Wheat World

When locusts began to swarm over the wheat fields of Argentina last fortnight, the Minister of Agriculture was ready with a plan. He proposed to pay eight centavos (2 1/2-c-) to anybody who could fill a 100-lb. sack with locusts, bring them to the Government to be soaked in gasoline and buried.

If, to escape such destruction, an Argentine locust could wing his way to the U. S., he would there find less wheat to eat than at any time in 50 years. If he crossed the Atlantic to Europe he would see slim pickings in the seared fields of France or by the banks of the Danube. And in Germany he would see crops so poor that people must eat potatoes once thrown to the pigs. In Russia the roar of 140,000 tractors hastily harvesting a premature crop, the shrill cries of village children scampering after the reapers to scoop up lost heads of precious wheat, would drive the traveling locust on into Northern China. There he might get his wings soaked in torrents of crop-destroying rain, if he did not fly to Western China. There drought and the sun would drop him to earth at last, scorch him to death at 115DEG. But on his world junket the Argentine locust would have seen what sharp-eyed traders began to foresee last spring. There is not enough wheat growing in the fields of the world to feed all the people in the world.

Italians want their macaroni made out of durum--a hard-kerneled wheat. There is not enough durum in all Manitoba to feed even the macaroni-eating Italians in the U. S., and not enough wheat of any kind growing in Italy to fill her normal wheat and flour consumption of 300,000,000 bu. Into U. S. mouths normally go more than 600,000,000 bu. of wheat but this year U. S. farmers can raise only a scant 484,000,000 bu. Germans, who eat nearly 200,000,000 bu., have not had enough water to raise 150,000,000 bu. Great Britain and Ireland, almost wholly dependent on the world for wheat, consume more than 275,000,000 bu., produce less than a quarter of that amount. This year the Danube Basin will have no wheat to spare after feeding its own territory, and Spain also needs most of her wheat for her own people. Thus the wheat-importing countries of Europe were looking anxiously across the seas last week to the three principal countries with exportable surpluses--Argentina, Australia, Canada.

The prospect was not as bright as it was a month ago. By last week traders had reduced their estimates of the Canadian crop to the point where Canada would have only about 160,000,000 bu. for export. And Australia, still four months from harvest, was put down for an exportable surplus of only 70,000,000 bu. out of this year's crop--less than half of normal. Thus Canada & Australia between them could barely supply the Mother Country's needs.

Remains Argentina, whose acreage was reduced by droughts in the Southwest. Her surplus from this year's crop will not be more than 140,000,000 bu., some of which will have to go to Chile whose crop was damaged by too much rain.

Yet grain experts could predict with perfect confidence that no one will starve for wheat. Piled high in grain elevators in the U. S., Canada and elsewhere are huge carry-overs from last year. From a curse these carryovers have now become a blessing. The U. S. has 265,000,000 bu. to cover her 140,000,000 bu. shortage for this year. By July 1935 the U. S. carry-over will be reduced to around 120,000,000 bu.--a normal carryover for the first time in seven years. Canada's surplus from last year is 200,000,000 bu., France's 100,000,000, Australia's 85,000,000, Germany's 24,000,000, Argentina's 100,000,000--a grand total of more than 700,000,000 bu. About 400,000,000 bu. of that carryover will be needed this year to make up for crop deficiency, leaving 300,000,000 bu. as the world's total surplus of unconsumed wheat for 1936.

Wheat prices in Chicago began to advance around May 1 when wheat was 78-c- and traders were beginning to see the effects of drought. Last week futures were selling at 97-c- to $1.05, spot at $1.12. Liverpool traders were more complacent: early reports on the Canadian crop had been favorable and Argentina, ignoring her export quota fixed at the London Wheat Conference last August, had plenty of wheat for sale. The Liverpool price at the end of May was around 72-c-. Not until mid-June, when drought news from Canada became alarming, did Liverpool traders begin to push the price. October wheat at Liverpool last week reached 86-c-. Some U. S. speculators were proclaiming last week that in the domestic market, which is effectively isolated from the world by a 42-c- tariff, the sky was the limit. Grain experts felt that U. S. wheat prices at present crop estimates might go to $1.25 but not much higher.

Statistically the biggest unknown factor last week was Russia, world's largest wheat-grower. Careless harvesting methods cost Russia nearly a quarter of her last year's crop. This year spring heat waves ripened the southern fields early, forcing peasants to harvest by night under the glare of electric lamps. Best estimates were that the total crop would be 700,000,000 bu., 30% less than last year. Several million bushels have already been imported from Argentina and Australia to Vladivostok to feed Russian troops concentrated in East Siberia.

Thus there was little chance that the Soviet would send wheat into the world markets. But neither is the Soviet counted on as an importer for the simple reason that when Russia does not produce enough wheat for the Russians, the Russians go hungry.

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