576 THE SMALL GRAINS 



many months in advance, based upon the price of wheat 

 at the time of sale, at perhaps only a slight profit. He is 

 enabled still to maintain this profit, in spite of an advance 

 in the price of wheat, by hedging against the flour sale 

 with a purchase for future delivery of an equivalent 

 amount of wheat. If wheat advances 5 cents a bushel, 

 without a hedge, he loses, in his flour sale, that amount 

 for every bushel of wheat required to produce the flour. 

 However, the wheat he buys as a hedge must be delivered 

 to him at 5 cents a bushel less than the future cash price, 

 which cancels the 5 cents a bushel advance in price, and 

 leaves him his profit in the flour sale undisturbed. The 

 miller is thus able to do business on a low margin of profit 

 between the cost of wheat and price of flour. 



637. Bulls and bears. When A sells 5000 bushels of 

 wheat to B, the former is said to be " short " in wheat, 

 while B is " long " in wheat. When there is a sharp 

 advance in prices, the statement is sometimes made in 

 commercial reports that " the shorts ran to cover," mean- 

 ing that those who were short by selling, hastened to 

 deliver before further advances in price could occur, as 

 in every advance they are losing. Those who continue 

 to buy and see high prices ahead, tend to rush the market, 

 and are known as " bulls " ; while those who prefer to 

 sell, and therefore drag the market, are called " bears." 



638. Corners in grain are effected when one man or a 

 few men secure practically all the grain of a certain kind 

 that is apparently available, and then attempt to dictate 

 prices. In recent years efforts have been made so to 

 regulate exchange operations as to prevent the possi- 

 bility of corners. The natural condition of enormous 

 production is likely in itself sooner or later to eliminate 

 such occurrences. 



