Wheat situation

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Title:
Wheat situation
Uniform Title:
Wheat situation (Washington, D.C.)
Physical Description:
v. : ; 26 cm.
Language:
English
Creator:
United States -- Dept. of Agriculture. -- Economics, Statistics, and Cooperatives Service
United States -- Dept. of Agriculture. -- Economics and Statistics Service
Publisher:
The Service
Place of Publication:
Washington, D.C.
Frequency:
quarterly
regular

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Subjects / Keywords:
Wheat trade -- Statistics -- Periodicals   ( lcsh )
Wheat trade -- Statistics -- Periodicals -- United States   ( lcsh )
Genre:
federal government publication   ( marcgt )
statistics   ( marcgt )

Notes

Statement of Responsibility:
Economics, Statistics, and Cooperatives Service, U.S. Department of Agriculture.
Dates or Sequential Designation:
WS-1 (Nov. 1936) - WS-254 (Nov. 1980)
Issuing Body:
Issued, 1936- by the Bureau of Agricultural Economics; <Oct.-Dec. 1953>-Feb. 1961 by the Agricultural Marketing Service; Apr. 1961-Nov. 1977 by the Economic Research Service, U.S. Dept. of Agriculture; Feb. 1978- by the Economics, Statistics and Coopertives Servie, U.S. Dept. of Agriculture; <Nov. 1980-> by the Economics and Statistics Service, U.S. Dept. of Agriculture.
General Note:
Cover title.

Record Information

Source Institution:
University of Florida
Rights Management:
All applicable rights reserved by the source institution and holding location.
Resource Identifier:
aleph - 000349017
oclc - 04015593
notis - ABY6688
lccn - 78643652 //r812
issn - 0364-2305
Classification:
lcc - HD9049.W3 U66a
ddc - 338.1/7/3110973
System ID:
AA00012162:00030

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UIITED STATES DEPART:.1T:T CF AGRICUL'JI .E
Bureau of Agricultvral Economics
Wash i.ngtcn
WS-15 January 25 1938.

THE WHEAT S I TUATION0
Incld.jo RRye -

Sumita ry

Another wheat crop in excess of domestic needs is likely in 1938. This

opinion of the Bureau of Agricultural Economics is based on the assumption that

the winter wheat crop will not be material ly less than indicated on December 1

and that the spring wheat crop will be no lower than the small harvest of 1934.

Winter wheat production was tentatively indicated at 630 million bushels

in the December Crop Report. Weather conditions between December 1 and harvest

time, however, may cause production to differ considerably from this indication.

If the winter wheat crop should turn out to be 630 million bushels and if the

spring wheat harvest should approximate the lO-year (1928-37) average, the total

wheat crop would amount to about 820 million bushels. Even if the spring wheat

nrop should be as small as in 1934, the total harvest would still be about 720

million bushels. Total supplies would include the carry-over on July 1, 1938,

which is expected to be about 200 million bushels compared with the very small

carry-over of aucut one-half that amount on July 1, 1937. Inasmuch as the dom-

estic disappear-'nce averages about 670 million bushels, supplies in 1938-39 are

likely to be more than 100 million bushels in excess of domestic needs, and dom-

estic prices may be expected to remain substantially below those at Liverpool.

Fall r,.ins over thu Prairie Provinces of Car.,j'. have been the best since

1933 and conditions in Europe, where early indications point to some increase

in acreage, are generally gocd. If world production is larger in 193,? than in

the past year, world prices may be expected to decline frcm the 1937-38 level,

unless demand is incruRased beyond pres._nt indications.

Domestic wheat prices during the next f.-w weeks will depend largely on




WS-15 2 -

European buying. If European demand remains about as now indicated, the newly

harvested Southern Hemisphere crop may be absorbed without becoming much of a

price-depressing factor. Because of the decline in world wheat prices follow-

ing the increased -estimates of the world crop and the generally disturbed bus-

iness conditions local market prices in the United States (weighted by monthly

sales) are expected to average about 99 cents a bushel in the current marketing

year (through June 1938), compared with $1.03 in 1936-37.

World supplies outside of Soviet Russia and China are only about 30 mil-

lion bushels larger than the very small supplies of a. year ago. With practically

no carry-over of old wheat in Argentina and the new crop greatly reduced by frost

and drought damage, and with Canada's exportable surplus small, the current wide

spread between domestic and foreign prices may be expected to encourage takings

of United States wheat. Both Argentina and Canada usually compete with the United

States in the marketing of hard wheats which are used by importers to strengthen

soft wheat flour.

From July through about mid-January, wheat exports from the United States

are estimated at 48 million bushels. Present indications point to further exports

of around 45 million bushels before the close of the mtrkziting srason(through June).

In the United States the acreage of rye sown for all purposes in the fall

of 1937 is estimated at 6,869,000 acres, or about 10 percent less than the large

acreage planted in the fall of 1936. Condition of the crop on December 1, 1937,

was reported at 74 percent of normal, compared with 71 percent on December 1,1936.

The area sown to rye in Europe is indicated to be slightly larger than that of

last year with condition generally good.
Special article in this issue to inform
readers of "The Milling In Bond Provision" of
the 1930 Tariff Act.




- 3 -


TEE YORLD WVEAT SITUATION

BACKGRCUND.- Total world supplies of whest, after increas-
ing from 1929 to 1933, declined sharply following successive
years of small prcducl or arnd increased world demand. The
apparent world disap-'..j ajce lhas averaged abut 3,770 million
bushels during the past 10 y',rrs. 'Iorld mar--Et prices of
wheat moved steadily upward fr in the sprirs of 1933 to the ,
summer of 1937, reflecting hithe'r world commodity price levels,
four successive below average harvests in North America, and
the 1935-36 short Southern Hemisphere crop. In 1936-37 wheat
prices advanced sharply as a result of increased demand and
the smallest -uppli:s in recent years.

World wheat supplies and trade in 1937-38

The wheat production of the world, excluding Soviet Russia and China, dur-
ing the current season is nov estimsatod L.t 3,784 million bushels, which is 5 mil-
lion bushels more than indicated a month ago. Slight upward revisions in England
r-nd Wales, DYrjrmrk, France, and Uruguay more then offset slight downward revisions
in Gree'- e, Tunisia, Chosen, and the Union of South Africa, The present production
estimate represents an increase cf aocut .140 million bushels over the production a
year earlier. However, with carry-ov...r stocks on July 1, 1937, estimated at about
210 million bushels less than on July 1, 1936, total supplies, excluding those of
Soviet Russia are only about 30 million bushels larger than the very small sup-
plies in 1936-37.


Table 1.- Whee.t surplus for uxrT.rt or
exporting countries, United
stocks afloat, January


carry-ov,.r in three principal
Kingdom port stccks, and
1, 1935-38 1/


Position 1935 1936 1937 1938 2/

: Mi lion Million I1 1lien millionn
: bushels bushels bushels bushels

Canada:
In Canada ......................: 270 250 106 59
In United States ...............: 28 35 25 5
Argentina ........................ 164 ?" 147 87
Australia ........................: 113 99 95 100

Total ........................ 575 444 373 251
United Kingdom port stocks ........: 16 11 9 9
Stocks afloat -bo:
United Kndom ................. 11 12 15 11
Continent .... .................. : 7 6 14 10
Orders ................ ......... : 7 2 7 10

Total ...................... 41 31 45 40

Total above ................ 616 475 418 291
SCrry-cvur ara t bL:imnin, cof thc yo.r (CI'.nr., July 31; Argentin-, J-nu'ry
1; Australia, Deccmb r 1 of the previous year) plus production, minus domestic
utilization for the year, minus monthly exports to date. 2/ Preliminary.


TrS-15





WS-15


Table 1 shows the estimated wheat surplus for export or carry-over on
January 1, 1938 in Canada, Argentina, and Australia, as well as United Kingdom
port stocks and stocks afloat. These total 291 million bushels compared with
418 million bushels a year ago, and 475 million bushels 2 years ago. Canadian
stocks, estimated at only 64 million bushels, leave a very small quantity for
export when an allowance for carry-over stocks is deducted. The estimate for
Argentina is 87 million bushels, compared with 147 millionn in 1937 and 144 mil-
lion bushels for the 5-ycar (l9 2-f6) averLr.. Th; surplus in Argentina this
year consists almost entirely of new wheat, stocks of old when.t having been re-
duced to about 1 million burhols by January 1, the beginning of the new crop
year in Argentina. The surplus for export or carry-over in Australia is esti-
mated at 100 million bushels compared with 95 million in 1937, and with 129
million bushels for the 5-ycar average.

Exports from Soviet Russia from July through December amounted to about
32 million bushels. Of this amount only about 4 million bushels were exported
in December, s,; :t-sting that total exports for the season from that country may
net exceed 40 nil liin bushels. Usually, experts from Soviet Russia are very
small after Janueary 1. The Danubian countries have only about 30 million
bushels still available for export.

On the basis of these estimates, end assFLuinp, total exports for the
1937-38 season of 485 million bushels, which quantity has been forecast by the
Bureau, exports frmcr January through June 1938 by the four principal exporting
countries may apprcxziatc only about 20 million bushels from Crida, 55 million
from Argentina, and 60 million from Australia, leaving about 45 million bushels
as probable exports from the United States. These estimates include flour in
terms of wheat. Exports of United Stc.tes wheat and flour made from domestic
grain in terms-of wheat from July 1, 1937 to January 1, 1938 arD estimated at
abcut 44 million bushels.

Tables 8 to 11 show figures on the movement of wheat in international
trade this season ccmp'.-red with the corresponding periods and totals for -other
years.

Area and condition of fall-svwn wheat and rye

The acreage sown to winter wheat in Canada in the fall of 1937 is re-
ported at 690,000 acres, ccmp-ired with the estimate of 781,000 acres sown in
the fall of 1936. Winter wheat, however, represents only a small proportion
of the total Canadian wheat acreage (only 3 percent in 1937). The condition
of the fall soodings on October 31, 1937, was reported as 93 percent cf the
long-time averoae. The condition on the same date of 1936 was reported as
107 percent of the average.

The fall-sown rye acreage in Canada is estimated at 517,000 acres,
compared with the 1936 seedings of 799,000 acres. The condition of the crop
on October 31, 1937, was 84 percent of the long-time average, compared with
the condition figure of 76 percent for October 31, 1936. Good rains have been
received throughout the Prairie Provinces, much of which area was affected by
the drought in 1936-37. Fall precipitation, which provides the sub-soil
moisture reserves for next year's crop, has be:n normal in Manitoba and
Alberta and 80 percent of normal in Saskatchewan.


- 4 -





WS-15 5 -


Definite data on the wheat asre.-,e planted in 'urope are not yet
available, but indications point to a slightly larger acreage than that
planted in the fall of 1936. ,scv-in. e nrm al winter-kill, we mij-.t expect
an acreage for harvest somewhat P1r; r than that cof 1936-37 since abandon-
ment in some important producing o untr:.es was much above average in 1936-37.
The area sown to rye in Europe is indicated to be slightly larger than that
of last year, with conditions generally good. In Poland, winter rye acre-
age is officially reported to be 2,8 percent above that of last year.' 'The
condition of the crop is somewhat better than at this time last year.

The condition of the fall sown crops over most of Europe is reported
to be satisfactory, and in many of the countries the prospects soemh better
than those of a y*rr ago. A notable exception is Italy, where much resow-
ing was necessary because of floods. Excessive moisture was followed by
extreme, cold and as the result' of these unfavorable conditions, observers
in Italy now believe it is impossible that the wheat crop should equal that
of 1937. In the important producing Danubian countries, where an increased
acreage is indicated, the condition of the wheat and rye crops is reported
to be satisfactory.

In Soviet Russia, snow covers the greater part 'of the grain area and
the condition of the crops is believed to be satisfactory. India has re-
ceived widespread, beneficial rains, and the wheat crop is said to be in
excellent condition.

Foreign Wheat Prices

Duri.;-i the last half of December, wheat prices at Winnipeg and Buenos
Aires rose while those at Liverpool rmaT.in'.-d weak. Cr-..ll remaining export-
able supplies in Canada, and a gr-atly reduced quantity and lower quality
of wheat for export in Argertina were .strengthening factors. Continued slow
demand ar.d Australian hedging featured the Liverpool futures rm..rket, which
declined to the lowest point since the summer of 1936.

During.the first week in January, foreign markets advanced sharply,
with imprqovd demand, less selling by Australian'shippers, and small
offerings of Russian and Argentine wheat. During the second week, wheat
prices in foreign markets ranged fromunchanged to somewhat lower even
th-cugh prices in the United States advanced, influenced by uncertainty
of moisture in the winter wheat area. Prices in Winnipeg dropped around
3 cents which broug1h'Canadian prices more in line with other export
wheats.




WS-15


Table 2.- Averane price per bushel of heat, specified markets and dates, 1937-38

: Kansas:Minneaoolis:Wi.ni-)eg: Buenos : Liver-:Great Britain: Berlin
S:City 1/: 2/ : 3/ :ires 4/:;ool 4/: 5/ : 6/

Cents Cents Cents Cents Cents Cents Cents
Month
Oct. .....: 106.0 120.8 117.4 137.7 131.4 123.0 215.0
Nov. .....: 94.2 115.3 110.6 106.9 120.5 120.4 218.7
Dec. .....: 93.5 .119.5 113.4 104.9 114.4 220.7
,'ee! ended:
Dec. 4 ...: 91.4 111.6 110.0 104.1 114.7 117.0 217.5
11 ...: 5.3.8 121.3 112.3 106.0 115,4 116.0 221.5
18 ...: 9:.8 116.1 117.6 106.2 114.9 114.9 222.0
25 ...: 93.1 122.0 113.8 104.3 112.6 112.7 221.5
Jan. 1 ...: 9.3 122.6 102.8 112.8 221.0
8 ...: 9.3 126.2 125.3 108.3 113.9
15 ...: 104.8 131.1 121.6 111.5 114.7

Prices are averyn;es of dail;.' prices for the week endil'g Saturday except as follows
Berlin prices are "Wed-esdty uot+ta:i ns. prices at foreign markets are converted
to United States mor.e.v t t.,c c'.rc:t r.tes of exchange.
I No. 2 Hard Winter. I/ 1:. 1 Dar': HIrthern Spring. 3/ No. 3 Manitoba North-
en.4kTear Fuitures. L/ H.re-rv;r. wheat in England and Wales. 6/ Central German
wheat, wholesale trade orica free Central German Station.

Table 3.- Averare closin, prices of May wheat futures, specified markets and
dates, 1936-37 and 1927-38

: Winnipeg : Livernool : 2uenos : : Kansas : Hinneap-
: i/ : 1/ : Aires : Chica o _: City : olis
Dat 19 36-:17- 193_.-:1937-:1293-:1937-:i936-:1937-:1936-:1937-:1936-:1937-
_______ 37 :____ Z7 3 7 33 21_ 37 ;. 22 : 33 37 ? 38
:Cents: Cents :Cents :Cets:Cents: Cents:Cents:Cents:Cents:Cents:Cents:Cents
Month: : : :
Oct. :109. :118.6 : -- :12. 0: -- :113.5:110.4:110.4: 96.5:123.0: 107.3
Nov. :10?.8:110.4 :112.6:116.3: -- : -- :114.7: 9C. 8110.9: 87.2:124.6: 97.9
Dec. :120.5:113.3 :125.6:112. : -- : -- :128.3: 92.1:122.5: 89.3:136.4: 99.7
Week : : : : : : : : : :
ended: : : : :2 :
Dec. 4 :113.0 112.4 112.1 114.1: Q1.2 1T.O 120.1: 91.6:115.2: 88.7:129.C: 98.7
11.115.6.115.6 .122.0.114.0 ~92.8 2.5 123.4. 93.3 117.6: 90.4 131.6: 100.7
18:13.7117.0 12.6113.4 .903.2:131.0: 91.8:125.1: 89.2:138.8: 99.2
25: 125.0116.7 1.1110.5.97.4102.:133.0: 91.7:127.0: 88.9:140.8: 99.3
Jan. 1 128.5:118.2 :132.1 :1?.- p0.1: l0E.:135.2o: 90.9:129.3: 83.1:143.4: 99.3
8:127.126.3 :11.0: 113. : S3. l 08.S133.4: 94.7:127.3: 92.3:141.7: 103.2
'15:127.2:127.2 :1-9.9:11-..3:198.2 1'12.C:3: .8: 97.4:127.5: 96.3:141.4: 107.3

High 4/ 128.5:127.2 :132.1:124.7:0.1- 12.0:135.2:103.8:129.3:104.0143.4: 114.8
Low /:10.9:109.1 110.4109.: 99.8112.289.8:109.5: 85.9:121.6: 97.0


Conversions at
March futures.


noon buying rate of exchange.
4/ October 1 to January 15.


2/ February futures.
5/ February and March futures.


- 6 -





WS-15


THE DOM-.:,T IC lEAT SlTUATICU

BACEKP OUND.- The carry-over of wheat in the United States
for the 5-year period (1P24-28) averaged alout 115 million
bushels. Stocks which began to accumulate in 19f?. reached
the record peak of 378 '.aillien b'ushels in 1933. Four small
wheat crops since that time, however, reduced stocks to
about 100 million bushels by July '1, 1937.

Domestic wheat prices from the spring cf 1933 to that
of'1937 were unusually high relative'to world market prices,
because of four small domestic crops caused largely by ab-
normally low yields per acre. During 1936-37 both world and
domestic prices advanced sharply as a result of increased
demand and the smallest supplies in recent years.

Domestic wheat supplies and distribution for 1937-38

Th- estimated domestic supplies and distribution frr 1937-38 remain essen-
tially unchanged from those in the analysis published jn the December issue of
"The Wheat Situation", pages 12-13. A reappraisal'iill be. made following the
issuance of the figures on January 1 stocks of wheat. Estimated stocks of wheat
in interior mills and elevators will be issued by the'Crop Reporting Board on
January 24, and figures on merchant mill and elevator stocks will be made avail-
able by the Bureau of the Censuson about January 26. The figures for the other
two positions used in making up the total as of January i are now available,
and are shown in table 4.

Table 4.- Farm and commercial stocks, January 1, 1938

Item 1934 1935 : 1936 1937 1938

1,000 1,000 1,000bo 1,000 1,C00
bushels bushels bushels bushels bushels

Farm stocks ................: 196,860 145,591 163,360 128,314 208,745
Commercial stocks ..........: 132,511 90,937 76,694 62,366 94,520

Total ............. 329,371 236,528 240,054 190,680 303,265


An analysis of the white wheat supply and distribution s-qgg:sts small
changes from the estimates of the prospective utilization and carry-over re-
ported in the December issue of "The Wheat Situation". It now seems reasonable
to expect that total utilization in 1937-38 may approximate 64 million bushels,
which would leave a carry-rver of 32 million bushels if total exports of white
wheat amount to 25 million bushels. This is based on a 35-million bushel
utilization of white wheat produced in Washington, Oregon, and Idaho; this
would suggest a carry-over of about. 18 million bushels of white wheat in these
States.


- 7 -




WS-15


Table 5.- Estimated supply and distribution of white wheat, Pacific
Northirest and other areas, 1933- 4 to 1937-38

Item 193:5-34 1934-35 :1935-36 1936-37 '1937-38 1/
:jIillion Ai]lion Million Million Million
:bushels bushels bushels bushels bushels
Wash., Ore., and Idaho
Stocks July 1 ...............: 24 ?2 12 10 6
Production ................ : 60 45 51 64 72
Total supply ...............: 4 67 63 74 78

Domestic utilization ........: 57 45 48 59 35
Exports 2/ ..................: 25 10 5- 9 25
Stocks June 30 ..............: 22 12 10 6 18
Total distribution ........: P4 67 63 74 78

Other than Wash., Ore., & Idaho:
Stocks July 1 ..............7: R 8 4 7 4
Production .................: 28 24 35 35 39
Total supply ..............: 36 32 39 42 43

Domestic utilization ........: 28 28 32 38 29
Stocks June 30 ..............: 8 4 7 4 14
Total distribution ........: 36 32 39 42 43

Total United States :
Stocks July 1 .............: 32 30 16 17 10
Production ..................: 61 69 06 99 111
Total supply ..............: 120 9 102 116 121

Domestic utilization ........: 65 73 80 97 64
Exp rts ..................: 25 10 5 9 25
Stocks June 30 ............. 30 16 17 10 32
Totvl distribution .......,: 120 99 102 116 121

1/ Prospects as of January 23, 1938.
/ Wheat and flour in terms of wheat including shipments to possessions.

Area and condition of fall-sown United States wheat

The acreage of winter wheat sown in the fall of 1937, for harvest in 1938,
is estimated at 57,492,000 acres, only a fraction of 1 percent below the record
acreage (57,612,000 acres) sown in the fall of 1936. The 5-year (1927-31)
average was slightly more than 45 million acres. Rather sharp decreases in
winter wheat acreages from those of last year are reported throughout most of
that part of the North Central group of States lying east of the Missouri River.
Marked increases in ;;ashington and Oregon reflect a return to more nearly normal
acreage following the reduction caused by unfavorable seeding conditions in the
fall of 1936. In the important hard red winter wheat area, moderate increases
are shown in Kansas, Nebraska, and Colorado, whilo Texas and New Mexico report
no change from the acreage sown last fall.


- 8 -






- 9 -


The condition of winter v'-'.?at on Decen-ber 1 was reported at 76 percent
of normal, the same as that of a year earlier, compared with the 10-year (1923-
32) December 1 average of 82 percent. The condition was reported below average
in all areas except in the Pacific North/rest and intermountain States. Reports
indicate that the crop has *.ro into the winter in excellent shape in the Pacific
northwest. In the .Great Plains region, and. to a lesser extent in the soft red
winter wheat area, the below-average ccnditi(n reflects late seeding and slow
development of the plant resulting from dry soil conditions at sending time.

Based on the past relationship between December 1 condition and yield
per seeded acre, with some allowance for the probable effect of weather ccndi-
ti.ons during the past summer and fall, the indicated production of winter
wheat in'1938 is about .30 million bushels. It is expected that abandonment
of sown a?re..e will be above average at-:.in in 1938, and will probably be
between 15 and 20 percent.

The acreage of rye sown for all purposes in the f.ll of 1937 was esti-
mated at 6,80 ,000 acres. This is 9.5 p..rcent less than the 7,593,000 acres
sown in 19c6 when, because. cf drought, there were large s-edings for pasture in
the Eastern Corn Belt States. The 1935 seeded area was 6,494,COO acres. The
condition of rye on December 1, 1937, was r ported at 74 percent of normal com-
pared with 71-on December 1, 19>6, end the 10-year (1923-32) average of 85. The
condition is lower than in 1936 in most of the central part of the country,
particularly in the East 1crth Central States where fall growth was slow. The
condition in the 1.'ountain and VWestern States on December 1 was higher than a
year age because the supply of moisture was better.

Domestic Wheat Prices

Domestic wheat prices fluctuated generally only within a narrow range
during the last half of December. Strength at Winnipeg and Buenos Aires about
offset the influence of the weak market at Liverpool and the reduced interest
in domestic markets. During the last half of December the weekly average
price of all classes .and grades in six markets varied less than one-half cent,
while the daily closing prices. of May futures at Chicago fluctuated less than
3 cents.

During the first week in January, with a good export trade and an
active milling, inquiry supported by a sharp advance in foreign markets, in-
cluding Liverpool, prices in domestic rarkets rose sharply. Th-,, strong market
in Winnipejt tended directly to irfluenbe United States markets. Some un-
certainty was in evidence concornin, the t..w winter wheat crop in the United
States, and prices continued to rise until about January 13. -'h price of
No. 2 Hard :Linter wheat at Kansas City averaged 105 certs for the week ended
January 15 compared with 96 cents for the last half of December. The daily
closing prices of !,,i.y futures at Chicago advanced 9 cents from December 31
to January 13.


WS-15




NS-15 i, -

Table 6.-Weighted aver.- .-e casY. rice of wheat, specified markets and
dates, 1936-37 and 1937-38

:All classes: c. 2 : No. 1 : No. 2 Hard: No. 2 : Western
:and grades :Hard Winter: Dk.LU.Spring:Ai.bor 2iurnr: Red Winter : Whnite
Date :six market.s:Kanss City: i-ear:oi s: I.innearolis: St. Louis :Scettle I/
:1936-: 1 ?37-:196-:1937-: 136-: 1937-: 1936-: 37-: 1936-: 1937-: 1936-: 1937-
: 37 : 38 : 37 : 38 : 37 : 38 : 37 : 8 : 37 : 38 : 7 : 38
:Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents Cents
Month-
Oct. :128.9 103.7 122.0 106.0 143.4 126.8 153.5 108.3 121.0 104.0 97.8 90.3
Nov. :127.5 93.5 121.9 94.2 144.3 115.3 148.0 100.2 122.7 93.2 2/ 83.8
Dec. :139.3 96.2 134.2 96.5 159.0 119.6 178.5 105.8 135.4 95.0 112.7 85.5
Week
ended- :
Dec. 4 :129.9 95.2 127.7 95.4 139.0 111.6 175.4 105.1 127.1 95.6 --- 85.3
11 :131.4 97.5 129.8 96.8 155.4 121.3 153.5 108.9 130.4 95.4 107.5 86.0
18 :142.0 95.9 137.0 95.8 161.7 113.1 183.1 101.4 136.7 94.0 112.6 85.0
25 :145.0 95.9 140.7 06.1 163.2 122.0 17/.F 103.4 141.1 95.0 113.7 86.0
Jan. 1 :149.2 95.5 143.3 96.5 176.3 --- 180.0 105.0 143.2 95.4 115.2 85.2
8 :149.6 101.2 140.8 93;.3 157.5 126.2 180.4 109.1 142.8 97.3 113.5 86.9
15 :148.0 105.2 1.59.6 10.1.8 163.4 131.1 168.2 109.9 141.2 101.7 114.0 --

High 3/ :149.6 109.7 143.3 111.3 176.3 133.1 183.1 110.4 143.2 111.9 115.2 94.6
Low 3/ :126.5 90.9 12u.3 92.5 139.0 108.9 142.6 98.2 118.C 85.5 95.9 81.8


1/ Weekly average of daily cash quotations, basis Io. 1 sacked.
2 No quotations October 31 December 9, 1936 due to strike.
3/ October 1 to January 15.


Early in the season domestic and foreign wheat prices rose sharply
following reports of serious d-image to the Canadian crop and the threat of
rust dcnae in tle United States, and it was tnought possible at that time
that world prices might remain sufficiently above the 1936-37 levels to
offset the decline in United States prices to an export basis. However,
with an increase of over 100 million bushels in the estimate of the world
crop, excludiirg Soviet Russia and China, the likelihood of large shipments
from Soviet Russia, a slow European demand, disturbed business conditions,
and a falling general comurmodity price level, wheat prices in world markets
have declined, and the price of v;heat at local United States markets, weighted
by monthly sales, is now expected to average 99 cents a bushel in 1937-38
compared with $1.03 in 1936-37.

For the wuek ended J3nu!r"y 15 Kansas City prices averaged somewhat
higher relative to Liverpool prices tLan in December. In December the spread
between No. 2 Hard Red Winter .-:at at Kansas City and Parcels at Liverpool
averaged 44 cents, which was the widest spread of Kansas City prices under
those at Liverpool since Augu st 1921.





73-15 li -

Table 7.-Spreads between domestic whe?.t prices and prices at
Winnipeg and Liverpool, specified periods, 1937-38

: May futures per bushel : Cash wheat per bushel
: Amount Chicago : Amnount Kansas City: Amount Io. 2 Hard
: averaged : averaged : Winter (Kansas City)
Month and : below : below : averaged below
week : : : :* N o. 3 :


:Winnipeg :Liverpool:Winnipeg :Liverpool:
: : :


Manitoba : Parcel
niW( niv eg) : (Liverpool)


: Cents Cents Cents Cents Cents Cents

Sept. .....: 16 --- 22 --- 12 26
Oct. ......: 18 23 22 26 11 31
Nov. ......: 20 26 23 29 16 42
Dec. ......: 24 20 27 23 20 44
Week ended-:
Jan. 15 ..: 30 17 31 18 17 1/


1/ Liverpool parcels not available.

With the January 1 stocks of old wheat in Argentina exhausted and the
new crop greatly reduced by frost and drought damage, and with Canada's
exportable surplus small, this wide spread between domestic and foreign prices
may be expected to encour-j.e takings of United States wheat. Moreover, hard
million ; wheats such as our Hard Red Winter are used by European importing
countries to strengthen flour made from soft wheats such as are largely
produced in Europe and in Australia. Small supplies in Canada and Argentina,
the two principal producers of hard milling wheat, are expected to turn much
of this trade toward United States wheat.

Increased Southern Hemisphere marketing usually become an important
price factor at this time of the year. Unless the demand is materially below
that now indicated, however, small world wihea.t supplies this year may tend to
offset the seasonal price decline.

THE '.EEAT MILLI::G IN B01D PROVISION 1/

The milling in bond provision of the 1930 Tariff Act should be dis-
tinguished from the drawback provision of that Act. The milling in bond
provision, which is embodied in Section 311 of the Act, permits the milling
of foreign wheat in Government bonded Am;erican mills under customs custody
without payment of duty on the wheat under certain conditions. On the other
hand, the drawback provision, embodied in Section 313 of that Act, specifically
states that the drawback privilege shall not be enjoyed by imported vihe-at.
Under earlier Tariff Acts an importer of ::-e.t could withdraw such wheat from
customs custody upon payment of the duty and, upon proof of the exportation of
the flour or byproducts produced from such wheat, the full amount of the duties
paid less 1 percent would be refunded. This drawback privilege, as far as
whvmt is concerned, was abolished by the new lcaniuae in Section 313 of the
1930 Tariff Act.
I/ Prepared by C. F. Wells. This statement has been included in response to
inquiries indicating rather general interest in the subject.






WS-15


- 12 -


What the Mi1li in Bond Provision Permits

Under the provisions of the Milling in Bond section of the 1930 Tariff
Act, the foreign wheat contained in wheat flour manufactured in whole or in
part of foreign wheat;- in Class 6 Government bonded manufacturing warehouses
under supervision of a Government customs officer is exempt from duty upon
the exportation of the flour, with one exception. The exception is milled
in bond-flour exported to Cuba. The foreign wheat contained in milled in
bond flour exported to Cuba pays a United States duty equal to the reduction
in the Cuban duty -and" the internal tax applicable to flour-milled in the
United States. Thus,though flour milled in bond in the United States from
Canadian wheat enjoys the same reduction in the Cuban duty and.tax as flour
milled in the United States from United States wheat, yet this .benefit is,
in effect, cancelled, or offset, by-the fact that the Canadian wheat rr.illed
in bond for the Cuban market must pay a United States duty just equtl.'to the
Cuban tariff and tax preference. This duty on Canadian wheat killedd in
bond for the Cuban market is a new provision in the 1930.,TariffAct and was
added to prevent flour made from Canadian wheat from enjoying;Cuban preferences
intended for flour ralde from American whnuat. In 1936 the duty on foreign
flour milled in bond for export to Cuba avcrr,-ed 12.3 cents per bushel.

The milling in bond provision does permit the mixing of domestic wheat
with foreign wheat in Class 6 bonded mills either before or after milling.
The millirL in bond provision does permit the withdrawal of bran a-ndd otner
wheat byproduct feeds from Class 6 bonded mills for consumption in the United
States upon the peCr.vcnt of the s,':ne duties that would apply if tney ,,were im-
ported directly from Canada or any other foreign country. Finally, it should
be remmbured that these privileges are granted subject to fulfillment of
customs regulations under which the foreign wheat is constantly under customs
supervision and control.

What the Millingin Bond Provision Does Not Permit

Foreign v:he*.t in Class 6 bonded mills may not be withdrawn for con-
sumption in the United .States even if the regular duty of 42 cents per bushrel
is paid. 2/ Nor can United States wheat or flour received into Class 6 bonded
mills be withdrawn for consumption in the United States even if the duty is
paid. 2/ Flour manufactured from foreign or domestic wheat in Class 6 bonded
mills may not be withdrawn for consumption in the United States even if the
regul-.r duty of $1.04 per 100 pounds is paid. 2/ The only purpose for which
either wheat or flour may be withdrawn from Class 6 bonded mills is for exporta-
tion, and then only under bond and under customs supervision until actually


2/ Imports into the United States for grinding in bond and export 5s well
as for domestic utilization, annually 1923-24 to 1936-37 and monthly, Janiury
to October 1937 are shown in the December issue of "The Whieat Situation",
page 21. Imports for grinding in bond in November, the last figure available,
amounted to 182,527 bushels, while imports for domestic .utilization for the
same mchnth amounted to only 60 bushels.




- 13 -


exported. 3/

In view of these facts it is clear thn.t it is not le ally possible
for the-operator of a Class 6 b,'3 .1 mill, b, substitution or otherwise,
to brinE .foreign wheat or flour therefro'n into t? domestic market eren
upon pr:'ment of the reul.jlr duties on th3 s-. c

T-.jle 8.-Ixpcrts of "*'e-at and rhert flour from the United States,
1935-37 &nd 1.-7-28
(Includes flour milled in bond from forei l-L whet)

P: "-'.nt _: ".t flour : PIet includir, fluur
Period
_019 .-3- :1C,'-38 :1 -' 37_ : 1937-38 : 1 ,,-37 : 1.-.37-8
1, 00 l,.'-j 1,0. ,.. 1,000 1,000
: buvhels bushels barrels barrels bushels bushels

Jul;-"ov. : 1,683 2-,768 1,597 2,022 9,191 3o,270
Wee-.i: en eded: : 8
Dec. 4 0'. 2.,211 31 144 146 2,888
11 : 0 .1,690 8 161 38 2,447
18 17 .2,220 49 36 247 2,389
S : 0 1,103 9 37 42 1,277
Jan. 1 0 1,645 34 54 160 1,899
8 0 1,8 22 84 103 1,93
15 0 1,902 13 53 .61 2,151


_Compiled. from reports of the Department of Colimmerce.


Table S.-Shipments of Wheat, including flour fi v principal exporting
countries, specified dates, 1936-37 and 1937-38

: : k. tmr-.Il -. _: ___ ^ ,.^.''s___ : -- _f}, 1,_rica
Period :l936-37:1937-38:1936-37:1937-38:19 '-37:1937-38:1936-37:1937-38
1,000 1,000 1,000 1,000 1,k 00 1,000 1,000 1,00O
:bushels bushels bushels bushels bushels bushels bushels bushels

July-Nov. : 23,692 15,032 27,724 26,680 35,040 21,704 123,544 73,200
,,eek ended: -:
Dec. 4 : 1,.36 368 1,812 2,872 1,648 1,160. 6,640 6,360
11 : 1,048 408 1,600 1,476 .3 976 4,c10 3,592
18 : 1,-28 1,068 1,272 2,068 1,680 176 4,256 4,128
25 : 3,236 1,912 2,068 2,192 1,344 408 3,736 4,816
Jan. 1 4,116 1,108 1 ,3.4. 3,164 944 488 4,016 3,080
8 : 3,928 1, 048 2, 0(0_ 802 <4 545 3, 4 3,635
15 : 5,740 1,656 1,720 3,591 1,322 288 2,720 4,155


Compiled from Broomhall's Corn Tr:.,de News.

3/ "Except for...supplies for vessels, no articles or materials received
into bonded manufacturing warehouse or articles manufactured therefrom, shall
be wvithdr-:.m or removed therefrom, except for direct shipments and e::portation
or for transportation and irmnedi-.te exq,prtation in bond to foreign countries,
or the Philippine Iclands, under the supervision of a customs officer." -
(Customs Regulations of 1937, Article 980 (b).


IS-15




- lb -


Table 10.-Movement r -.::at, including& flour, frini plincijal ex-ort-
in; c rn,.ria ,. 1.93 -' i t- 19-.7->3


-: E- :-r'.: r- .iv:-n >:- 3ffi.ial *;eure s
Country : '- i. J-. I 1 to oa,.e shown : Date

: 1,OC : 1,C.,0 : 1,000 : .1,000 : 1,000 : 1,000 :
",4"1:1 P: : 4ji "-e s
4 4 4


United States ......: 21,5? 2:
Canada ...... ....... :169,6 .
Argentina .......... : 187,000
Australia ..........:10,007 7
Russia .............: ,2s6:
Hungry ............: 12, '99:
YaiSoslavia .........: 4, 1l:
Rumani ......... ... : 3,72
Bulgaria ..........: *7
British India ......: 2, 1l:J


15,929: 21,531: 6,639: 9,191:
237,447:213,028:152,539:159,959:
76,577:162,08 : 0 ,11664: 37,096:
lu2,258: 95,970: 29,328: 20,206:
29,704: 4,479: 11, sl: 890:
14,644: 27, ?S: 5,847: 12,426:
728: 17,302: 79: 7,490:
-6,91: 35,40: S, 894: 17,277:
9C3: 7,27 : 577: 3,010:
2,,56: 14,671: 162: 359:


33,270:Nov.
61,331 :'ec.
21,763:Doc.
22,035:0ct.
9,969:Sept.
2,994;0ct.
4, 209:Oct.
16, 742:Oct.
2,764:Oct.
609:July


Total .......... :513,4'): o7,222:59 :


Slio.S ,-nt -s :i. n I' traie sources
: Total : cek ended 1937-'.-, :Jul; 1 Jan.15
:1935-36:19S,:-3-7 :Jan. 1 :J&n. 8 :Jan.15 :1'30-37:1937-3g
: 1,OOC : 1,000 : 1,000 : 1,000 : 1, 00 : 1,000 : 1,000
:biuns:1. :buFhe.s:bus h b1; :b.sh.1:b-.2hl.:bushels


Iforth American i ...
Canada,4 markets 2J
United States ......
Argentina ..........
Australia ..........
T-\


Da nub
Briti


:220,464:'
:246,199:
: 7,.19;:
. 78, 71 ":
:110,57^:


222,902::
19, 531:
10,0)9:
l'5, '3678:
1- 4


3,0 0:
506:o
1, S5: :
1,1_U:


3,635:
651:
1,9S3:
1,0)4:
7Oh?:
GO._


h).
I."

C,.
1,
3,I


Ia .....2........: 29,024: 8d: 0: 1,23):
ie & Bulgaria 3]: -, 12: 65,544: Ud: 5:5:
.sh India .......:Lj2,5E:/1t, G6?: Itc: 0:
Total 5/....... :449,24a: L,76,7?2:


Total European ship-: : :
ments 1 ........... : 3 ,2b : )' b ,bS :
Total ex-European : :


S155:154,52:102,966
513 :17,298: 60,513
151: 5j321: 40,762
656: 44,924: 22,600
591: 04o,o4: 42,845
2Sg: 88: 31,559
288: 43,334: 25,745
192: 7,0 6'1: 10io,90
:2g9, 42:236,205


7,064:


shipments 2j....... :131,76: 127,192: 1,34:;


IJ Brorrahollas Corn Trade i',.-.vs.
2/ Fort William, Pcrt Arthur, YVnc*ouvr.r, Prinze Rupert, and N-_w Westministcr.
3*/ Blak Sea shipments "'nl-y.
/ Official.
^/ Total of tr.d=. figlLr&s incli,.s ri.h America as reported by Broorhall's
but does not include it.'ms P :nd 3.
Q/ To January 1,.


:bj : G
: 70,36o: hl,336


:2 s : i 6,99
: 211,81l6:1lg6, g96


WS-15





: ::forecast :
:. million : Million :


Austria .............. : 10 : 10 :Oct.
Belgium .............. : 40 : Oe ct.
Czechoslova:.ia .......: 2/-11 : 2/ -1 :Nov.
Denmark ..............: 7 : 7 N:ov.
Finland .............: 1 : 3 :Oct.
France .............. : 7 : 26 :Sept
r.rmany ...............: 23 : 28 :Oct.
Greece ...............: 21 : 13 :Oct.
Irish Free State .....: 14 : 14 :.-v.
Latvia ...............: l/ 1 : 0 :Oct.
Notherlands ............. 21 : 24 :;ov.
1Tnrway ........ .... .: 9 : 8 :ov.
Polaad ............... 2/ -6 a: /-1 :Oct.
Port-c l ............. .: : 1 :Oct.

..ed n .............: : -1 :Un.
S7i tzer i-aId ..........: 19 : 17 :Nov.
United Y.,'\om .......: 199 : 202 :Nov.
Total imrocrts of : :
above ..........: 381 : 394 :
Italy ............ ... : / > : 6 :


to :
: Million : .'.illion
:- a ~ s o : i-


31:
31:
30:
30:
31 :
30:


32:
30:
30:


31:

30:
30:
30:


3

14
1
1


7

8
2
Z/ -3


2 3-1
8
83


2
14
-2
1
2
22
5
6

10

I/



5
81


Total imports ...: 436
Total exports ...: 17

Total, net imports 419


4oo
3


: 397 :


Compiled from official sources


except as otherwise stated.


3/ Forecast by Europe:an offices of the Pureau of Agricultural Economics.
j/ Tet exports.
3J 11Ht exports of less than 500,000 bushels.
4/ Less than 500,000 bushels.


138
5


153
2


: 151


: 133


ws-15 15 -


Table 11.- ITht imnrorts of heat, inTluiin.-- flour, into E'.trrpean
countries, year bezinnir.n- Jl-;' 1, 1936-37
and 1937-39

: : Net inmrts report d
Country 193-6-37 : J'
:onr 1.:37-- z J: L 1 .
q1 6- 37 ] 9z7-3g




IIIIIIIIIIIII illlll i IIlll
3 1262 08861 8409






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