WHAT MAKES THE PRICE OF OATS 23 
Three significant relationships between cash and future prices have 
been brought out : 
(1) May prices of September futures are strongly influenced by 
prevailing May cash prices. 
(2) May cash prices of oats conform to supply of oats as measured 
by the production plus carry over of the previous fall. 
(3) September cash prices conform to supply as measured by the 
size of the new crop and carry over. 
By virtue of these facts, cash prices in May following a large crop 
and carry over of the previous fall will tend to be relatively low, and 
consequently the May prices of September futures will be lower than 
the cash prices in September, unless the new crop also is unusually 
large. 
However, the fact that in years when the supply of oats is above 
normal, as indicated by, the straight-line trend of production plus 
carry over, May prices of September futures are below cash prices of 
the following September, does not necessarily mean that in these 
years it will always pay to hold oats from May to September. May 
prices are normally above September cash prices because of the 
expense of carrying oats from September to May. 
A COMPARATIVE STUDY OF WHEAT PRICES 
EXTENT OF WHEAT MARKET, AND ITS INFLUENCE ON CHICAGO PRICE 
The price of wheat, unlike that of oats, is determined in large 
measure in the world market by the world crop. This fact is brought 
out by a study of the extent of the market and by correlations showing 
the degree of relationship between the Chicago price of wheat and the 
production of wheat in the United States and in the world. 
Table 13 gives an idea of the extent of the market by showing the 
principal countries which import and export wheat, with average 
imports and exports of wheat and flour tor the period 1909-10 to 
1913-14. The United States during this period was the second most 
important exporting country, exceeded only by Russia in the volume 
of exports. The fact that the United States must seek a foreign 
market for a large part of its wheat crop, where its wheat comes into 
competition with wheat from other parts of the world, would suggest 
that the production in other countries should have considerable influ- 
ence upon the price of wheat in this country. 
Correlations given in Table 14 show that the influence of the crop 
of the United States upon the price of wheat at Chicago is measured 
by a coefficient of only — 0.32, whereas the influence of the crop of the 
entire world is measured by a coefficient of —0.71. The table shows 
also that the price of wheat is influenced to some extent by the pro- 
duction of rye. The Chicago price is very closely related to the price 
at Liverpool, as indicated by a coefficient of +0.93 when the prices at 
these two markets are correlated during the period 1890 to 1921. 
