Foreign Trade: Big Deal

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Having survived a wintry blast from Congress that nearly killed it, the great wheat deal between the U.S. and Russia finally yielded its first cash crop last week. In the biggest one-shot commercial grain transaction ever made by a U.S. firm, Manhattan's Continental Grain Co. agreed to deliver a whopping 1,000,000 metric tons of wheat to Black Sea and Siberian ports by early spring for $78.5 million, including shipping costs. Presumably, to compensate Continental for the difference between the heavily subsidized U.S. price for the wheat ($90 million) and the lower world market price that the Russians paid ($65 million, plus shipping charges), Washington will give the U.S. firm subsidy certificates worth $25 million in Government-stored wheat.

An Agriculture Department spokesman said the U.S. would save $5,000,000 a year in storage costs by the 1,000,000-ton reduction in its wheat stocks. The Russians, he added, were paying cash, but he did not elaborate. The whole wheat deal, originally approved by President Kennedy in October, nearly collapsed when congressional critics tried to prohibit the extension of credit to the Russians and demanded cash instead. Whether half of the wheat would move in U.S. vessels, a condition that Kennedy laid down to make the deal politically more palatable but that the Russians resisted because of higher U.S. shipping costs, was not known. That would depend, said Continental President Michel Fribourg, on whether "ships can be made available."

In the wake of Continental's big deal, U.S. grain companies are now looking for a bumper harvest of Soviet orders. All told, the Russians are expected to buy 4,000,000 tons of wheat—150 million bushels—for some $300 million.