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Drought Quickens Pace At Bustling Board of Trade

June 24, 1988

CHICAGO (AP) _ High atop the Chicago Board of Trade building a statue of Ceres, the Roman goddess of grain, stared unflinchingly into the searing, cloudless sky. If anybody was praying to her for rain, she hadn’t heard them.

Besides, the whispered plea of an Iowa corn farmer wouldn’t stand a chance against the din arising from the floor of the world’s oldest and largest grain exchange, where bushels of grain are traded in millions and blessings are counted in dollars.

The Board of Trade’s grain floor, abandoned by many traders when prices and trading activity slumped in the mid-1980s, is filled these days with people looking to profit from the Midwestern drought.

As the drought withers crops across the Farm Belt, it ignites big rallies on commodity exchanges, where contracts for future delivery of grain grow more precious by the day.

″This is the only place I could think of where I can make a lot of money in a fairly short period of time,″ said Brad Whitacre, 21, an entry-level employee of a large investment firm who dreams of owning his own seat on the exchange.

Whitacre’s job is to stand just outside the apparent chaos of the jam- packed corn futures pit and report to his boss on the moves of the market’s major players. He has put his college education on hold for this opportunity, which was created by the dramatic rise in trading activity accompanying the drought-driven jump in prices.

″If you start out working at a corporation it takes years to work your way up to the top,″ Whitacre said. ″But you come down here, after a couple of years you buy a seat, and you can be making a lot of money.″

How much? ″Your imagination’s the only limit.″

Whitacre isn’t the only one lured to the Board of Trade by one of the greatest grain rallies in the exchange’s 140-year history. The population of the grain trading floor has swelled more than 40 percent to nearly 2,000 in just the past two months, according to exchange figures.

About half of those people are traders. Their job is to face each other on the steps of circular pits and use a combination of hand signals and shouted bids to strike deals for future deliveries of grain and soybeans in 5,000- bushel lots.

Big trading companies such as Refco Inc. and C&D Commodities frequently trade thousands of contracts, totaling millions of bushels, during a session.

Perhaps a third of the traders are independents, called ″locals″ or ″scalpers,″ who trade for their own accounts and drift from pit to pit in search of action. When grain trading slowed after the volatile, dry-weather period of late 1983 and early 1984, many locals moved to the exchange’s financial-futures room to bet on the performance of stocks and bonds.

Because of its boisterous nature, trading in the pits is usually perceived as a young person’s game. But among the recent returnees to the grain room are a good number of silver-haired veterans, some of whom claim their experience gives them an edge over the mob of speculators.

″I can tell what’s going on standing here with a blindfold on,″ said 74- year-old Paul McGuire, a former Board of Trade chairman, as he surveyed the scene from the sidelines while waiting for the right moment to strike.

″I can tell whether the markets are going up or down by the sound.″

Although this is the fifth significant dry-weather boom the grain markets have seen since the record-setting rally of 1973, the timing and severity of this drought makes it unique, traders said.

″Nobody here has ever really traded (on) the fear of a real potential disaster,″ said one trader who asked not to be identified. ″That’s what makes this market different from any other time in history.″

Independent traders resent the perception that they seek to profit from the nation’s misfortune, a view that inspired a recent Chicago Tribune editorial cartoon depicting commodity traders as vultures descending on a drought- striken farmer.

″When the traders start to make a little money, some people begrudge it to us but they don’t realize we’ve had a severely depressed business here the last four years,″ said Bernard Dorman, an independent grain trader who also runs a small trading company.

″We feel very badly that the farmers are hurt but we can’t do anything about that,″ Dorman said. ″We just follow the market, we don’t make the market.″

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