The Nonpartisan Leader Newspaper, December 1, 1919, Page 8

! "When Shall the F ar‘mer Sell His Crbps'? Does Holding Corn and Wheat for Better Prices Pay? A Discussion of the Markets and Some of the Drawbacks Against Holding HICH pays best, for a farmer to hold his crops for a few months after harvest, or to sell-at once ? This is a question that in the last analysis each farmer must solve for himself, but a study of the chief elements that enter into the problem will enable i each man to have all the facts ! before him when he makes his decision. The main factors to be considered are these: Do prices ordinarily go up or down after harvest? { What loss, if any, is to be expected from shrink- . age? . Minor elements are interest on the value of the [ crop, possible loss by fire or cost of insurance and i the possibility of abnormal shrinkage through ! depredation of rats, mice or insects. . In studying the usual trend of prices in relation to eath farm crop, it is well to throw out of the calculation the five war years, beginning with . 1914. Conditions were so abnormal, due to price- fixing and large governmental purchases, that the actual prices received give no idea of what is likely to occur in the future. While prices are now much higher than in the pre-war period, it is likely that the next few years will show price variations more nearly like those of 10 years ago than those of five " years ago. p Take the case of corn first of all. According to i the statistics of the Chicago Board of Trade for the . last 25 years, corn is a fairly steady performer on the speculative market. For 20 years beginning with 1884 the Chicago Board of Trade corn statistics | show that corn ordinarily is at the minimum price i about the first of the year. It generally shows a ! slow advance during January, goes up at a faster ! rate until May 1, slows down again for 2 month and i then goes up rapidly, reaching a top price ordinarily . about August 1. Then there is a decline, slow at . first, then faster, until a bottom figure is reached i at the end of the year. : . For the 10 years, 1904 to 1913, both inclusive, the average price of corn by months on the Chicago { Board of Trade was as shown in this diagram, the ' figures at the left indicating the price per bushel in cents: 1) B A R ] ) [ ] [ i (i (=3 1 O R I () (el il = B S e ) R B o ] Y e Y B O S5 G e [, P ) R ) R S ST A o [ ) P, ) ) I v ) R P, e R T R Ve (21 ] T i ] ) R ) RO ) T e ™ D N ) IS ) Ve 7 T O R B e T The dotted line shows the average corn price on the Chicago Board of Trade for each month for the 10 - years 1904-1913, both inclusive. The 10 years 1894-1903 show a similar range of prices. It is thus plain that the corn grower can not ex- . pect much of an increase in price unless he holds 'his grain until well into the middle of next year. {The next question is that of shrinkage—how much ;‘grain will he have on hand to sell out of each 100 {bushels that he stores? ; . i The Illinois experimental station has made a 10- i year study of corn shrinkage. Each year about 300 {bushels of corn were hauled direct from the field iand placed in an open crib, protected by tight roof iand by slat sides, where it was left until the next lcrop was gathered. Four times each month the ‘crib and contents were weighed to determine the ishrinkage. s Yy | On the basis of 100 bushels of corn, placed in the icrib in October, there were only 83.39 bushels in the jerib by the end of the following August. The fol- lowing table shows the shrinkage, in bushels, each imonth, and how much was left out of each original 1100 bushels at the end of the month: ] Shrinkage in bushels Bushels remaining November ... 98.67 December .... 1.93 96.74 January ... . .90 95.84 February .1.32 94.52 March ... ..1.47 93.05 7Y 7y 1 L 3.04 90.01 May ... .3.11 86.90° June ... 2,19 84.71 July ....... .86 83.85 August ...l - .46 83.39 { Therefore the price must be considerably greater during the spring months if the corn producer is to gain anything by holding his crop, shrinkage alone considered. Taking a” price of $1.46 for corn at the present time, the farmer must get the following prices dur- ing the next nine months if he is to make up for shrinkage losses: ................ $1.48 April .o GLET e 161 May ... .. '1.62 Junme ... March ... 154 July oo August .................... $1.74 There is no telling, of course, what corn will do in the market this year. A big speculative move- ment might increase the price sharply. But if this year should follow the average of the years 1904-1913 in price fluctuations the price that the farmer would receive for his corn, by holding, would always be less than the price that he would have to get to break even on his loss by shrinkage. As this article is written the price of corn is around $1.46, or almost exactly two and one-half times the average November price for the 10 Jyears 1904-1913. If the movement of prices for the next few months follows the average course for the last 10 pre-war years the “corn price will vary as indicated by the lower line in the following dia- gram, while the price necessary to be obtained to compensate a farmer. for the losses due to shrink- age, will be as indicated by the upper line: - Corn prices today are almost exactly two and one- half times the average price for the same month in the 10 years 1904-1913. If, during the next pine months, corn prices should vary in the same ratio that they have done in the past, keeping at all times approximately two and one-half times the prices of the same month in previous years, they would range as shown by the lower line. On the other " hand, to make up for the loss through shrinkage, the farmer would have to receive, each month, the price indicated by the dotted line above. The figures at the left indicate the price in cents per bushel. " Of course prices this winter mé.y run differently from the previous years. - Prices may go up during * the winter, instead of down. But they will have to go up considerably above the upper line if the farm- er is to reap any advantage from holding corn for market: ! ; In the case of other grain than corn the price variations are altogether different in normal years. The following table shows the average price varia- tions of wheat, oats, barley and rye on the Chicago market for the 10 years 1904-1913, inclusive, the figures being taken from the statistics of the Chi- cago Board of Trade: HOW RRICES OF OTHER GRAINS VARY BY MONTHS : (Cents per bushel) Months 4 Wheat Oats Barley = Rye January ........... 100.1 89.6 67.2 74.0 February . . 100.9 40.9 66.1 75.2 March <. ... ... 100.7 40.9 67.4 75.8 ApEl o 101.5 41.7 67.1 76.5 May S e nl 106.3 434 673 794 June ... .zl .108.4 43.4 64.4 76.6 July ... 95.2 42.8 61.56 73.2 August ...... — .. 92.3 37.8 60.2 71.0 September ................ 95.6 38.6 63.9 73.1 October ...................... 98.4 38.0 63.8 75.0 November .. 974 87.6 64.3 738 December .................. 98.8 38.6 65.6 73.3 Average ......covreeen.. 99.2 - 403 64.9 4.7 It will be noted that in four grains, the high price has been case of each of these - ] 1 May, while the low price for each is in August, with the exception of oats, which continued at practically the same low mark throughout the fall months. Taking one example—wheat—as typical of the four grains in this class, it may be cited at the start that the variation in wheat prices is allogether different from that of corn. i % In the case of wheat the situation is strikingly different. Wheat ordinarily reaches its low point during the month of July or early in August, when more than a quarter of the crop is thrown on the market in one lot. From this figure it gradually climbs to reach a high mark about May 1. This is shown by the Chicago Board of Trade records for the last 25 years. The average price of wheat by months, for the 10 pre-war years 1904-1913, is shown by the following curve, the figures gt the left indicating the price in cents per bushel: * The dotted line indicates the average price of wheat on the Chicago Board of Trade each month for the 10 years 1904-1913. When wheat approaches its peak price in May it is in the hands of the specu- lator. Under present conditions the farmer is al- most always forced to sell immediately after har- vest, when prices are at their-lowest. The figures at the left indicate the price in cents per bushel. - “The next guestion to be considered is the p‘?m,bable loss in shrinkage in holding wheat. This will de- pend largely upon local conditions. A number of scientific tests have been made under normal con- ditions, but excluding shrinkage -due to mice, rats and insects. The greater shrinkage discovered was in Ohio experiments and amounted to a loss of only 2.3 per cent in three years. In Michigan experi- ments the loss in a little less than a year was one- half of 1 per cent. In Utah experiments it was found that field-dried wheat put on weight' during the winter, due to absorption of moisture, In the case of farm storage, however, there is a normal shrinkage of 1 to 2 per cent that may be traced to rodents and insects. If the grain is very dry when stored the gain through absorption may easily offset this loss through shrinkage. ] : As the curve of normal wheat prices ordinarily represents a gradual increase after the first of the - year, especially during the early spring, it is or- ’ reached in Minneapolis dinarily to the farmer’s interest to hold his old wheat until the following year, provided he has storage facilities. In the pre-war years the price of wheat ordinarily increased approximately 5 cents during the month of April alone; under present conditions this would be equivalent.to a .price in- crease of 10 or 11 cents. : Taking the case of wheat, during the 10 years 1904-1918, the average August price has been 92.3 cents. Figuring a shrinkage of -1.5 per eent it would e necessary for the grower to get a price of 93.7 cents the following spring to justify him in holding it. . The same 10 years, 1904-1918, show an average maximum price of $1.063-10 for wheat, generally reached in the -following June. ' Considering the question of shrinkage alone, the average grower would have made 12.6 cents per bushel by holding his wheat over the winter, instead of having it forced on the market in the fal. On a billion- bushel wheat crop, presuming that half of it could be held by the growers until the following spring, ‘the growers would net a gain of $63,000,000 a year on the old prices! When it is considered that present prices of everything are more than double the prices of the 1904-1913 period, the gain in a year like the pres- ent one, if half of the wheat crop could be held back by the growers, would amount to $150,000,000! By improving credit conditions, through a state ing system, and by giving the farmers oppor: tunity to hold their wheat for a favorable market in state-owned terminal elevators, the state of North Dakota is starting to solve the biggest problems that confront the farmer and enable him to saye some of the millions that now go to the .- speculators of the Chicago Board of Trade and the Chamber of Commerce. et