COTTON PRICES AND MARKETS 45 
sentatives. It remains to be shown how the local buyers convert 
the limits into the prices they pay the farmers. 
The limits given local buyers are given in different terms in dif- 
ferent markets. If it is an important local market and the local 
representative knows the classification of cotton fairly well (1) he 
is given limits in terms of " ons " (premiums) for grades above Mid- 
dling and "offs" (discounts) for those below Middling: (2) he is 
given the parity between spots and futures (see p. 58) ; (3) in the 
markets where considerable staple cotton is sold, he is also given 
limits " on " for extra staple lengths. 
For example, the differences for grade may be quoted at 50 i; on " 
for Good Middling, 25 u on" for Strict Middling, 50 "off" for 
Strict Low Middling, and 100 " off " for Low Middling. 
The second part of the limit may be quoted at, let us say, 100 
"off," basis Middling. If the merchant is paying the local buyer 
premiums for staple length, he will quote a limit of, let us say, 25 
points on for 1 T V to iy 8 inch staple, 50 on for iy 8 to l T 3 e, and 75 on 
for 1 T \ to I14. 
The basic price from which the " ons " and " offs " are calculated 
is the price of contracts for future delivery in a designated futures 
market. The particular month varies, though usually it is the price 
of the near active month. The futures price is continually changing. 
The buyer is never advised of all these changes. The buyers in some 
of the more important local markets obtain from the telegraph 
companies what is known as the C. 1ST. D. service (Commercial Xews 
Department reports of telegraph companies), which quotes the fu- 
tures market at intervals of 15 minutes. In most cases the cotton 
merchant either telephones or wires his local representatives when 
the price changes are significant. The premiums and discounts for 
quality are changed less frequently. 
If the limits are quoted f. o. b. cars at the local market, the buyer 
will arrive at the possible price he can pay as follows : Suppose that 
Xew York futures are quoted at 31.25 cents. The buyer goes out on 
the street to bid on a bale of Strict Middling full 1% inch staple. 
Cents Cents 
Price of futures 31.25 
Possible premium for Strict Middling grade . 25 
Possible premium for 1%-inch staple . 50 
Total value in central market 32.00 
Deduction on parity basis 1.00 
Deduction for tagging, drayage, etc . 25 
Deduction as buyer's margin . 25 
Total deductions 1. 50 
Price buyer can pay farmer 30. 50 
In many of the smaller local markets in the short-cotton territory, 
the local buyer is given a stated price as a limit. He is quoted 
a price, say of 30.50 cents. He may pay a little more than this for 
extra good bales and as much under that for the general run as 
competition will permit. It is in this type of market, where cotton 
is bought on the average, that the farmer has the least incentive for 
improving quality. The price is rarely quoted as standard, and 
