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^ production. It may t^e the market some little time to recover from 

 such a bearish report. 



Wheat. Wheat and rye prices strengthened considerably this 

 week in response to the President's anti-inflation message. The 

 stimulating factor was his suggestion that farm prices should be 

 sttibilized at 100 per cent of parity or some recent price, whichever 

 was higher. Wheat was 25 to 30 cents below p ^Tity, and rye was selling 

 at a discount of 60 cents below parity. Both had a long way to go 

 before the price ceilings would apply, providing benefit payments were 

 not counted as part of the price received by the farmer. 



Why would wheat or rye be worth more after the speech than 

 before? The answer is that potential buyers of wheat must have feared 



(thr.t price ceilings might be established at prices below parity, yet no 

 hint of such action had been forthcoming, and trade papers suggested all 

 along thp/: such action was unlikely. Have conditions of supply and 

 demand changed enough to Justify a substantial increase? As to total 

 production, the answer is no. However, a substantial fraction of the 

 wheat crop is expected to be placed in storage under government loan. 

 But that phase has not altered greatly either. Canada recently sold a 

 substantial quantity of wheat to Russia, but that would not materially 

 affect either Canada's or the United States' burdensome carryover. We 



^supply some wheat to our allies under lend-lease agreements but not 

 enough greatly to affect the price. The -only bullish feature of the 

 picture is that Inflation may hit us, and with other prices fixed there 

 would be a tendency to bid up prices of goods — the price of which had 

 not yet reached ceiling levels. Consumers could easily pay parity price 

 for wheat. All that would be necessary would be to keep the quantity 

 offered for sale slightly below the quantity needed for domestic 

 milling. The loan program has a tendency to keep wheat off the market 



