Harvest Moon

"Because of the tremendous crops, nothing can stop business improvement this fall." When famed Economist Roger Babson spoke thus before the Boston Chamber of Commerce last week, he enunciated what is currently the No. 1 bullish hope of the country. In theory bumper crops sold at fair prices provide the huge farming class with such extensive buying power that all commerce benefits. How bumper are crops was last week summarized by revised estimates of the Department of Agriculture, indicating that total value for three major crops of corn, wheat and cotton will be $4,500,000,000, largest since 1930. Total farm income from the sale of all crops plus payments by the Agricultural Adjustment Administration will total up to nearly $9,000,000,000. largest since 1929's $10,479,000,000, and more than a billion greater than last year. Though bears suggested that most of this fat income had already been spent in anticipatory or installment buying, leaving only a wrung-out remnant for fall business, joy reigned in most rural hearts as the nine billion dollar harvest moon approached its full.

Corn. Present estimate for this year's corn crop is 2,549,000,000 bu.--109,000,000 bu. less than estimated a month ago but a billion more than last year. At present prices of 63-c- a bushel for December corn in Chicago, the crop is worth about $1,606,000,000. Last week, with this huge harvest due to begin pouring on the market about Oct. 1, by a freak of commerce the corn futures market on the Chicago Board of Trade was threatened by the tightest "natural squeeze" or corn shortage in years. This was due to the fact that last year's short crop left the smallest carryover of this century. As a result, corn brokers anticipated trouble fulfilling their contracts for September futures which come due on Sept. 30, before the new crop reaches market. There were only some 4,000,000 bu. of visible supply for September delivery. Prices soared as high as $1.16 a bushel, longs grinned, shorts hunted frenziedly for stray kernels.

A similar situation occurred last July when potent Cargill Grain Co. held the long interest, and potent Farmers National Grain Corp. the short. At the last minute Farmers suddenly pulled 500,000 bu. of previously invisible corn out of the hat, gave Cargill a severe drubbing as the price fell 27-c-. Last week brokers suspected that Cargill was out to get even. However, there was little chance that a serious squeeze would materialize, for the Secretary of Agriculture has power to extend trading to prevent such things. Last week the Commodity Exchange Administration was visibly disturbed, uttered warnings about manipulation and presently the Chicago Board of Trade Clearing House Association doubled the margins on September corn (from 4-c- to 8-c-) to discourage new speculation. At week's end longs reluctantly liquidated enough corn to ease the squeeze materially.

Wheat. With a crop now estimated at 885,950,000 bu., largest since 1931, and last week's price of $1.05 a bu., the U. S. wheat crop is worth about $1,000,000,000. Wheat has already been harvested, so the department estimate is pretty sure to be right. Including last year's 90,000,000-bu. carryover, wheat on hand amounts to 975,950,000 bu. of which some 775,000,000 bu. will be needed in the U. S. With 200,000,000 bu. more to dispose of, the U. S. may become an important wheat exporter for the first time since 1932.

In the world's wheat marts, the U. S. will this year have little competition from Canada or the Danubian countries, both having small crops. Argentina and Australia expect fair crops and Russia a huge one. Last week European demand for U. S. wheat manifested itself strongly for the first time this season and on one day nearly 1,000,000 bu. were sold abroad.

Cotton. Since the bulk of U. S. cotton must be marketed abroad, this year's crop of 16,098,000 bales, fifth largest in history and biggest since 1931. may be difficult to sell in markets glutted by a record world production of 35,600,000 bales. As a result, cotton prices fell to the lowest in four years--87-c- a lb. Nonetheless, with a subsidy of 3-c- a lb. on 65% of the ''base'' production of 16,000,000 bales the farm value of the new crop will be some $1,000,000,000--first billion-dollar crop since 1929.

World consumption of cotton for the twelve months ending in July was 30,700,000 bales, up 4,500,000 from the previous twelvemonth. A similar increase in world consumption this year would gobble most of the bumper crop. War is the chief threat, as was shown last week when Japan, best U. S. cotton customer, stopped buying it in order to conserve her gold. Brokers were quick to remember that cotton prices broke at the onset of the World War, then rose to a thumping 30-c- a lb. Hopes for increase in domestic consumption were dim last week. Anticipating labor troubles, cotton mills operated at capacity early this year. After the break in prices in July, they curtailed operation to reduce inventories. But sales of cotton goods have lagged and large quantities of cloth are still on hand. Cotton mill activity last week fell below September of last year.

Peanuts. Of the problems facing farmers who produce minor crops, a good example was provided by peanuts. Last year's peanut crop totaled some 630,000 tons (normal 450,000), worth $44,000,000. This year's is about the same. Peanut farmers were not included in the original AAA, but after a price shambles brought on by a 560,000-ton crop in 1934, they were taken into the fold. Last week, in order to keep this year's crop from drugging the market, AAA officials in Washington held a conference with 100 representatives of growers, arranged for four general co-operative marketing associations to buy peanuts for diversion into by-products and oil instead of sending them directly to market. Last week southwestern growers were asking $65 a ton. Virginia growers as much as $80. The co-operatives will buy the surplus with RFC and AAA funds, may resell to the Federal Surplus Commodities Corp. Co-operatives will, however, be free to turn their purchases back into normal trade channels if prices are not damaged.

AAA, With this year's crops well on their way to use, Secretary of Agriculture Henry A. Wallace last week collected 119 representatives of State farmer associations in Washington to discuss and approve the proposed national AAA program for 1938. Major changes are two: 1) benefit payments to be lumped, instead of coming in two categories for "soil-building practices'' and diverting soil-depleting crops; 2) reduction in the base acreages lor the major soil-depleting crops. Cotton, for example, would be reduced from 34 million to 29-31 million acres. Other base acreages suggested: potatoes, 3,100,000 to 3,300,000 acres; rice 825,000 to 875,000 acres; tobacco, 1,400,000 acres; corn, 92,000,000 to 96,000,000 acres. Wheat was not mentioned, for wheat farmers, having yet to produce a normal carryover, may plant unrestricted.

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