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Show DESERET NEWS, THURSDAY, MAY 13, Hectic trading in grain future c By Robert M. Press Christian Science Monitor News Service CHICAGO 111. Racing the clock, signaling with frantic fingers and urgent shouts across a paper-litterefloor, a group of men (and a few women i in Chicago d spend all day trading what they don't have to others who don't usually plan to keep it. Their world is an institution known to most Americans only as a fleeting glimpse on an evening television news report, or a paragraph in a newspaper article atxmt food prices. Yet what they do has an impact on supermarket prices, and thus on individual family budgets, exports say. The general view' is that the net effect is to stabilize prices and over the long term help keep them lower than they would have been without such trading. But uncontrolled speculation could work to raise prices. Partly spurred by grain price rises following the huge U.S. grain sales to the Soviet Union in 1972, Congress has just enacted a series of reforms. The buyers and sellers are members of the Chicago Board of Trade, the largest of more than a dozen futures" markets in the U.S. The board is to grain sales what la DO-- $V meat-cuttin- n . Ri A u Win. P ..V, LINE Mil Lufce CttY, The West High School playing field across from the school is known as Dandelion Grove. Its solid gold, as are the median strips all the way to Wasatch Springs. They dont even mow them hut let them go to seed. All the homes thus catch the seeds. Why cant Salt City. they he mowed or sprayed? It could gel worse before it gets better. School district crewmen sprayed at West yearly this month hut some "sxrt" turned on the sprinklers largely nullifying the retardants effects. Now West must wait until the rest of the citys schools get sprayed. Residents along Second West medians have a slightly brighter prospect for some spray action next week Irom the City Parks I)ept.. provided the weather cooperates It has to be calm and dry. As for those private yellow lots, owners must purchase their own treatment chemicals regardless come (nun. of where the seeds Instant cash refund On February I sent a check for $21.95 to Ilahmid Clothing. Paterson. N.J. for a mans suit. I received the cancelled check cashed Felt, ti but I have never received the suit after writing twice to them. M husband and I are unemployed. I sure hope you can Mrs. M.G.L., Salt Lake City. help. A fast let or went out from here followed by your note two days later that Haband, Inc., had refunded your money which indicates their desire to protect their business reputation. 1 Chicago, grain investors trade what they don't have to others who don't usually plan to keep it. In ere. professor of agricultural economics at Michigan State University. Larzclero teaches farmers how to hedge" on the futures markets. Hedging and speculating are the two pillars af the market. Hedging is tne way large farmers, grain elevator operators, millers and meat packers, some supermarket chain.-,- , and exporters and other protect themselves from possible big losses from fulure drop-ithe price ol their product. Hedging ai-puts a ceiling of sorts on how much they might gain from future rises in the price ol their products. Hedging works this way; U) A large grain firm operator, for example, buys 5,000 bushels of grain lor cash from a farmer at $2 a bushel in September. (2) But he has no miller to buy the grain irom him then and wants to be sure he doesn't lose money by any possible drop in the priee. so he hedges i.e.. he selis a "contract" promising to deliver 5. non bushels of grain in May at $2.32 a bushel. (3; In December he sells tile original 5.000 bushels to a local miller lor $1.95 a bushel. o Watch interest by the day I have been paying $15 a month for several years on a college loan. In November the interest was $10.43 with the principal credited with $4.57. 1 am sure this is an error since the next month's interest was shown as $3.22 and credit to principal $11.78 from the $15 He then buys another contract for 5.IHI0 bushels at $2.07 to deliver in May. This fulfills his obligation to deliver 5.000 bushels in May as promised earlier. On his cash transactions he has lost 5 cents because the priee dropped f ront $2.00 to $1.95 during the time he held the grain. But on his "paper" transactions on the payment. A year ago the interest was $2.91 and credit to principal $12.09. I am wondering why the interest A.T., Salt Lake City. jumps up and down. The college h.is explained in detail with photocopies of computer data. It appears the basic thing to remember is: interest declines by the day instead of by 'he month the old wav. From that point on you probably should know the number of days of interest represented by the portion shown on the regular loan statement as interest, then divide the days into that figure. Also, watch for your periodic statement of tranoctions from the college computer (most statements of this type are issued each three months' which, presumably, you are receiving. first selling only a lutures market contract for 5,ou0 bushels and then buying he has only a contract lor 5.000 bushels gained 25 cents a bushel, a net gain ol 2u cents a bushel, or $1,000 on the whole deal. ( ash .and futures prices tend to move upv. ard and downw ard at roughly the same pattern. Thus when he sold the actual grain the price was down, but so was the cost of buying on the futures market. Seculators use the market differently. They assume risks ol possible price changes bv buying and selling contracts, hoping to profit from price changes. But cheating is sonic times possible on futures markets. Shrewd traders can on occasion affect prices artificially. Congress last year passed a law setting up the Commodity Futures Trading Commission iCFTCi. This independent agency, which started its work in April this year. Do-i- t Man attempts to solve problems, get answers, investigate complaints and cut red taw. Write. You must siem vour name and give your address and telephone number. Rockwell's gratuities Ranchers take their case to consumers $4.09-an-hou- r e Dandelion Grove" giows r By George Money hn Christian Science Monitor News Service American cattlemen say they would NEW YORK like to see consumers do a lot more beefing about the jump in tieef prices soon to hit U.S. supermarkets. With agriculture experts advising shoppers to stock up their freezers now because beef prices may jump as much as 20 and 30 cents a pound in the coming months, cattlemen are saying, in effect. "Dont blame us. Our hands are dean." Wray Finney, president of the American National Cattemen's Association and an Oklahoma rancher whose family has been raising cattle for seven generations, came to New York City to round up consumer support for his range war against what he calls "the real culprit" the mythical middleman." behind rising beef prices Finney, whose organization represents 200,000 U.S. cattlemen, says, "We re concerned because we've been losing money, but retail prices have continued to go up." He blames the price hikes on management-labo- r contracts that have allowed pay hikes for butchers, meatpackers, and retailers but have not mandated increased productivity. Feather-bedding- " adds at least five cents a poimd to retail meal prices, l,e aigues. responds James Wishart. research Hogwash, director for Amalgamated Meat Cutters and Butcher Workmen of North America. Productivity has increased, he argues. The real problem, according to the Chicago union researcher, is an increasing concentration, or "monopoly,'' of firms that has tended to lessen and drive up prices. eomjx-titioWishart says his union has pressed for higher wages, earnings at but that the current average food prices is not exorbitant. He argues that the priee margin lietwcen what the cattleman receives and what the consumer pays at the retail store has increased at the name general pace of inflation. Cattleman Finney argues that butchers, earning $x.25 an hour in some cities have won contract restrictions that, for instance, prohibit a janitor from entering a room for cleaning purposes. 1 OUR READERS' ACTION the New York Stock Exchange is to stocks and bonds. On the noisy trading floor, the brokers handle contracts for grain at the rate of more than $250 million worth every year. Thats more than half the total numlx-- of grain contracts bought and sold in the nation. At this futures market, grain is bought well before it is harvested, and sold to others who agree to pay a certain price w hen it is delivered at a future date. Since the object of the vast majority of traders is to make money on contracts only 2 percent of all transactions deal with actual grain stored and ready for delivery. The rest is, in effect, trading in pieces of paper or contracts. Theres money to be made here, big and small : Jim Iiyan, one of the 1,402 memixrs of the board, made $225 in 15 seconds recently. He lost $2,0)0 another day; on yet another, he gained $1,200. Large grain dealers dealing in major contracts can earn many thousands a day, some sources say. How does all this affect the average food shopper in the United States? The idea is that even betore the first giant grain harvester enters a farmer s field, the farmer can sell his grain at current prices, giving him a safe, guaranteed price rather than forcing him to take the risk of prices rising or falling by the time the grain is ready for market. The farmer does not have to use the board of trade, of course. He can wait until harvest and sell directly to a grain company. Or he can sell a futures contract on x amount of grain instead. Advocates of the system say that such trading takes much of the fluctuation out of grain prices. And, they say. the public trading place causes prices to be set openly, instead of behind c losod doors. U.S. companies filling orders from the Soviets or grain are buying most of the grain through the futures markets, says David J. Keefe of Lam son Brothers and Co., a board member. Even the part liought directly for cash from private interests or in other countries is bought at prices influenced by the futures prices, he says. Since futures prices eventually affect retail prices, shopix-rmay tend to blame the futures markets for high food prices. But they should not, says Dr. Thomas professor of agricultural Hieronymus, economics at the University of Illinois. The futures markets merely register" forces affecting prices, pinpointing the junction between supply and demand, he says. "A system where there were no futures markets would tend to make consumer prices higher, maintains Henry E. Larzei- - A3 m man s What all the shouting's about American grain. 1 1976 WASHINGTON Last fall, a mystery man calling himself "Moses" tipped us off that the giarlt space contractor, Rockwell International, had given gratuities to scores of government space officials. After months of digging, we can report at least this much: Smiling Rockwell executives have taken federal officials on hunting trips, to race tracks and to football games. On these occasions, Rockwell usually has provided plenty of food and liquor. Corporate hunting lodges at Wye Island, Md., and near Albany, Ga., were opened to space officials, depending on whether they prefer to shoot geese in Maryland or quail in Georgia. The corporate jet has also been made available to officials in need of transportation. To spare their government guests from embarrassment. Rockwell uses perforated expense vouchers. Above the perforation, the Rockwell executive writes down how much money he has spent mi entertainment. But the government officials w&o were entertained are discreetly listed below the I perforation. After the Rockwell auditors have approved Ike reimbursement, the lower sections of the vouchers are removed and supressed. Despite these precautions. we have learned the names of some of the otfieials who have partaken of Rockwell's hospi tality Rockwell once invited some distinguished chairguests, including Sen. Frank Moss, man of the Senate Space Committee, to its Georgia hunting retreat. Then the company brought in astronaut James Lovell to impress upon the guests the importance of the space program. On another occasion. Rockwell sent its private Sabre liner to Houston to fly astronaut Jack Uiustiju to a hunting lodge. The corporate files show Unit astronaut Stuart Roosa has also used the Rockwell ' Cattlemen want consumers to beef more about meat prices. butchers spend their Thus, he contends, high-paitime sweeping the floor. Back at the ranch cattlemen say that situation is not any better. "I havent made a dime in the past two years." signs Finney, who like most ranchers has reduced the size of his herd to 500 head this year. Reduced herds arc considered the major laetor in the higher beef prices that are exjiected for the remainder ol d 1970. The I.S. Department of Agriculture reports cattlemen will market 5.9 million head between now and June, a drop from the 0.3 million head marketed in the first three months of 1970. Cattle raising tends to go in cycles. When ranchers are making money, they increase their herds until supply exceeds demand; then prices drop and the cattlemen reduce their herds, generally too much, they concede, and prices are driven up again. This particular cycle is one of the worst we've had." explains Finney, because the energy crisis has forced fertilizer prices to double and has tripled teed costs. A break in the fertilizer market in recent weeks has been seen, however. : "We should be back into a break even jxisition this year, because supply is back in u propel- relation to demand again." he says. lso a culprit in the upw ard trend in beef prices, as the cattlemen see it, is a proliferation of local, state, and tedoral gov eminent restrictions which, they say. also tend to hold down productivity. let. An vh rrKru(J iti jii eunicr coiujiiu, NpuCv bflic iais Clarence Gay, Kendal Wetherington, Gerald UVUll remarkable in West Reaction to Brown favorable By Louis Harris Despite his late entry into the race and his uphill battle in next Tuesdays Maryland Democratic primary, California Gov. Edmund G. (Jerry) Brown has impressed voters in ways that are most unusual for politicians these days. Although no more than 53 percent of the public are familiar with him, the initial reaction to Brown is almost highly favorable. And m the West, where he is well known, it is nothing short of remarkable. The following elements in the Brown protile rate positively with the Ameiian public: By 59 5 percent, a majority of the cross section of 1,549 adults interviewed last month feels that he is right in saying that, with the world running out of physical resources, it is niore important to improve the quality of what we have than to try to get more quantity of In the West, an overnearly everything, whelming 73-- percent feel the same way. 9 ereent, a substantial plurality By 45-feels, that Brown "is a new type of politician who is unafraid to ask the public to makif. HARRIS built for the governor of California, he clearly has shown lie is nut an ordinary type of (Militieian who wants to live it up on the taxpayers money." In the West, this view is held by a percent majority. By percent, a plurality of the country feels that Jerry Brown "is the kind of new political leader this country needs to restore confidence in government." In the West, a 3 more substantial percent plurality agrees. Furthermore, various popular criticisms of the young governor are rejected by the public by rather wide margins; By percent, a majority of the American people does not believe that at 3$ years of age, Brown is too young to become In the West, a 98 19 percent 1'resident. feels similarly. majority A 93 5 percent majority disagrees with the view that "before turning to politics, Brown was in training to become a Catholic priest, and 1 dont l entirely comfortable having a Catholic for President." In the ,West, a massive 83-- nercent reiort 'tts also. 1 28-1- 7 SURVEY 45-2- sacrifices, rather than promising them hand outs from the federal government and that is good." In the West, a lopsided 99-- percent of the public agree. By percent, a plurality of the adult public likes Brown because "he is unafraid to say no to the pressures to spend more money that most politicians give in on and that is good." In the West, a icrcont majority agrees. 7 41-- 7 97-1- 0 percent, close to a majority believes that abolishing all of the state government's pianos and, limousines and by refusing to live in the new 25 room mansion By 4!) 9 55-1- 5 contractor at its Wye Island hunting lodge. ( hher space officials who have accepted favors from Rockwell include Charles King, 11. Dale Grubb. spac e I Alibrundo. Footnote: We called all the government u'ficiuls who received gratuities from Rockwell. Those tie reached denied any wrongful intent. A Rockwell sskesman said his company will no longer provide , gratuities to gov eminent officials. to 1979, United Feature Syndicate. Inc. Jeffrey Hamilton and 2 By percent, a plurality does not feel Brown is "wrong to take stands against many of the social programs that have been so long a part of the Democratic liberal philosophy." In the West, a percent majority disagrees with this criticism. By percent, a plurality is not concerned about the fact that Brown goes oft for "weekend retreats with Zen Buddhist groups." In the West, a much larger percent margin tee is similarly By percent, a plurality does not feel that Brown "seems too brash, emotional, unstable and immature to be President." In the West, this claim is rejected by a lopsided 4o-1- A1 55-1- 4 37-1- 94-1- . 35-1- 2 5o-1- 200 ; years lpzL QQO percent. from these results that the initial impression Brown has made on the country is a favorable one. To be sure, when Brown is pitted head against former Georgia Gov. Jimmy Carter for the Democratic nomination among 1,090 Democrats and independents nationwide, Carter w ins by percent. But in the West, where he is known to 79 percent of the public. Brown emerges on top bv a cle'ireut ivreent It is apparent 52-3- 3 ; The French island of Ma u K to ' Rhode Island Martinique reported 100,000 it pounds of ; that had received pon der and some firearms, and teas ; prepared to exchange them for American produce. 53-3- V A .v |
