WELLINGTON NOTES.

Hokitika Guardian, 23 March 1925, Page 4

WELLINGTON NOTES.

SLUM F IN WHEAT

(Special to "Guardi"Ji”.)

WELLINGTON, .March -JO. Vs a general thing very little attention. is paid in Wellington to the wheat market, lor there is very little grown in the 1 district, and wo arc wholly dependent upon supplies from the south. Just now we know that bread is costing l.d more per 21b loaf, that there is an alleged shortage of wheat in the country ,Lnd that the duty on flour has keen lixed at an almost prohibitive rate. ■| here are, however, one or two persons in the city who rival in studying markets, and the writer had an oppurtumtv ot discussing the wheat null Let with one such enthusiast. At the beginning id tile year, in fact in the beginning of the cereal year in Europe, that is in August last, the crop reports in Europe and America were unlavourable and the experts made predictions d scarcity. It is true that I’ranee, Germany and some other European countries, including Russia, were Molted into the wheat market lor supplies and the most ol this was made by the gamblers in the wheat pits of Chicago, which is the prinicipal wheat market of the United States. In the wheat market purchases are made for cash, that is lor prompt delivery, this being known as “ futures.” t owards the end of January, .May wheat, that E wheat for delivery in .May, was quoted at 205 cents per bushel, which was the highest price recorded since 1808, when a certain .Mr Hutcheson worked a earner in wheat. In 1888, there was a ireuuine shortage of the cereal, and wheat sold at 220 cents a busnel for cash. Since the end ol January the statistical position ol wheat, that is supplv and demand, has heen subject to severe I revisions, all against the earlier esimatex. and the buyers ol “ futures ” have become panic stricken, and on .Mareli .13 pandemonium raved in Lhe Chicago wheal pit. where everyone. was keen to unload •‘futures” at any price/and cut losses. East week there was a further break in prices, [ol it extended to New York and Winnipeg, and affected the Wall Street Stock Exchange. Dealing in ” lutuiea provides a. strong incentive to gambling, for a deal may he turned over several times at a. profit each time on a. rising market, and that is probably what did happen when the price was carried to over 2dols. The buyers on a rising market may he classed as “ bulls.” and the sellers are ” hears.” The buyer does not want the wheat, and the seller has not the wheat he sells, it is just a pure gamble with wits against wits. W ith the slump in the market the- ” hears can e out ol the fray with a profit, lhe seller who sold wheat for May delivery at 2 dollars per bushel can now cover his commitment at a little over 1 dollar a bushel and thus make a huge profit, while the buyer at 2 dollars is making a huge loss.

eekkcts od the si.umi*. The effects of the wheat slump will he far reaching, and must cause a serious disturbance to the money maikel. Wall street, that is the New V ink Stock Exchange, is said to be disturbed. The slump means ruin In hundreds ol gamblers, and on (lie American principle of bigness it will mean the loss of mam- mi Minns of d dims. No doubt, many of the gamblers have been forced to realise on their securities and have thrown these on the Stock Exchange to be sold at any price obtainable. There will be tremendous demands on the national hanks lor at coiuiiiodati.ui, mid the borrowers will he glad to pay any. rate of interest, indeed the magnitude cl the demand will force up the rates. New York and E'indou are very closely connected f.imncially, and what affect's the New York money market, will he speedily ictlecied in Loudon. American investors in sterling securities will recall their Imids. and if ibis i., td anv magnitude, then sterling exchange will depreciate in terms ol dollars,"and. the Hank of England may lie again forced to raise the discount, talc. If this happens it will cause a tronicndmis diil-urh-aiice. and. will bring pric os of commodities tumbling down. 'this iiuthurity staleil that the position nt tlic moment appeared to he very ugly, but America was a very wealthy ciuiiitrv and the loss of a few millions ol dollars will not cause imiih harm. Wheat prices I lie world over wili he hound t : full because of this American panic, and tig wheat growers of New Zealand arc 1 am I I" he aUVcigi Ws'r.Yci has the wheat crop and >1 the price nl wheat drops there to os per bushel, as stems not unlikely, then the pi e>' >9 Hour may drop to a level which would enable New Zealand iiup.n'ters to purchase \iisLraiian Hour and land same in North Island duty paid at less than c 111 j,er t in. If lids happens, then Now Zealand wheat, growers and Ilnur millers must fall into line and the baiter;'. must reduce the price ol bread. Should the l.oiidon money market become stringent, and that is quite I •able, then "wool and other eoiiinmdiUes must fall ill value, 'lhe gamblers m wheat futures in C'bicag. ■> have done a wonderful amount of harm at the niomeiil. hut in I lie long run good will result by placing trade and eomnu rc e on a sounder basis, for the price level ol eoiu modi ties will Ice more reasana.ile with the gambling element eliminated.