MARKETING GRAIN AT COUNTRY POINTS. 17 



railroad the shipper must ascertain whether such routing or de- 

 livery is possible under the rate quoted. 



PREMIUMS AND DISCOUNTS. 



The establishing and issuing of price quotations from marketing 

 centers is a broad subject, embracing some featured that often lead 

 to misunderstanding between the producer and the country-elevator 

 manager and between the manager — especially one with little ex- 

 perience — and terminal market dealers. Price quotations, particu- 

 larly as they appear in many newspapers, are often misleading and 

 confusing. Some farmers note the top price and expect the local 

 elevator to bid for their grain upon that basis. Frequently the top 

 prices paid in large markets are only for a few cars of extra choice 

 quality of grain, or, as sometimes happens, they represent a pre- 

 mium for a certain kind of grain of which the supply is limited 

 and for which the demand is unusually keen. Thus on July 17, 

 1915, during the early movement of new wheat, local elevators 

 in a certain country town were offering the farmers $1.10 per 

 bushel for wheat. Track buyers, representing a large terminal 

 market within shipping distance, were offering the local elevators 

 $1.14 per bushel. The newspapers, however, appeared with large 

 headlines proclaiming the fact that wheat was selling in this terminal 

 market for $1.30. Freight rates from the country station to this 

 terminal market were 4.2 cents per bushel. The farmer patrons of 

 the country station concluded that the local elevators were buying 

 their wheat at $1.10 and reselling it in the central market at a price of 

 $1.30 per bushel, less freight. When the situation was analyzed it 

 was found that the price of $1.30 was paid for a single car and 

 that it was an unusual sale, the premium being due to the fact that 

 several millers desired wheat of that particular variety. Owing to 

 the light movement at this time, however, only one car was available, 

 so competitive bidding forced the price to the abnormal level. If at 

 that particular time there had been ten or fifteen cars of the same 

 quality of wheat on the market, undoubtedly the price would have 

 been lower. The country buyers were unable to base their price on 

 premium quotations, because, in all probability, by the time their 

 grain was marketed receipts would have increased materially and 

 the price would have dropped to the normal level for cash grain. 

 The $1.14 track bids offered to country dealers had taken this fact 

 into consideration, as the bids were made for delivery within two 

 weeks. Commission merchants in the central market published the 

 high premium sale for the purpose of creating a favorable impression 

 of that market among inexperienced country dealers and thereby 

 securing larger consignments. 

 93179°— Bull. 558—17 3 



