Wild Oats

Minneapolis' Cargill, Inc., the biggest U.S. grain company, has been in plenty of trouble for its shenanigans on the commodity exchanges. In 1938 it was cited by the Commodity Exchange Authority for cornering the market in corn futures; three of its officers and a subsidiary company were expelled from the Chicago Board of Trade. In December 1952 the company was indicted for converting to its own and its customers' use 80,000 bushels of corn stored for the Commodity Credit Corp. (The case is still to be tried.) Last week Cargill was in trouble again with CEA. As a result, the company agreed to a consent decree that bars it from trading in oats futures for the rest of the year.

CEA charged that Cargill drove down the price of oats to its profit in 1951 and 1952, thus interfered with the Government's price-support program.

What Cargill did was to go "short" on oats futures, i.e., sell oats for future delivery in the expectation that prices would drop. At one time, said CEA, Cargill was short as much as 31.5 million bushels (24% of the 1951 crop), though regulations permit maximum contracts of only 3,000,000 bushels. At the same time, Cargill Grain Col, Ltd., a wholly owned Canadian subsidiary, was buying oats futures on the Winnipeg Grain Exchange and contracting to sell the oats to the parent company in the U.S. Cargill, charged CEA, falsified its books by listing these contracts as cash purchases in order to balance them off against the excessive short sales. The heavy short sales depressed the futures price of oats. When the time came for Cargill to deliver, CEA charged, the Canadian company shipped in grain, further driving down the U.S. price. With the imports and the oats bought at lowered prices, Cargill "covered" its short position, i.e., delivered the grain it had contracted to sell earlier.

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