COOPERATIVE MARKETING OF COTTON 43 
be fixed, the place of delivery, the rules governing delivery, and the 
_terms of payment if different from the usual terms of cash on the 
day of shipment.° 
In spinners’ markets in the United States, which are those markets 
located in close proximity to mill centers to supply mill needs, cotton 
is offered in even-running lots by dealers, merchants, and brokers 
and is bought by mill buyers or their representatives. In Europe 
the mills buy mainly through buying brokers who, in turn, purchase 
through selling brokers or agents of importing merchants. In mak- 
ing sales in spinners’ markets price bargaining is almost entirely 
confined to the “basis” or parity between spots and futures. In 
American markets prices are made in terms of New York and New 
Orleans futures. The bargaining points are the premium or dis- 
count or the points “on” or “off” the futures price for grades above 
and below middling, for staple lengths, and for delivery of even- 
running cotton at the mills’ warehouse. 
The cooperatives, subject to their general orderly marketing poli- 
cies, sell cotton wherever the best price is obtainable. In the past a 
large part of the sales have been to exporters, although they offer to 
sell to anyone. The volume of their direct-to-mill sales has not 
equaled the early expectations of many leaders in the movement, 
but it has exceeded the expectations of others who recognized the 
handicaps under which they compete for mill business. ‘The Staple 
Cotton Cooperative Association sells approximately 92.5 per cent of 
its cotton to the mill trade, a record made possible to a large extent 
by the different conditions in the staple-cotton trade, and the fact that 
this association, through its willingness to use the futures market, 
is In a position to handle mill business in accordance with established 
methods of mill buying. 
With the exception of the staple association, the cooperatives, as 
a rule, do not use the futures market in hedge transactions. They 
take the position that their business is confined to sales of spot cot- 
ton, and that their plan of pooling and distributing sales through- 
out the year operates as insurance against short-time fluctuations in 
the price and enables them to obtain a better average price than they 
could if they hedged. Many men in the cotton trade maintain that 
their nonuse of the futures market is contrary to modern merchan- 
dising methods and is a mistake. Undoubtedly the conservative use 
of the futures market has strengthened the position of the staple 
association with the trade and with bankers, and has not caused 
a revolt on the part of the members who, most association leaders 
believe, object to transactions in the futures market. Such an ob- 
jection in one association resulted in the abandonment of its early 
practice of making sales on call. 
Many mills make it.a practice to purchase their cotton on “ buyers’ 
call,” a method that gives the mill an advantage in bargaining for 
the sale of its product and does not require it to carry the hedge. 
Under this plan the mill purchases cotton for forward delivery at 
so many points “on” or “ off ” a futures month. When it decides to 
call it notifies the seller, who immediately fixes the price by a sale of 
future contracts, which at the same time cancels his prior purchase 
of future contracts. This method of sale is agreeable with the spot 
> Cox, A. B. Studies in Cotton Marketing. 
