Crop Drop

Wheat gyrated back into the news last week with the Department of Agriculture's first estimate of the 1932 winter crop. Where 787,000,000 bu. of winter wheat were harvested in the bumper year of 1931, this year's crop was forecast at 458,000,000 bu., a drop of 42%. The Great Plains had had a dry autumn, a dry winter, a dry spring. Planters were abandoning their winter wheat acreage in the face of drought. The economic consequences of last year's overproduction probably had more to do with a reduced yield than the Farm Board's pleas to cut acreage. July wheat on the Chicago Board of Trade began the week at 58-c- per bu.-- 3-c- below last year's level. Alarms of crop damage due to weather upped the price to 60-c-. Next day similar reports failed to sustain the market. It slumped back to 58-c-. The third day prices climbed 3/4-c- and the fourth day 1/4-c- more on tales of dust storms in Kansas, delayed spring wheat planting in the Northwest. The fifth day the market went to smash, dropping to 56 1/2-c- per bu. Traders were jumpy at reports that the House of Representatives was about to abolish the Farm Board, thus throwing its 125,000,000-bu. holdings suddenly on the market. The stock market had been declining heavily all week. Bears dumped selling orders into the Chicago pit. After closing time in Chicago, double news arrived from Washington: 1) The House had voted (152-to-23) against liquidating the Farm Board; 2) the Department of Agriculture prophesied its drastic cut in the winter crop. Informal trading spurted on the curb outside the Chicago Board of Trade, with shorts covering at any price. On the sixth day July wheat leaped back to 60-c-. Few pit traders anticipated any further sensational rise despite the crop drop because the Farm Board continued to sell its surplus on every market bulge. Chairman Stone of the Farm Board happily predicted: "The 3/4-c- crop estimate was a bullish statement. I see no reason why this year's crop shouldn't bring better prices than are now offered."

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