COTTON PRICES AND MARKETS 
57 
best only partially active, there is usually little support for the 
weight of contract supply. Such a thing is, therefore, hazardous 
and is ordinarily not done. In either case, the price of Octobers is 
the governing factor, if there is prospect of a normal carryover of 
deliverable cotton. Thus, if Octobers were at a discount in May 
and are declining in July, unplaced spots in July must decline faster 
than futures, so that at the close of July spots will be little, if any, 
above October futures, and under certain conditions must be low 
enough to be hedged in October. If Octobers start higher than May 
spots and continue to rise through July, spots will follow at least to 
about the hedge transfer basis. 
After the last notice day in July, the remaining part of the old 
crop is transferred to the new crop year as carryover and with the 
new crop makes up the supply for the new year. Marketing inter- 
COTTON AT NEW ORLEANS 
OCTOBER FUTURES COMPARED WITH SPOTS, JULY 31 
1912-1924 
1912 1913 1914 !9I5 1916 
1919 1920 192! 1922 1923 1924 1925 
Pig. 11. — Prices of spots and October futures were usually closer together on July 31 than 
on May 31. The prices used are the official daily spot quotations and closing quotations 
for October contracts of the New Orleans Cotton Exchange 
ests turn decidedly to the two months, October and December. Up 
to this time contracts for fall delivery have been bought and sold 
largely by speculative buyers and speculative sellers. 
In July and August a third group, the spinners, ordinarily become 
interested in the new crop from the standpoint of purchase. It is 
the time they begin to make contracts to supply spring goods. The 
market for the new crop is thus definitely broadened, especially 
under normal conditions of deniand and supply. 
Spinners may hedge their commitments on the new crop prior to 
its harvest, in two ways. They may go into the market and buy 
future contracts to cover sales. They may buy specific grades from 
merchants for forward delivery on their call and proceed immedi- 
ately to fix the price. The price is the " on " or " off " for the class 
of cotton and the parity plus the price of the hedge contract the 
merchant buys. 
