Crop of Trouble?

The hope of a drop in food and clothing prices later this year changed abruptly into doubt. For the second successive week, the commodity futures market, which had been quiet or sagging during May and June, boiled up with an ominous hiss. Wheat futures rose the permissible limit of 10-c- a day. July corn jumped to an alltime high of $2.21 a bushel. Within two days, sharp rises in eleven major commodities forced the Dow-Jones commodity futures index up 4.07 points to 146.37. It was the highest since the index was first compiled in 1933 and 9.82 points above the previous high this spring.

Chief cause of the upsurge was the Department of Agriculture's midseason crop report, even though prospects were described as "surprisingly good." The bumper wheat crop, greatest in U.S. history, looked even bigger than it had a few weeks ago. Now the estimate was for 1,436,000,000 bu.

Chain Reaction. But reports of corn were far from good. Cold weather and floods had taken a heavy toll, leaving an estimated yield of only 2.6 billion bu. The crop was still almost up to the 1936-45 average, but it was down 21% from last year. Good weather, said the report optimistically, might brighten the corn picture considerably. But corn users, not willing to take that chance, started to buy heavily.

To ease the pressure on prices, the Department of Agriculture canceled a July-August allocation of 6,740,000 bu. of corn for export and decided to substitute wheat, barley and grain sorghums. For all the abundant expectations, the demand for wheat was already being heightened by harvest trouble. Rains had already put the harvest behind schedule. And though there were more combines at work than ever before, Texas, Oklahoma and Kansas were yelling for still more.

In many places as much as half the wheat crop was being dumped on the ground for lack of storage bins and boxcars. Thus, when the Department of Agriculture, in a rush to fill its foreign commitments, raised its buying price on wheat by 13 1/2-c- a bushel, wheat markets too went soaring.

The Target: Consumers. Another major rise was prompted by cotton prospects. Although this year's cotton acreage was 17.6% higher than last year's, estimated yield was nearly 2,000,000 bales below last spring's estimated needs. As monthly cotton consumption has been dropping--and as there was a carryover of 3,000,000 bales--there was no tight shortage ahead. But cotton buyers also preferred to pay more to be sure they had all they needed. By week's end, the price of July futures rose 2 1/2-c- to 39.49-c- a pound, the highest in 27 years.

Whether all this meant that the U.S. would not get the drop in food and clothing prices which had been expected in the fall, there was some debate. Typical was the argument over meat. The Department of Agriculture feared that corn would be at least 200,000,000 bu. too short--and too expensive--to maintain meat production at present levels. On the other hand, the American Meat Institute saw "no drastic effect on meat supplies or prices." Nevertheless, top grade beef in Chicago rose to $30.50 a cwt., highest since last January. Not till all the crops were in would the consumer know how things would be with his pocket book.

This file is automatically generated by a robot program, so reader's discretion is required.