World Wheat

For the benefit of its busy readers the Wall Street Journal carries a daily table called ''World Wheat at a Glance." Listed in four columns are closing prices for the previous nine trading days on the four great primary wheat markets--Liverpool, Buenos Aires, Winnipeg and Chicago. Last week it took no more than a glance at that table to perceive that world wheat was in the midst of something far more significant than a speculative war jiggle.

In a terrific burst of activity that put the Board of Trade on the front page for the first time in months, Chicago wheat soared 4-c- per bu. in one day to the magic figure $1. Dollar wheat has appeared several times since the New Deal but, because U. S. markets are insulated by a high tariff against outside factors, world prices lagged far behind. Winnipeg prices have also been artificially high, due to the stabilization efforts of the Canadian Grain Board. Lacking the stability provided by huge storage facilities. Buenos Aires is erratic. From its year's low Argentine wheat has lately zoomed 25-c- per bu. to a five-year high of 82 1/2-c-. The true world price for wheat is therefore set in Liverpool. The Liverpool price has, since early September, climbed 16-c- to nearly 99-c- per bu., jumping 8-c- last week alone. Snipping costs considered, dollar wheat in Liverpool is equivalent to $1.20 wheat in Chicago.

Though all four great markets seesawed sympathetically with changing prospects for War or Peace last week, the upward surge in world wheat had one fundamental cause: supply & demand. "Were it not for the very heavy carryover of Canadian wheat, amounting to about 200,000.000 bu.," said Grainman Fred Uhlmann of Chicago, "I believe there would be a scarcity of wheat such as has not occurred in a decade or two." Fact was, instead of having four or five major wheat exporting nations, the world this year will have only one.

As everyone knows, the U. S. is no longer a major exporter and has not been for years. Crops for this and the two previous years have averaged nearly 100,000,000 bu. below domestic consumption of about 650,000,000 bu. annually. This year, moreover, the 595.000,000 bu. harvested is light in weight, requiring the use of more bushels per barrel of flour. The surpluses piled up prior to 1933 are nearly exhausted, and before the next harvest U. S. millers must import perhaps 50,000,000 bu. of high-grade Canadian grain over a 42-c--per-bu. tariff.

In Australia recent rains have helped a poor crop but wheat acreage there was sharply curtailed this year. When the December harvest is done Australia will probably have relatively little grain for export, and most of that will go to the Far East. Despite rosy reports on its crop, Russian exports are expected to be light (see p. 19). But the most sudden and surprising upset in the world's wheat trade occurred in Argentina, where drought and locusts cut the prospective harvest nearly 50%. In good Latin American tradition the crop was officially overestimated early in the season, causing no end of embarrassment to Buenos Aires exporting firms which sold for future delivery more grain than the country can spare. Argentina still has wheat from last year's crop but, after supplying nations like Brazil and Colombia, there will be little new crop wheat left for Europe. Meantime what was expected to be the second largest European harvest in modern history turned out miserably. In Hungary there is even talk of famine.

Thus at a time when the wheat importing areas of the earth need more grain than they have bought in years, Canada alone can supply them. So for once it looked as if a governmental stabilization scheme might turn a profit instead of the usual loss. With its enormous reservoir of wheat accumulated in tireless attempts to support the Winnipeg market, the Canadian Grain Board can almost dictate its own prices.

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