The Soaring Soy

On the Chicago Board of Trade, the star performer for weeks has been the versatile soybean, the eighth most valuable U.S. farm crop. Since the first of the year, Europe's freeze, which ruined the olive-oil crop, has sent the oily soy soaring nearly $1 a bushel to the season's high of $3.42 per bushel. While other farm commodities did poorly, the soy did nip-ups for happy speculators: exports from Oct. 1 to March 31 rose nearly 1,000%, compared with the same period a year ago, while domestic producers crushed the beans at a record rate for oils and livestock meal. A trader who put up $180 at Christmas (at an 18-c- per bushel margin) to buy a futures contract to deliver 1,000 bushels four months later, pocketed a $997.50 profit at the beginning of May.

But the soy's very success spelled trouble. As the price rose, the processors' profits dropped and so did their interest in soybeans. They could not compete with edible oils from corn and other sources, and finally they began closing down.

At midweek the inevitable happened. As trading volume reached an alltime high of 66,205,000 bushels, prices for July futures, i.e., July delivery, dived the permissible 10-c- limit for the day. The next day the same thing happened as speculators with tiny margins and quick reflexes hastened to unload. Rumors that the Commodity Exchange Authority (the SEC of commodity trading) was going to investigate possible market rigging brought still more stop-loss orders pouring in. At week's end, the CEA investigation rumors quieted; July futures closed at $3.20 per bushel, a loss of about 22-c- in three days, and the market seemed slightly firmer. Said a broker: "This is the kind of business that can give you heart failure."

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