Wheat is of two kinds, winter and spring. Winter wheat is sown in the Southern belt during September and October, and harvesting is begun in Texas as early as the latter part of May. Spring wheat is sown in April and the harvesting begins in the Da kotas about August.
Market quotations are usually made in May, July, September and December wheat, because these are the months in which most of this grain is actually de livered. Cash purchases are made with equal fa cility on every day of the year, but for trading in fu tures the four-month delivery system is more con venient.
At the beginning of the year, active business in fu tures is carried on in connection with the May and July delivery. About April some traders begin ne gotiations for September wheat; and about June 1st, December wheat figures on the market. After May has passed, only July, September and December de liveries are in favor, and in June deliveries for the following May again receive attention. In August —the September, December and May futures are be ing dealt in.
For whatever month a person buys wheat, the first day of that month is the day on which he must be ready to accept delivery of his purchase, altho it may not be offered until the last day of the month. The seller has the option of delivering the wheat at any time during the month, and altho future trades are often called "options," the only accurate use of the term is that which has just been explained. If a buyer does not wish actually to receive the wheat in the form of a warehouse receipt, he sells in the pit an amount equivalent to what he has purchased—a trans action which may also be made long. before the de livery month.
6. Terms of sale.—In every trade the seller has the privilege of making delivery on any day of the de livery month. Should the trader wish to stay in the market after the date set for the delivery of his com mitment, because he believes that prices will rise and will yield him a larger profit later, he can accomplish his object by buying or selling an amount equal to his previous trade, but for a future month. It is as a rule cheaper for a trader to sell a current delivery and repurchase a future, than to hold grain during the interim and pay the charges which accrue; that is, if he holds 10,000 bushels of May wheat about May 30th, and desires to stay in the market for six months or more, it will be more profitable for him to sell his May holdings and buy December instead. Broker
age commissions and price difference will be perhaps 6 cents a bushel, whereas storage charges and insur ance would be 10 cents. Of course, these figures are subject to constant change; on rare occasions they may even be reversed.
If a trader wishes to withdraw at any time, he merely sells the contract, which "passes on" to the next buyer. A contract may change hands hundreds and even thousands of times before the final settle ment is made.
It is this constant buying and selling that makes the "continuous" market which is such a remarkable and in many respects valuable feature of grain ex changes. The total volume of future trading is so enormous compared with the actual amount of the commodity marketed, that the actual figures are al most incredible to those who have not been able to grasp the workings and functions of a speculative market. Whether the total volume of future trading is ten or one hundred times the actual amount of grain, makes very little difference, except that it may be said in general that the larger the volume of future trading in any one market, the more frequent the bids and offers of traders, and the more delicate the adjust ment of price to every news item or rumor affecting supply and demand.
The facts in regard to wheat have already been dis cussed. The active months in some of the other grains and provisions are: Corn.—May, July, September and December. Oats.—May, July, September and December. Pork.—January, May, July and September. Lard.—January, May, July and September. Short Ribs.—January, May, July and September. 7. Legal status of futures.—All contracts for fu ture delivery are binding. The statement of the Bur eau of Corporations in regard to the subject is this : The seller of such a contract is absolutely liable for de livery, and if called upon for such a delivery by the buyer he can in no way avoid compliance with the terms of his con tract, except under unusual conditions especially provided for. . . . When the time for making delivery has expired, he cannot sell out his contract. This fact, and the fact that any buyer from the first to the last, can, if he chooses, hold his contract and compel the seller to deliver actual cotton (grain, etc., as the case may be) when the date of a maturity arrives, give trading in futures a character entirely different, in principle at least, from that of a mere wager or bet.