56 
BULLETIN 1444, U. S. DEPARTMENT OF AGRICULTURE 
If prices are high in the winter and spring months, contracts for 
delivery in the following October will probably be at a discount. If 
prices are low and farmers discouraged, Octobers will probably sell 
for a premium over the old crop months. The amount of the 
premium is not usually more than the cost of carrying spot cotton 
from the old crop month, plus the cost of delivering it on October 
contracts. The amount of the discount has no such definite limits. 
On June 8, 1923, Octobers in New York had declined to 435 points 
below the average value of Middling spots in the 10 designated 
markets. This caused widespread curtailment of mill consumption, 
which in turn caused stagnation in the raw cotton market. Before 
COTTON PRICES AT NEW ORLEANS 
OCTOBER FUTURES COMPARED WITH SPOTS, MAY 31 
1912-1924 
CENTS 
PER 
POUND 
30 
20 
10 
) 
^ 4 
/ 
/ 
October 
// 
\ 
l\ 
\\ 
Spots 
i< 
futures 
\\ 
M 
tt 
/ 
1? 
/" 
""*^^ 
"\^ 
1912 1913 1914 1915 1916 19S7 1918 1919 1920 1921 i922 1923 1924 1925 
Fig. 10. — The price of cotton in the spring for delivery in October may be any amount 
below the value of spot cotton. A difference of as much as 10 or even 15 per cent is 
not uncommon, as in 1918, 1920, and 1924. The price of cotton in the spring for 
delivery on October may go above the price of spot cotton, as in 1921 ; but the differ- 
ence in price should be no greater than the cost of carrying spot cotton. The prices 
used are the official daily spot quotations and closing quotations for October contracts 
of the New Orleans Cotton Exchange 
the end of July the price of spots had been brought down to about 
even with Octobers at about 21 cents. 
As the season advances into July, various figures become available 
as to crop conditions and acreage planted. If reports are such as to 
cause Octobers to sag, near months and spots may tend likewise to 
sag if the carry over is normal. If Octobers are above spots and re- 
ports are bullish, near months and spots tend to rise. 
Figures 10 and 11 show the relationship between the price of spots 
and October futures on the last day of May and the last day of July 
of the years indicated. 
July is the last active month in the old crop year. It is, therefore, 
the last month in which the old crop can be safely hedged. Cotton 
hedged in July must be sold by then, delivered against contract, or 
the hedge switched to October. It is technically possible to switch 
the hedge to August or September, but since these months are at 
