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Business & Finance: Commotion in Commodities

4 minute read
TIME

Throughout the world’s great markets last week prices of the foodstuffs and raw material by which man lives surged upward in a heavy groundswell. In the past few months the steadily mounting level of commodity prices has become the most significant sight on the broad business horizon. It is certainly a portent of boom, perhaps of real inflation. In Washington the New Deal is no longer agitated by the question of how to get prices up, as it was for three long years, but how to keep them down. By last week the Annalist’s index of wholesale commodity prices was abreast of April 1930, 134% of the pre-War level.

On the Chicago Board of Trade wheat rose in heavy trading to a seven-year high, December contracts going above $1.40 per bushel. In Liverpool wheat hit an eight-year high, and in the other two world wheat markets, Winnipeg and Buenos Aires, the red cereal likewise registered sensational gains. The wheat crop was poor this year in most of Europe, so that imports will be unusually heavy. Reports that Germany needed 37,000,000 bushels of wheat, 37,000,000 bushels of rye, coupled with higher estimates of Italy’s requirements, set the grain markets seething. For the third successive year the U. S. will be numbered among the wheat-importing nations. Canada’s stocks are 140,000,000 bushels lower than they were a year ago. Unless the bumper Argentine crop is marketed more rapidly than usual, the world may face an actual wheat shortage before the next harvest in the Northern Hemisphere.

Wrote Grainman Fred Uhlmann last week: ”Corn, oats and rye also are in a very strong position, and the fact of the matter is every single cereal is so scarce that hardly one is available as a substitute for the other.”

Grains were not the only participants in last week’s commodity commotion. With a crop high in quality, low in quantity, burley tobacco burst upward in the Kentucky market, averaging more than $42 per hundred pounds, a 20-year high. Soybeans on one day jumped the 4¢ limit to a new high of $1.58 per bushel, up 38¢ since they were admitted to trading in the Chicago Pit last autumn. Cotton was not spectacular last week but in the previous fortnight added 1¢ per Ib. to bring the price to nearly 13¢ (see p. 42).

So fast was rubber trading in London that reports flew thick that a corner was in the making. These reports were heavily discounted by knowing rubbermen but the price rose above 20¢ per lb. for the first time since October 1929, and this advance occurred in the face of an announcement from the International Rubber Regulation Committee that shipping quotas would be increased in the coming year. The same excitement pervaded the metal markets. Steel scrap in Pittsburgh went up another notch. Iron Age’s scrap average rising to $17.33-up 33% from a year ago. Hiked from 10¢ to 11¢ per lb. was the price of domestic copper, following a rise of foreign metal to 11¼¢. At week’s end both categories of copper were at a peak since 1930. Tin at 52½¢ was up 1¢ for the week. A sudden wave of buying pushed lead to 5.57¢ per lb., zinc to 5.50¢ per lb.

No less affected than the standard staples were minor commodities. In the past month kerosene has gone from 4½¢ to 5¢ per gal., linseed oil from less than 9½¢ to 10¢ per lb., wool from 92¢ to $1.01 per lb. In London, where one can speculate in dried flies and ant eggs, an all-time high was set for copra. The New York Journal of Commerce reported a rise in balsam copaiba, a tight market in gum benzoin and “no sign of any relief in the shortage of eucalyptus oil.”

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