249. Circular Telegram From the Department of State to Certain Posts1
1378. USDA officials met Thursday afternoon, January 28 with representatives Argentine, Australian and Canadian Embassies to review reasons for price changes in wheat which occurred earlier in week and to advise changes to be made in U.S. wheat prices later the same day.
USDA officials explained that weight of world wheat surpluses and aggressive competition for markets was one of the major points discussed at Ministerial meeting in December and that pressure to reduce [Page 657] prices was probably inevitable. Since that time aggressive competition has continued on the part of the other exporters and it was probably this competition that led to Canadian announcement early this week of substantially reduced price for No 5 wheat in order make sales to Red China.
U.S. responded to this new situation on Monday and Tuesday of this week with certain price adjustments which brought our prices more nearly into line with Canadians but still left us short of meeting continuing aggressive Southern Hemisphere price competition.
We then described additional changes in U.S. hard winters and soft wheat to bring U.S. prices more nearly in line with Southern Hemisphere quotations. Told Embassy representatives that so far as the U.S. is concerned, process of adjustment to current situation now completed provided that other exporting countries not cut their prices below current levels. Said U.S. prepared to hold prices at current levels with the hope that our competitive situation would improve. Stated U.S. willing to lead upward price movement when justified but stressed that for time being we should attempt encourage buyer confidence that lowest plateau prices reached and thus encourage purchases.
We also offered to reconsider our quotations if they could be shown to undercut foreign quotations for comparable qualities.
Understandably, Embassy representatives not in position to make any substantive comments about action and advised they would communicate contents general discussion and specific price actions taken to their home governments.
Canada, Friday morning, made substantial reductions all grades of Manitoba wheats. In response, U.S. increased Northern Spring subsidy 13 cents per bushel Friday afternoon. We anticipated Canadian and U.S. prices will stabilize at approximately the relationship resulting from Friday’s changes.
Cumulative net price reductions per bushel during week though 1/29 are as follows:
| Canada | at Vancouver | at Fort William-Churchill-Lakehead |
| #1 | -12 | -12 |
| #2 | -15 | -12 |
| #3 | -19 | -16 |
| #4 | -20 1/2 | -18 |
| #5 | -17 | -14 |
| #6 | -18 | -12 |
| Feed | -18 | -12 |
| U.S. Wheats | West Coast | Atlantic-Gulf-Lakes |
| Hard Red Winter | -20 | -20 |
| Western White | -8 | — |
| Soft Red Winter | — | -18 |
| U.S. Wheats | West Coast | Atlantic-Gulf-Lakes |
| Soft Eastern White | — | -18 |
| Hard Northern Spring | -19 | -19 |
Will advise any further significant developments.
- Source: Department of State, Central Files, INCO–WHEAT US. Unclassified. Drafted by Raymond A. Ioanes and W. N. Starkey (USDA) on January 29, cleared by Jerome Jacobson (E), and approved by Fred H. Sanderson (OR/FD). Sent to Bonn, Brussels, Buenos Aires, Canberra, Hamburg, London, Geneva for GATT, Manila, New Delhi, Ottawa, Paris, Rome, and Tokyo.↩