Evening Star Newspaper, September 22, 1930, Page 12

VIEW OF SOVIET HEDGING ‘Operations of Russians in Chicago Market Considered Legitimate—Efforts to Protect Sales Seen. BY FRANK I WELLER, Associated Press Farm Editor. After a momentary upward flutter of | wheat prices as a result of Secretary Hyde's crusade to drive the Russian | government out of the domestic grain | market, values have fallen back to their | weak and unsettled position, influenced | chisfly” by heavy Canadian marketings ‘and increased offerings in Europe. The short-lived advance of 2 cents a bushel on wheat was considered a nor- mal bullish reaction to the Secretary’s charges that the Soviet Union had been | selling short on the Chicago Board of Trade in a deliberate effort to depress | pricés and that action would be taken to curb their operations. Generally, however, the trade re-| mained calm and accepted Russian par- | ticipation as a hedging process of the simplest and most common form. | Wheat Started to Market. Russian wheat i§ beginning to move to market. There was almost 3,000,000 bushels of it in the Black Sea shipments , {1ast week and commercial news reports indicate Russia has chartered frelght‘ Toom for 22,000,00 bushels—hoping to liquidate in the world markets before Dew wheat starts from the Southern | Hemisphere in January. For the most part Russian wheat is | delivered at Liverpool. By hedging in | the American market, Russia can pro- tect her sales at Liverpool whether prices rise or fall. Grain men make an example of arbi- figures to illustrate what they be- Yieve the Russians to be doing: If whe: is selling at 95 cents in Liverpool at th time a Russian cargo is dispatched an December futures are quoted at Chicago | @t 85 cents on the same day the Rus- sians contract to sell in Chicago in De- | ff a bushel loss at Liverpool | i wheat, but make 5 cents cago by buying Ameri- 80 cents to fill out their deliver wheat there for 85 | | eents in December. Likewise, if prices rise the gain in one | | fnarket is balanced against the loss in . The system is more or less guaranteed by the fact that American prices never get more than a fraction of a cent out of line with the usual spread between domestic and world ices. ‘The operation is the same as ||| t employed by domestic traders ex- eept that the Russians, by dividing their between the two markets, keep off Liverpool market the additional W] the mt. hich m&h&uwurk Iurfl'l:r tfl prices where expect to sel cash wheat. 4 Raussians’ Statement. the operation says le: inister br par- to the American ket if it were conducted by a pri- trader rather than by a govern- t. He says the Russians sold more 7,000,000 bushels short at Chica- ice was beating back the every time it opened above the of previous day. issians say they have sold less ,000 bushels, scattered over a months. They deny that ,000 bushels would have any effect on prices, considering the daily turn-over of between 50,000,000 and 60,000,000 bushels chalked to domestic trader account at Chicago. Some students of the Russian situa- tion say the Soviet Union is not in financial position to back such a tre- mendous task as breaking the American wheat market. It could not even afford to stand the losses on 7,000,000 bushels sold short if prices rose instead of fell. From a clear slate in 1923, the Soviet funded indebtedness has risen to $1,600,~ 000,000, on which it is paying about 10 per cent interest. Most of the money. has been spent for imports, and the government still is largely in debt to | banks in this country for some $75,000,- 000 worth of farm machinery purchased from American manufacturers during the first six months of 1930. Traders Are Target. . Chicago traders, who insist it is their business to accept orders from any part of the world, are the chief target of the Secretary's attack. He is trying to get them to refuse Russian orders from a standpoint of ethics, but says there is now law to bar Russian operations or force traders to reject them. He sug- gests additional legislation in the next Congress to control the situation should further investigation lodge the blame for current depressed prices with the Russian government. 6% il No Commission Charged | You can take 12 years to |f pay off your loans without the || expense of remewing. $1,000 | for $10'per month, including interest and principal. Larger or smaller loans at proportion- ate rates. Perpetual Building Association Established 1881 Largest in Washi Assets Over $23,000,000 Cor. 11th and E N.W. | eoWAES Regular Delivery Over 100,000 families read The Star every day. 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