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The price spread between July and September wheat is determined primarily by current domestic supplies of all wheat in the United States, conveniently measurable in terms of July 1 carryover. Early in the season the spread may show little relation to the statistical supply position, but by June the relation normally becomes very close. Given an accurate appraisal of the domestic supply position, the price spread in June may usually be predicted with great accuracy. Substantial disparity between the actual spread in June and that to be expected from the supply statistics has occurred in eight years since 1896. In each of these years there was a peculiar market situation-usually a corner or "squeeze" in the futures market. Existence of such a disparity gives. prima facie evidence of abnormal speculative market conditions. Changes in the spread tend to occur in response to influences specifically related to the spread, and not in response to general price influences. The spread-related influences necessarily affect the price of at least one of the two futures. Under certain circumstances they affect the price of July wheat and not the price of September; under other circumstances they affect September and not July; under still other circumstances they affect the price of both futures, but July more than September. The July-September price spread is subject to conspicuous and reliably predictable seasonal changes. Most of these are related to even stronger seasonal tendencies in price of the July future, which have hitherto been only imperfectly understood because their character is dependent in part on factors related to the July-September spread in a way not previously recognized.


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