C01T0X PRICES AND MARKETS 
59 
December. In the late winter the basis was the highest of the 
cotton year. The future price in 1923-24 would indicate that there 
was nofall dip caused by hedging. 
Figure 12 shows the fluctuations of the " basis " for the six-month 
period ended January 2, 1925. 
It is not only impossible to tell how much of the buying and sell- 
ing in the future market is due to speculation, but it is impossible to 
tell how the purchase and sale of spots are being handled. A mill 
may haye bought cotton from a merchant on " basis " and fixed the 
price immediately. On the other hand, these " basis " contracts may 
be permitted to ' accumulate in large yolume. When the price is 
called, the purchasing of hedges by merchants, which they sold as a 
protection, may clriye futures up materially. 
Price of Middling spot Cotton f.o.b. Dallas 
Territory and of New York futures 
Weekly, July 3, 1924 — Jan. 2, 1325 
CENTS PER 
POUND 
30 
29 
28 
27 
26 
25 
24 
23 
22 
21 
\ A 
v ^- Spots f.o.b. Dalle 
rs Territory 
- 
* 
- 
/ 
\ * 
\ » 
\» 
X. 
\ ^ Nev 
1 
/ YorK Futures 
1 
- 
' 
\\. 
Jk^ 
I 
_ 
_ 
OCT. FUTURE 
- 1 * lie 
m m 
DEC. FUTURE 
.1. 
-• J" 
„ 
J \j 1 '!' 
| F 
UTURES - ^ 
lL~w-.^ . ...t.... .. ....XJ....-.1. ..Lau..w..u.-iU^-«--..Jj - 1 '.-u l._,._.u„ a...u 
July 
8 15 22 29 5 12 19 26 3 
Aug. Sept. 
10 17 24 31 
Oct. 
' 14 21 28 5 12 19 26 2 9 16 23 30 
Nov. Dec. Jan. 
Fig. 12. — During the last half of 1024 the basis at Dallas fluctuated from 365 points on 
New York to 190 points off. Merchants in the Southwest had sold more new crop 
cotton for July and August shipment than was readily available because of the lateness 
of the crop. Spot cotton sold at a considerable premium over futures until the insist- 
ent demand had been satisfied. Prices used in the preparation of this graph are official 
quotations of Friday of each week. New York futures are those for delivery in nearest 
active month on that exchange 
STRADDLE PARITIES 
Prices in different futures markets may become such that a trader 
can buy in one and immediately sell in the other at a profit through 
the subsequent adjustment of the parities. The markets at such 
times are said to be out of line. Before the World War, the normal 
difference or parity between Liverpool and Xew York was about 100 
American points in favor of Liverpool. Liverpool is higher than 
Xew York because the flow of American cotton is from American 
markets to European markets. The difference is due to such items 
as freight, rates of exchange, insurance, and labor. If the price dif- 
ference between the markets widens or narrows appreciably without 
apparent changes in costs, a dealer on one of the exchanges will sell 
