‘Call Session’ Has New Meaning for Grain Exchange : Yesteryear’s Colorful Ritual Supplanted by Phone Quotes
At 11:30 most weekday mornings, Cathy Crawshaw steps into a glassed alcove above a feed and supply emporium in La Habra to carry on a seemingly spectral conversation with voices emanating from a bank of speaker phones. The voices actually belong to members of the Los Angeles Grain Exchange--33 retailers who call in to share pricing data on nine grains plus several crop byproducts that they regularly buy and sell to serve Southern California.
The ritual’s roots reach back to the creation of the Los Angeles Grain Exchange 75 years ago this month, a time agriculture formed the backbone of the burgeoning Southland economy.
Crawshaw’s hookup today only remotely resembles the animated auctions of old, when nearly 100 dealers crowded the exchange’s spacious trading room to call out offering prices and buying bids for shipments of grain worth millions of dollars a year. Nonetheless, it still provides a means of setting Southern California grain prices, alerts farmers to the going prices for their crops and feed stocks, and reflects on a regional basis changes in national supply and demand, as currently with the Midwest drought.
Still, the telephone quotations are a pale reflection of the colorful daily sessions, even into the early 1960s, when the exchange was billed as the nation’s biggest cash auction.
“The trading today is very minimal compared to years past,” acknowledged Steven R. Lindersmith, a director and former president of the exchange, whose family has been in the Southern California grain business for three generations. “It’s mostly a function of establishing a market and prices for Southern California.
“The exchange brings buyers and sellers together,” he explained. “The prices established are unique to the Southern California area and are based on delivery to Southern California.”
Recognition of the same need led 14 grain and milling men to take out incorporation papers for the Los Angeles Grain Exchange on July 9, 1913. Membership peaked at 70 companies in 1950, representing all branches of the business, from large national and international milling and trading firms to local dealers and associations of grain and flax growers; associate members represented firms closely allied to the industry, including banks, railroads, bag makers and brokerages.
Livelier Days
Twenty days after incorporation, the exchange attracted 25 dealers to its inaugural trading session. The site was the ground-floor rooms of the old Los Angeles Stock Exchange in the I. W. Hellman Building at 124 West 4th St., at Main Street, in downtown Los Angeles. Dealers spread samples of their grains on a long table so that prospective bidders could inspect the quality of the merchandise to be auctioned. Seconds after the session opened, 50 tons of Oregon wheat were sold by Howard Brokerage to Excelsior Mills.
A week later, on Aug. 6, the exchange released the first price quotations to the press. These continue to run each trading day in The Times financial tables under the heading “L.A. Grain.”
“The call session was lively in the older days with all the members present,” recalled Lindersmith, who besides his exchange responsibilities is president of J. W. Flammer Co. of Anaheim. “Attendance was important because grain was traded on a visual basis.”
After the federal government began grading commodities, the need for dealers to view auction merchandise disappeared; by the mid-60s an elaborate conference call eliminated the need for a large meeting room to contain the auction or for a location with immediate road-and-rail access. Consequently, the exchange has moved over the years with increasing frequency, from downtown Los Angeles ever eastward--first to East Los Angeles and then to progressively smaller quarters in El Monte, and now to its new site above Kruse Feed & Supply, a member firm at 2300 E. Lambert Road, on La Habra’s eastern edge.
Lindersmith said he expects the region’s demand for grains and byproducts used in animal feed to continue a long-term decline, reflecting the waning importance of Southland agriculture over the post-war decades of rapid urbanization. But, he added, he also expects the exchange to be around to celebrate its centenary on July 9, 2013.
Nine Commodities Traded
“The exchange will be here in another 25 years,” he predicted, “but its function will continue to change. It will become more information-oriented rather than price-oriented.” It will also continue to provide a forum for members to swap crop conditions and to offer an inexpensive arbitration process for settling the occasional contract dispute, he said.
Today’s exchange trades in nine commodities: sorghum, corn, barley, wheat, whole cottonseed, cottonseed meal, cottonseed hulls, soybean meal and yellow corn hominy. It also tracks prices for a varying slate of such crop byproducts as almond hulls and beet and citrus pulp used in animal food.
Bids and offers come from members not only in Southern California, home of 70% of the present members, but also from Northern California, Texas and Kansas, said Crawshaw, who is only the exchange’s sixth secretary-manager since 1913 and its sole salaried employee. All participants now are dealers, she said, and they generally report the latest actual prices that they have paid or offered to pay. Some dealers use the results to set their prices for the week.
Unlike the big commodities exchanges in Chicago, which deal in grain futures (buying and selling contracts for grain at a guaranteed price deliverable at a specified future date), Los Angeles deals in cash prices actually paid--or willing to be paid--for a given grade of grain by the participating dealers.
“You don’t have the speculation here,” Crawshaw said. “The bids and offers are based on cash prices for ‘immediate’ delivery, which means within 10 days. The people who call in are people who deal in the commodity on a daily basis.”
THE TOLL ON L.A. GRAIN
Midwest drought reflected in sample L.A. grain prices per 100 pounds.
May 13 June 22 July 1 Barley (via WP/UP) $5.15/5.20 NA NA Corn (via SP) 4.96/5.04 7.20/7.30 7.23/7.33 Sorghum (via SP) 4.84/4.89 7.35/7.45 7.14/7.18 Oats (truck) 7.42/7.55 NA NA Feed Wheat (L.A. spot) 5.75 6.25/6.50 7.00
Source: Los Angeles Grain Exchange
