COTTON PBICES AND MARKETS 
73 
there are usually premiums for the distant months. In October, 1911, 
for example, cotton for future delivery in New Orleans was quoted 
as follows: December, 9.38; January, 9.39; March, 9.50; May, 9.64; 
and July, 9.T1. There is no economic reason why spot cotton of 
deliverable grade and quality should be lower than futures to the 
extent of more than the cost of carrying the cotton to the delivery 
month, cost of delivering it, and in addition, the possible losses which 
might occur because of changes in the grade differences. 
MOVEMENT OF SPOT PRICES AND NEW YORK FUTURES PRICES 
CENTS Monthly, Au£., 1920 -July, 1924 
PER 
POUND 
34 
32 
30 
28 
26 
Ik 
22 
20 
18 
16 
\k 
12 
10 
New York Futures • -*^*^W^ 
1 Spots 
\y 
yvV 
Wl / 
> 
»\/ 
if 
/ V^g;- 1 ^.**/ 
IN^v^ 
L^L-l_J_O^U^— CO-W-U 
--- L ~U-J~^I_-L^UJ_J~UJ~J_. 
—W— J^J~UA_UJUJ_J^J_ 
_^_j^iil_ 
A.S. O. N. D.J. F. 
!920 
A. M. j. J. A. S. O. N. D. J. F. M. A. M. J. J. A. S. O. N. D. J. F. M. A. M. J. J. A. S. O. N. D. J. F. M. A. M. J. J. 
1921 1922 1923 1924 
Fig. 16. — The relation between the prices of spot cotton and future contracts is constantly 
changing, as illustrated by the movement of average monthly prices of Middling in 10 
designated spot markets from August, 1920, to July, 1924, and the corresponding 
prices of New York futures for the nearest active month 
THE SQUEEZE 
Occasionally futures or spots are forced out of line to an ab- 
normal degree in the current month, as a result of what is known 
as a squeeze. In any current month there are speculators who have 
sold short and others who have bought long. In addition, there 
may be cotton merchants who are long on spots and short of con- 
tracts as hedges. There may be some spinners who have bought 
long to cover sales of goods, but ordinarily very few permit them- 
selves to get into such a position, because they can not afford to take 
delivery against contracts to fill their mill requirements. What 
happens, therefore, depends largely upon who the traders are and 
what technical position they occupy. The longs may ask for de- 
livery on their contracts, and probably will if there is little cotton 
available and there is a broad outlet for spots. Such a demand may 
force the shorts to settle at substantial premiums. The shippers of 
unsold cotton in the South may be caught in the squeeze and forced 
to pay a heavy penalty in taking their hedges out of the current 
month and placing them in a distant one. 
Corners are similar to squeezes except that they are conducted on 
a larger scale and are more intense. That is, a corner is a squeeze 
in every position ; or conversely, a squeeze is a corner in one month. 
