How High Is Up?

In the high jinks staged by commodity markets last week, the main ring was in Chicago. There, in the most hectic trading in the wheat pit in over five years, the price of spot wheat jumped to $2.50, highest since 1920. This put such a pinch on traders in March futures, i.e., wheat to be delivered before the end of the month, that futures jumped even higher, hit $2.62. Up with them they carried all the other grains.

There was plenty of action in the smaller rings. The price of hogs went up to an alltime high of $30 a hundredweight, almost double the price of five months ago. Many another commodity edged up enough to shove Dun & Bradstreet's weekly index of wholesale food prices to a record high. Some metals rose too. Lead went up 1¢ to a new high of 14¢ a lb.; copper worth only 14 3/8¢ under OPA ceiling rose to 21¢ a Ib. Silver, which had sagged to 70¢ a Ib. in February, now somersaulted up to 80¢.

Gloom on the Exchange. Wall Streeters jumped to the conclusion that rising food costs might upset the none-too-steady labor-management peace. The stockmarket slumped, wiping out all of the gains of two months.

In spite of this show of discouragement, few seemed to think that the U.S. was in for another steep price rise all around. Wheat and hogs made the headlines. But there were plenty of reasons why commodities in general would not follow. Hogs had been going their own wild way for months (see chart). Some metal prices, due to the worldwide shortages, might well rise some more--and stay up. But food was something else again. Wheat was up because of 1) a shortage of freight cars and 2) Herbert Hoover's recommendation that food exports to Europe be stepped up (see NATIONAL AFFAIRS).

There was still a fair amount of wheat on U.S. farms, but the railroads were bringing comparatively little of it to the market. And the Government had been a heavy buyer of what was delivered. Yet the winter wheat promises to be a bumper crop, even bigger than last year's whopper. The U.S. will probably be able to ship as much wheat to Europe as last year and still have a small surplus. Eyeing all this, traders expected wheat to be down to around $2.16 by July and they were buying for future delivery on that basis.

Cheer in the Cupboards. In high hog prices, the U.S. was paying for the post-OPA stampede of pigs to market last fall. The hog crop was so depleted then that pork would remain relatively scarce until May. There was a good prospect of $1-a-Ib. pork chops--if anyone would buy them. But there was no reason why anyone should; there was plenty of other lower-priced food to eat. The Department of Agriculture was actually worried because there was so much food in cold storage. Example: there were 140 million Ibs. of turkeys in cold storage, 25 million more than last year. There would be no place to put incoming crops if such stored surpluses were not soon sold. Furthermore, a near-record number of cattle, 4.3 million, were being fattened on the feed lots. Soon, they would be coming to market. Looking at the full cupboards, the Office of Temporary Controls confidently predicted that food prices would be down this spring.

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