As each delivery of wheat is graded and weighed, word is sent to the central wheat exchanges that so many bushels of such and such grades are at the elevator, and official samples are also sent on at the same time. The bulk of the sales however are made by grade and not by sample. The actual buying and selling takes place in the wheat exchanges, or wheat pits as they are called, at Chicago, New York, Minneapolis, Duluth, Kansas City, St Louis, and Winnipeg, each of which markets possesses its own special character. Chicago the greatest of the wheat markets of the world passes through its hands every year about 25 million bushels of wheat, chiefly from the western and south-western States. It owes its preeminence to the converging railway lines from those States, and to its proximity to Lake Michigan which puts it in touch with water carriage. New York has grown in importance as a wheat market since the opening of the Erie Canal. It is especially the market for export. Minneapolis is above all things a milling centre. No doubt it has become so partly on account of the immense water-power provided by the Falls of St Antony. It receives annually nearly 100 million bushels of wheat, its speciality being the various grades of hard spring wheat. Duluth is the most northern of the American wheat markets. It receives and stores over 50 million bushels annually. It owes its importance to its position on Lake Superior, which is available for water carriage. Kansas City deals with over 40 million bushels per annum, largely hard winter wheat, which it ships down the Missouri River. St Louis deals in soft winter wheats to the extent of about 20 million bushels per annum. Winnipeg is the market for Canadian wheats, to the extent of over 50 million bushels per annum. It has the advantage of two navigable rivers, the Red River and the Assiniboine, and it is also a great railway centre. Its importance is increasing as the centre of the wheat-growing area moves to the north and west, and it is rapidly taking the leading position in the wheat markets of the world.
It has been stated above that Chicago is the greatest wheat market, but it will no doubt have been noticed that this is not borne out by the figures which have been quoted. For instance, Minneapolis receives every year nearly four times as much wheat as Chicago. The reason of this apparent discrepancy is that the sales at Minneapolis are really bona fide sales of actual wheat for milling, whilst nine-tenths of the sales at Chicago are not sales of actual wheat, but of what are known as “futures.” On this assumption, whilst the actual wheat received at Chicago is 25 million bushels, the sales amount to 250 million bushels. Such dealing in futures takes place to a greater or less extent at all the great wheat markets, but more at Chicago than elsewhere.
The primary reason for dealing in futures is that the merchant who buys a large quantity of wheat, which he intends to sell again at some future time, may be able to insure himself against loss by a fall in price whilst he is holding the wheat he has bought. This he does by selling to a speculative buyer an equal quantity of wheat to be delivered at some future time. If whilst he is holding his wheat prices decline, he will then be able to recoup his loss on the wheat by buying on the market at the reduced price now current to meet his contract with the speculative buyer, and the profit he makes on this transaction will more or less cover his loss on the actual deal in wheat which he has in progress. As a matter of fact he does not actually deliver the wheat sold to the speculative buyer. The transaction is usually completed by the speculator paying to the merchant the difference in value between the price at which the wheat was sold and the price to which it has fallen in the interval. This payment is insured by the speculative buyer depositing a margin of so many cents per bushel at the time when the transaction was made. Speculation is, however, kept within reasonable bounds by the fact that a seller may always be called upon to deliver wheat instead of paying differences.
The advantage claimed for this system of insurance is that whilst it is not more costly to the dealers in actual wheat than any other equally efficient method, it supports a number of speculative buyers and sellers, whose business it is to keep themselves in touch with every phase of the world’s wheat supply. The presence of such a body of men whose wits are trained by experience of market movements, and who are ready at any moment to back their judgment by buying and selling large quantities of wheat for future delivery, is considered to exert a steadying effect on the price of wheat, and to lessen the extent of fluctuations in the price.
CHAPTER III
THE QUALITY OF WHEAT
In discussing the quality of wheat it is necessary to adopt two distinct points of view, that of the farmer and that of the miller. A good wheat from the farmer’s point, of view is one that will year by year give him a good monetary return per acre. Now the monetary return obviously depends on two factors, the yield per acre and the value per quarter, coomb, or bushel, as the case may be. These two factors are quite independent and must be discussed separately.
We will first confine our attention to the yield per acre. This has already been shown to depend on the presence in the soil of plenty of the various elements required by plants, in the case of wheat nitrogen being especially important. The need of suitable soil and proper cultivation has also been emphasised. These conditions are to a great extent under the control of the farmer, whose fault it is if they are not efficiently arranged. But there are other factors affecting the yield of wheat which cannot be controlled, such for instance as sunshine and rainfall. The variations in these conditions from year to year are little understood, but they are now the subject of accurate study, and already Dr W. N. Shaw, the chief of the Meteorological Office has suggested a periodicity in the yield of wheat, connected with certain climatic conditions, notably the autumnal rainfall.
We have left to the last one of the most important factors which determine the yield of wheat, namely, the choice of the particular variety which is sown. This is undoubtedly one of the most important points in wheat-growing which the farmer has to decide for himself. The British farmer has no equal as a producer of high class stock. He supplies pedigree animals of all kinds to the farmers of all other lands, and he has attained this preeminence by careful attention to the great, indeed the surpassing, importance of purity of breed. It is only in recent years that the idea has dawned on the agricultural community that breed is just as important in plants as in animals. It is extraordinary that such an obvious fact should have been ignored for so long. That it now occupies so prominently the attention of the farmers is due to the work of the agricultural colleges and experiment stations in Sweden, America, and many other countries, and last but by no means least in Great Britain. This demonstration of the value of plant breeding is perhaps the greatest achievement in the domain of agricultural science since the publication of Lawes and Gilbert’s classical papers on the manurial requirements of crops.
Wheat is not only one of the most adaptable of plants. It is also one of the most plastic and prone to variation. During the many centuries over which its cultivation has extended it has yielded hundreds of different varieties, whose origin, however, except in a few doubtful cases is unknown. Comparatively few of these varieties are in common use in this country, and even of these it was impossible until recently to say which was the best. It was even almost impossible to obtain a pure stock of many of the standard varieties. This is by no means the simple matter it appears to be. It is of course quite easy to pick out a single ear, to rub out the grain from it, to sow the grain on a small plot by itself and to raise a pound or so of perfectly pure seed. This can again be sown by itself, and the produce, thrashed by hand, will give perhaps a bushel of seed which will be quite pure. From this seed it will be possible to sow something like an acre; and now the trouble begins. Any kind of hand thrashing is extremely tedious for the produce of acre plots, and thrashing by machinery becomes imperative. Now a thrashing machine is an extremely complicated piece of apparatus, which it is practically impossible thoroughly to clean. When once seed has been through such a machine it is impossible to guarantee its purity. Contamination in the thrashing machine is usually the cause of the impurity of the stocks of wheat and other cereals throughout the country. The only remedy is for the farmer to renew his stock from time to time from one or other of the seedsmen or institutions who make it their business to keep on hand pure stocks obtained by the method above described.
