Corn over Wheat

Corn, a humble U. S. crop that usually stays on the farm to feed hogs, cattle and chickens, had its day last week. What had been expected to be one of the greatest corn yields in history had shriveled under Drought, as of Aug. 1, to 1,439,000.000 bu.

(normal: 2,500,000,000), smallest since 1881. Buyers scouring the country for corn were finding that farmers were not selling, needed far more feed than they had grown. Husking bees had been postponed for want of ears to husk. And in the Chicago grain pit, traders suddenly realized that outstanding sales of corn for September delivery were double the supply in terminal grain elevators. Suddenly corn bounced up 3 7/8-c- per bu., nearly the full 4-c- limit allowed by the Chicago Board of Trade for one day.

In the two great corn states of Iowa and Illinois, the temperature rose to 115DEG and in the grain pit corn kept pace, next day mounting a full 4-c- to $1.16 a bu. This put democratic corn ahead of aristocratic wheat ($1.14 a bushel) for the first time in six years. Next day September-delivery corn rose 3!^ to $1.igf, a price unequaled since the great days when War-starved Europe bought all the U. S. grain it could get. and cash corn sold up to $2.17 per bu.

Meanwhile corn truckers were paying farmers better than $1 a bushel at the farm and spot corn in Chicago was bringing as much as $1.37.

Since corn is the staple hog diet, "corn on the hoof" (i.e., hogs) last week rose too. Headlines read: RETURN OF THE $12 HOG. As corn passed wheat, it became too dear to feed hogs, whose diet was thereupon switched to wheat, which is a better meat-builder, anyway.

Alarmed by the corn flurry, the Chicago Board of Trade Clearing House last week raised trading firms' margins from 3-c- to 4-c-; a bu., equalling the margins for wheat, oats and barley, and the Board of Trade required non-members to put up double the Clearing House margin requirements.

This made the official requirement 8-c- instead of 4 1/2-c-, but grain houses were already asking from 8-c- to 10-c- margin per bu.

At $1.19! a bu., corn was far above the world price. Promptly toward the U. S.

sailed part of Argentina's estimated exportable surplus of 246,000,000 bu. including Argentine corn that had already reached Rotterdam. At Buenos Aires corn cost only 54-c- Thus shippers could pay the 25-c-U. S. tariff and still have a 51-c- margin for shipping cost and profit. Last week some 20,000,000 bu. of Argentine corn were already bound for the U. S. Most of it will not reach Chicago before mid-September.

With the frightening approach of Argentine corn and the ''pessimistic" news that showers had wet down Illinois, Wisconsin, Minnesota, Indiana and Iowa, corn sold off at week's end, dropping below wheat again.

The long view of all this was last week presented by the Smithsonian Institution's Secretary Charles Greeley Abbot. Said he: "The North Central States can expect no appreciable letup in the Drought before 1938. A rain cycle is indicated by records of the water levels of the Great Lakes since 1837. . . . The cycle in the North Central farming and grazing zone has a 46-year swing, which is double the cycle for most areas on the globe. After this Drought there should not be another major dry period in the area until somewhere around 1980."

Forty-six years ago, bearing out Scientist Abbot's theory, the U. S. corn crop was a measly 1,650,000,000 bu.

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