were melting, the hard-eyed Manhattan Irishman turned to the one thing that was bound to rise--gold. In his day Ben Smith had been a gold mucker, an automobile salesman, an ambulance driver. He helped bull Alaska Juneau from $3.50 per share to $20, Pioneer from $2.25 to $7. Once he flew to Alaska to inspect the Juneau properties, bought a gold brick worth $25,000. Back on the Exchange floor he wanted to put the brick on top of the Juneau post but his good friend Stuyvesant Fish decided a gilded paving stone would do just as well. Last year Ben Smith had the dubious pleasure of turning his brick into the treasury at $20.67 Per ounce. Eggs, butter, lard and other farm products have long had speculators to assume future risks. Largest butter & egg market is in Chicago but handy for Wall Streeters is the second largest--Manhattan's old Mercantile Exchange, where chalk marks on the butter board have made many a fortune and where some 450 brokers trade eggs as "Fresh Gathered Firsts," "White Standards," "Dirties." Unit of futures trading is a carload lot--300 tubs of butter, about 19,200 lb.; 400 cases of eggs of 30 dozen each. Margin requirement for a carload of butter is $400; for 144,000 eggs, $240. Butter & eggs are put in cold storage during peak production (spring), consumed in off seasons. Both commodities have boomed since the drought, and stock traders who cannot tell a butter firkin from an eggplant have been edging into the market. Between 800,000 and 1,000,000 lb. less butter is going into storage daily than year ago. Egg production is at the lowest level in ten years. Butter & egg trading does not have the daily fluctuation limits of the grain exchanges, and with October eggs at 19-c- per dozen and September butter at 24-c- per pound, margin requirements amount to only 8 to 10% against 25% minimum for stock trading.

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