Action in the Pits

While the stock market has been drifting sidewise, another exchange has been moving at a furious pace. At Chicago's Board of Trade, biggest and busiest commodity market in the world, pit brokers have perspired through two weeks of record business. On one day, they traded an alltime-high 270 million bushels of wheat, corn, oats, rye and soybeans--an amount almost three times greater than last year's average. Twice the market's opening had to be delayed an hour in order to catch up on paper work, something that had never happened before in the board's 118-year history.

Commodities trading is more intricate than stock trading and a lot more hazardous for the unwary. Ranged on the steps of seven pits on Chicago's trading floor, the brokers transact orders for Kansas wheat, Illinois soybeans, or other crops that have not yet been harvested and in some cases not even planted. Sales of such futures are made with hand signals--palm up and in when a broker is buying, or up and out when he is selling. Fingers are held horizontally and manipulated to indicate prices offered or asked. Each contract represents 5,000 bushels of a commodity. The contracts are still traded on margins as low as 10% of actual crop prices. Margins on the principal commodities were raised last week by the Chicago Board of Trade after repeated urgings by the Department of Agriculture. Even so, for as little as $1,000, a gutsy buyer can get a contract that six months later could entitle him to a cascade of Midwest hard wheat.

The trick is to know how long to hold a contract and when to sell. Prices rise sharply on good news, fall in a matter of minutes on bad news, and gyrate with changes in weather forecasts. Last week's action was generated largely by reports of reduced grain surpluses and the Soviet purchase of Canadian wheat. Two weeks ago, Vice President Humphrey caused a 3% jump in soybean futures by revealing in a speech to farm editors that the soybean surplus this fall will be only 32 million bushels, or a two-week reserve, rather than the 48 million bushels that the Government had previously estimated. Soon after, July soybean contracts dropped 11 1/2% as a result of profit taking. Many individual fortunes have been made in trading over the past furious fortnight. In such a speculative market, amateurs are discouraged from going in, and even the wisest take an occasional bath in corn or wheat or oats.

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