We may now examine the exchange "futures" in minuter detail. They are
quoted as a rule for about ten months ahead. Thus in January the futures
quoted will be January (technically termed "current," "present month" or
"near month," "futures"), January-February, February-March, March-April,
April-May, May-June, June-July, July-August, and perhaps two or three
more. Each group, it will be observed, except "current futures,"
culminates in two defined months. The rule is that on the first of the
two months the seller of "futures" may, and before the last day of the
second month must, deliver cotton against them, or, what comes to the
same thing, buy back the "futures" on the basis of the price of "spot"
cotton of middling grade. Various grades of cotton are tenderable
against "futures": if this were not so "futures" would be in danger of
defeating their object, because the price of the grade upon which they
were founded would probably at times be thrown widely out of relation to
the general level of prices in the cotton market. The lowest grade
tenderable used to be "low middling," but since October 1901 "good
ordinary" has also been accepted. Arbitrators report on deliveries and
award allowances on those of grades above "middling" and deductions of
price from those below. A sample is taken from each bale and the "points
on or off" are fixed for each bale separately. If either party is
dissatisfied with the award, he may appeal to an appeals committee on
paying L3:3:0: which is refunded to him by the other party if the appeal
be upheld. The detailed arrangements described above are those of the
Liverpool market. The great bulk of "futures," however, are bought back
and not delivered against.
Quotations.
Beneath are the official Liverpool quotations of "futures," as they
appeared on the morning of the 19th of April 1906:--
_American Deliveries, any port, basis of middling, good ordinary clause
(the fractions are given in 100ths of a penny)._
+------------+-----------+---------------------------+---------+
| |Yesterday's| To-day's Early Sales. | Values |
| | Close. | | 12.15. |
+------------+-----------+---------------------------+---------+
| April | 6.05 | | 6.03 |
| April-May | 6.05 | | 6.03 |
| May-June | 6.05 | 6.06, 5, 4, 3, 2, 1, 2, 3 | 6.03 |
| June-July | 6.05 | 6.05, 2,* 3 | 6.03 |
| July-August| 6.04 | 6.05, 4, 3, 2 | 6.03 |
| Aug.-Sept. | 5.98 | 5.99, 8, 6 | 5.97 |
| Sept.-Oct. | 5.34 | 5.85, 4 | 5.84 |
| Oct.-Nov. | 5.76 | 5.77, 6 | 5.76 |
| Nov.-Dec. | 5.75 | 5.75, 4* | 5.75 |
| Dec.-Jan. | 5.74 | 5.75* | 5.75 |
| Jan.-Feb. | 5.75 | 5.75* | 5.75 |
+============+===========+===========================+=========+
| | Late Business. | Closing |
| | | Values. |
+------------+---------------------------------------+---------+
| April | 6.03* | 5.98 |
| April-May | 6.03 | 5.98 |
| May-June | 6.03, 4, 3, 2, 1, 2, 0 | 5.99 |
| June-July | 6.04, 3, 2 | 5.99 |
| July-Aug. | 6.03, 4, 3, 2, 1, 0,* 1, 2,* 1, 0 | |
| | 5.99, 6.0,* 5.99, 6.0, 5.99, 8 | 5.98 |
| Aug.-Sept. | 5.98,* 6, 5, 4, 5 | 5.92 |
| Sept.-Oct. | 5.84, 2* | 5.78 |
| Oct.-Nov. | 5.76,* 5,* 4, 3, 4, 3,* 2, 1, 0 | 5.70 |
| Nov.-Dec. | 5.70* | 5.69 |
| Dec.-Jan. | 5.72, 1, 2* | 5.69 |
| Jan.-Feb. | | 5.69 |
+------------+---------------------------------------+---------+
* Transactions of 100 bales only.
_Egyptian Deliveries, fully good fair (in 64ths of a penny)._
+----------+-----------+--------------+--------------+--------+
| |Yesterday's| Business | To-day's |Closing |
| | Close. | before Noon. | Business |Values. |
| | | | Afternoon. | |
+----------+-----------+--------------+--------------+--------+
| April | 10-11 | .. | .. | 10-1 |
| May | 10-12 |9-62, 3, 10-0 | 10-2* | 10-1 |
| | |9-63, 2, 10-0 | | |
| June | 10-11 | .. | .. | 10-0 |
| July | 10-9 |9-60, 1, 0* |9-63,* 10-0,* | 9-62 |
| | | | 9-63, 2 | |
| Aug. | 10-0 | .. | .. | 9-54 |
| Sept. | 9-58 | .. | .. | 9-48 |
| Oct. | 9-24 | .. | .. | 9-18 |
| Nov. | 8-58 |8-52,* 0, 49 | .. | 8-52 |
| Dec. | 8-50 |8-39* | .. | 8-42 |
| Jan. | 8-44 |8-36 | .. | 8-35 |
+----------+-----------+--------------+--------------+--------+
* Transactions of 100 bales only.
Egyptian futures, it will be observed, run out in single months. As the
cost of dealing in "futures" is only one shilling on each transaction
for a member of the Cotton Exchange (the outsider is charged in addition
a commission by his broker), it is not surprising that the transactions
taking place in "futures" number legion.
The methods of dealing in cotton are very intricate, and it is necessary
here to interpolate an explanation of the relations between the prices
paid by spinners for cotton and the quoted "spot" prices. We begin by
giving the official quotations of "spot," and statement of business
done, published on the morning of the 19th of April 1906.
_Quotations._
G.O. L.M. Mid. G.M. F.G.M. M.F.
American 5.87 6.05 6.21 6.41 6.49 6.71
Mid Fair. Fair. Gd. Fair.
Pernam 5.95 6.35 6.61
Ceara 6.02 6.40 6.62
Paraiba 5.94 6.32 6.56
Maceio 5.96n 6.34n 6.56n
Fair. Gd. Fair. F.G.F. Good. Fine.
Egyptian br'n 8-7/8 9-7/8 10-1/4 11 11-5/8
" Upper -- 9-3/16 9-5/8 9-7/8n 10n
Gd. Fr. F.G.F. Gd. G.F. Fine. S'fine.
M. G. Broach. .. .. 5-7/16 5-19/32 5-3/4 ..
Bhownuggar 4-9/16n 4-11/16n 4-13/16n 4-15/16n 5-1/16n ..
No. 1 Comra 4-9/16n 4-11/16n 4-13/16n 4-15/16n 5-1/16n ..
Bengal 3-25/32 3-29/32 4-1/32 4-5/32 4-5/16 4-1/4
Tinnevelly 5-1/4 5-7/16 5-9/16 .. .. ..
_Cotton Ships arrived._
Boston: Canadian S. Hamburg: Iceland S.
+-----------------+-------+--------+-------+--------+-------+--------+
| | Sales. | Speculation | Imports includ-|
| | | and Export. | ing Hull, &c. |
| +-------+--------+-------+--------+-------+--------+
| | |Previous| |Previous| | Week's |
| |To-day.| this |To-day.| this |To-day.| Total. |
| | | Week. | | Week. | | |
+-----------------+-------+--------+-------+--------+-------+--------+
|American | 6330 | 18,050 | 500 | 1500 |17,665 | 53,684 |
|Pernam, &c. | 150 | 200 | .. | .. | .. | .. |
|Paraiba, &c. | 460 | 130 | .. | .. | .. | 2 |
|Ceara and Arac'ty| .. | 30 | .. | .. | .. | .. |
|Egyptian | 500 | 1200 | .. | .. | 321 | 7,983 |
|Peruvian | 460 | 350 | .. | .. | 32 | 32 |
|W. I. and African| 50 | 20 | .. | .. | .. | .. |
|Surat | .. | .. | .. | .. | 3,664 | 3,829 |
|Madras | 50 | 20 | .. | .. | .. | .. |
|Bengal | .. | .. | .. | .. | 608 | 608 |
|Sundries | .. | .. | .. | .. | .. | .. |
+-----------------+-------+--------+-------+--------+-------+--------+
| Total | 8000 | 20,000 | 500 | 1500 | 2,290 | 66,138 |
| | | 8,000 | | 500 | | |
| | +--------+ +--------+ | |
|Since Wednesday | | 28,000 | | 2000 | | |
+-----------------+-------+--------+-------+--------+-------+--------+
"Points on or off."
Purchases for "speculation" remain in the market and therefore figure
again in the sales. These official prices are sometimes prices actually
paid, and sometimes prices settled by a committee according to their
notions of the prices that would have been realized at the close of the
market had business been done. The work of the committee is by no means
simple, as frequently very few transactions take place in the kinds of
cotton of which quotations are given. As regards "middling" American,
the committee fixes "spot" by allowing so many "points on or off"
present month futures. The variations of the gaps between "spot" and
"present month futures" are somewhat mysterious, a matter to which we
shall recur. "Spot" quotations, the reader will now understand, are
partly nominal, and must therefore be taken as affording a general idea
only of movements in the prices of cotton. While quoted "spot" remained
low, the prices paid by most spinners for the special kinds of cotton
that they needed might rise. When the spinner has informed the dealer
exactly what quality of cotton he needs, the dealer quotes so many
"points on or off" the "future" quotations prevailing in Liverpool at
the time of the purchase, which refer to Upland cotton of "middling
grade," of "no staple" and of the worst growth. Then, according as the
spinner wants immediate delivery or delivery in some future month, he
pays the price of current "futures," or of "futures" of the month in
which he requires delivery, plus or minus the "points on or off"
previously fixed.
The considerations which determine the "points on or off" charged to the
spinner may be taken roughly as three:--
1. The grade, i.e. the colour, cleanliness, &c., of the cotton. These
are of importance to the spinner owing to the necessity of his cleaning
machinery being adapted to the condition of the cotton. The lower the
grade the more elaborate and expensive is the machinery required to
clean it, and consequently a spinner is willing to pay a certain amount
extra for high grade cotton in order to save expenditure on preparatory
machinery.
2. The length of the staple. This determines to a large extent the
fineness of the yarn which can be spun. Only the very lowest counts can
be spun from cotton with "no staple," that is, with a fibre of about
three-quarters of an inch. The longer the staple above the minimum the
higher the counts that can be spun.
3. The growth. The best American cotton (Sea Island and Florida cotton
are always considered quite apart) is grown in the Mississippi valley,
the next best in Texas, and the poorest on the Uplands (i.e. in Georgia
and Alabama). Considerations of growth determine to a great extent the
hardness or softness, and strength or weakness, of the fibre, and thus,
indirectly, whether the cotton is suitable for warp or weft.
Some spinners cover their yarn contracts merely by buying "futures," but
the cover thus provided is frequently most inadequate owing to
variations in the "points on or off" for the particular cotton that they
want. For example, after the size of 1904-1905 crops became known, and
the Americans attempted to hold back cotton, the "points on" for many
qualities rose considerably owing to artificial scarcity, though the
price of cotton, as indicated by "spot," remained low. There is a
tendency for cautious spinners in England to run no risks and fix the
prices of their yarn in accordance with quotations for actual cotton of
specified qualities made by their brokers.
"Options" and "straddles."
We now return to exchange "future" transactions regarded as a genus. In
addition to "futures" proper there are "options" and "straddles."
Options are single ("puts" or "calls") or double (that is, alternative
"puts" or "calls"). The "put" is a right to sell cotton within some
specified time in the future at a price fixed in the present, which need
not, of course, be exercised. The "call" is similar, but relates to
buying. It will be evident that the "put" is a hedge against prices
falling, and the "call" a hedge against their rising. The basis of
"options" is the same as that of ordinary "futures," i.e. middling
American cotton of "no staple," &c. Whether the purchaser of an option
gains or loses depends upon the price that he has paid in relation to
the gain, if any, that he makes out of his power. The price of options
of course varies: that of double options is always highest, but they are
little used. A "straddle" is a speculation on the difference between the
prices of nearer and more distant futures, which varies from time to
time, or on the difference between the prices of different kinds of
cotton. An example will make the nature of the straddle clear. Suppose a
dealer buys April-May "futures" at 4d. a lb. and sells the same quantity
of May-June "futures" at 4-10/64d. a lb. Then, whether prices rise or
fall as a whole, he gains if the difference between the two prices
becomes less than 10/64d., but if it becomes more, he loses. On the
other hand, had the dealer bought May-June at 4-10/64d. and sold
April-May at 4d. he would have gained in the event of the difference
increasing, and lost in the event of its decreasing.
Measures of steadiness in prices.
A question which has met with a good deal of attention is whether the
speculation, which has been encouraged by the various arrangements made
for facilitating operations in "futures," has steadied or unsteadied
prices. Before we are prepared to answer this question we must be
furnished with a precise conception of what is meant by "steadiness" in
prices. It is sometimes assumed that this is measured perfectly by the
standard deviation,[6] which is obtained by taking the squares of the
differences between the average and the individual prices, summing them
and extracting the square root. But obviously the information given by
the standard deviation is limited: the frequency of movement cannot be
inferred from it; two series might have quite different average
oscillations and yet the same standard deviation; and the range of
movement, or spread of the variations from the average price (though
allowed for in the standard deviation more than in the average error),
is hidden. Now frequency of movement, average daily price variation, and
range of price movements are matters of fundamental importance to the
public. Hence for practical purposes we require several kinds of
measurement of price movements, and it is impossible to weigh exactly
the one against the other in respect of importance. Observe that an
increase of the frequency of movement, or even of the average daily
movement, is not necessarily objectionable, since changes are less
harassing when they take place by small increments than when they are
brought about by a few big variations. The difference between the
highest and lowest price, we may observe, is a very imperfect indication
of the range of movement (though, taken in conjunction with the standard
deviation, it is the best at our disposal), because either of the
extreme prices might be accidental and quite out of relation to all
others. An investigator must be on his guard against using quotations of
this kind. There is also a difficulty about the frequency of movement,
because as a rule many movements take place in one day the total over a
period sufficiently lengthy to yield general results is enormous, and
many are unrecorded. In one day, for instance, when the net drop was 33
points and the range of variation 59 points (namely, 8.45 to 7.86), 150
price fluctuations were recorded. However, the count of frequency of
movement from daily closing prices would probably afford a roughly
satisfactory comparative measurement in markets in which prices
sometimes remain the same for a day or two together. The points just
noted apply also to the average fluctuation and the standard deviation,
but it is probable in these cases that daily or even weekly quotations
would be sufficient to yield the information sought for with sufficient
exactness for purposes of comparison.
Effect of speculation on steadiness of prices.
Now, supposing dealing to be confined to experts, what effects upon the
course of prices would one expect from the specialism of the cotton
market and improved facilities for dealing, on the assumption that
dealers were governed wholly in their actions by the course of prices
and never tried to manipulate them? The frequency of movement ought to
increase because the market would become more sensitive, but, other
things being equal, the range of movement ought to diminish, and
ultimately the average daily movement also, though at first the latter
might not fall appreciably if, indeed, it did not rise, owing to the
increased frequency of movement. These results would prove beneficial to
the community. May we infer deductively that they have been attained
because of the increase of speculative transactions? By no means, and
for two reasons. In the first place, the public speculates to a large
extent on the cotton exchange, and its speculation (taken as a whole) is
sheer gambling. But, it may be replied, the outsiders, being as a whole
completely ignorant of the forces at work, so that they cannot form
rational anticipations, cannot have any effect either way: by the law of
chance their influences would neutralize one another. This would be so
if people acted independently and without guidance, but actually they
are sometimes misled by published advice and movements in the market
intended to deceive them, and, even when they are not, they watch each
other's attitudes and tend to act as a crowd. The mass becomes unduly
sanguine or weakly surrenders to panic. Hence the law of error does not
apply, and speculation by the public may unsteady prices. Again, dealers
sometimes try to create corners and form powerful syndicates for that
purpose: the dealing syndicate of late years has become a force to be
reckoned with. Many large-scale operations are entered into, not because
prices are relatively high or low, but to make them high or low for
ulterior purposes; i.e. the market is deliberately "bulled or beared."
In consequence of this tampering with the market no certainty can be
felt about the effect even of expert dealing.
Movement of prices.
What, then, we may profitably inquire next, has actually happened to
price movements generally as the market has developed? This question can
readily be answered as regards the past forty years or so, for which
material has been collected, but the reader must bear in mind that if
improvement can be traced it cannot logically be attributed
unhesitatingly to the perfecting of the machinery of speculation,
whereby a larger use has been made of "futures," since many other
economic changes have taken place concomitantly and they may have
wrought the major effect. The world may be steadying and steeling its
nerves. Now, turning to the actual effects, we discover somewhat
remarkable facts. Expressed both absolutely and as percentages of the
price averaged from the 1st of October to the 31st of July, the range of
movement, standard deviation, and mean weekly movement calculated
between the times mentioned above (October 1st to July 31st), after
diminishing significantly for some years after the later 'sixties, have
risen appreciably on the whole of late years. The figures in the table
below are from the _Journal of the Royal Statistical Society_, June
1906: quotations for August and September were omitted to avoid the
transition movements between the price levels of two crops.
In this table measurements of price movements stated both absolutely and
as percentages of price levels are given, because authorities have
expressed doubts as to whether the former or the latter might be
expected to remain constant, other things being equal, when price rose.
On the one hand, it is argued that speculators are affected only by the
absolute variations in price, while on the other hand it is contended
that a movement of one "point," say, is less influential when the price
is about 8d. than when it is about 4d. In response to the first view it
might be argued that if speculators are influenced only by the
differences for which they become liable, a "point" movement would have
a somewhat slighter effect on their action, other things being equal,
when price was high, because, supplies being relatively short, each of
them would tend to be engaged in a smaller volume of transactions
measured in quantity of cotton, than when supplies were larger. But the
point need not be discussed further here, since both percentage and
absolute indices of unsteadiness have risen of late years. The
explanation of this change in the direction of indices of steadiness
cannot be proved to consist in any peculiarity in the supplies of recent
years. But the dealing syndicate has probably been of late more common
and more powerful--that is, the syndicate which exists to make profits
out of manipulating the market--and the public has probably been
speculating increasingly. It is plausible, then, to suppose that the
dealing syndicate primarily, and the speculations of the public
secondarily (secondarily, because in all likelihood the effect of its
operation would be much less in magnitude), may account for the change.
Table calculated from Weekly Prices between the 1st of October and the
31st of July in each Year.
+--------------------------------------------------------------+--------------------+
| | Expressed as Per- |
| | centage of Average |
| |(1 Oct. to 31 July) |
| | Weekly Prices. |
+---------+---------+---------+---------+--------+------+------+------+------+------+
| | | | |Range of|Stan- | Mean |Range |Stan- | Mean |
| Year. | Average | Lowest | Highest | Move- |dard |Weekly| of |dard |Weekly|
| | Price. | Price. | Price. | ment. |Devia-|Move- |Move- |Devia-|Move- |
| | | | | |tion. | ment.|ment. |tion. | ment.|
+---------+---------+---------+---------+--------+------+------+------+------+------+
| | d. | d. | d. | d. | d. | d. | d. | d. | d. |
|1867-1868| 9-5/8 | 7-3/8 |12-7/8 | 5-1/2 | 1.74 | 0.31 | 57.1 | 18.1 | 3.22 |
|1868-1869|11-1/2 |10-1/2 |12-5/8 | 2-1/8 | 0.58 | 0.19 | 18.5 | 5.0 | 1.65 |
|1869-1870|11-1/8 | 7-3/4 |12-3/8 | 4-5/8 | 0.92 | 0.23 | 41.6 | 8.3 | 2.07 |
|1870-1871| 8-1/8 | 7-3/16 | 9-3/16 | 2 | 0.65 | 0.17 | 24.6 | 8.0 | 2.09 |
|1871-1872|10-7/8 | 9-3/8 |11-1/2 | 2-1/8 | 0.75 | 0.15 | 19.5 | 6.9 | 1.38 |
|1872-1873| 9-3/4 | 8-3/4 |10-5/16 | 1-9/16 | 0.53 | 0.10 | 16.9 | 5.7 | 1.08 |
|1873-1874| 8-5/16 | 7-3/4 | 9-1/8 | 1-3/8 | 0.32 | 0.10 | 16.5 | 3.9 | 1.20 |
|1874-1875| 7-11/16 | 6-15/16 | 8 | 1-1/16 | 0.26 | 0.07 | 13.8 | 3.4 | 0.89 |
|1875-1876| 6-1/2 | 5-7/8 | 7-1/8 | 1-1/4 | 0.37 | 0.08 | 19.2 | 5.7 | 1.23 |
|1876-1877| 6-5/16 | 5-7/8 | 7 | 1-1/8 | 0.33 | 0.11 | 17.8 | 5.2 | 1.74 |
|1877-1878| 6-3/4 | 5-7/8 | 6-9/16 | 1-11/16| 0.21 | 0.07 | 11.0 | 3.4 | 1.12 |
|1878-1879| 6 | 4-15/16 | 7-3/28 | 2-1/4 | 0.67 | 0.13 | 37.5 | 11.2 | 2.17 |
|1879-1880| 7 | 6-10/16 | 7-3/8 | 1-3/4 | 0.24 | 0.12 | 10.7 | 3.4 | 1.71 |
|1880-1881| 6-5/16 | 5-3/4 | 6-13/16 | 1-1/16 | 0.34 | 0.08 | 16.8 | 5.4 | 1.27 |
|1881-1882| 6-5/8 | 6-3/8 | 7-1/16 | 11/16 | 0.15 | 0.07 | 10.4 | 2.3 | 1.06 |
|1882-1883| 5-13/16 | 5-7/16 | 6-5/8 | 1-3/16 | 0.31 | 0.07 | 20.4 | 5.3 | 1.20 |
|1883-1884| 6-1/16 | 5-3/4 | 6-7/16 | 11/16 | 0.20 | 0.08 | 11.3 | 3.3 | 1.32 |
|1884-1885| 5-13/16 | 5-7/16 | 6-1/8 | 11/16 | 0.19 | 0.07 | 11.8 | 3.3 | 1.20 |
|1885-1886| 5-1/8 | 4-3/4 | 5-8/16 | 3/4 | 0.18 | 0.07 | 14.5 | 3.5 | 1.35 |
|1886-1887| 5-7/16 | 5-1/8 | 6 | 7/8 | 0.28 | 0.05 | 16.1 | 5.2 | 0.92 |
|1887-1888| 5-1/2 | 5-3/16 | 5-11/16 | 1/2 | 0.14 | 0.05 | 9.1 | 2.5 | 0.91 |
|1888-1889| 5-3/4 | 5-5/16 | 6-3/16 | 7/8 | 0.23 | 0.06 | 15.0 | 4.0 | 1.04 |
|1889-1890| 6-1/8 | 5-9/16 | 6-11/16 | 1/8 | 0.34 | 0.08 | 18.4 | 5.5 | 1.31 |
|1890-1891| 5 | 4-3/8 | 5-3/4 | 1-3/8 | 0.36 | 0.06 | 27.5 | 7.2 | 1.20 |
|1891-1892| 4-1/8 | 3-6/16 | 4-15/16 | 1-3/8 | 0.36 | 0.07 | 33.3 | 8.7 | 1.70 |
|1892-1893| 4-3/4 | 4-1/8 | 5-15/16 | 1-3/16 | 0.37 | 0.09 | 25.0 | 7.8 | 1.89 |
|1893-1894| 4-1/4 | 3-29/32 | 4-11/16 | 25/32 | 0.22 | 0.04 | 18.4 | 5.2 | 0.94 |
|1894-1895| 3-3/8 | 2-31/32 | 3-7/8 | 9/32 | 0.30 | 0.06 | 26.9 | 8.9 | 1.79 |
|1895-1896| 4-3/8 | 3-3/4 | 4-27/32 | 3/32 | 0.28 | 0.07 | 25.0 | 6.4 | 1.60 |
|1896-1897| 4-3/16 | 3-25/32 | 4-11/16 | 29/32 | 0.22 | 0.07 | 21.6 | 5.2 | 1.67 |
|1897-1898| 3-13/32 | 3-3/16 | 3-13/16 | 5/8 | 0.18 | 0.05 | 18.5 | 5.3 | 1.47 |
|1898-1899| 3-9/32 | 3 | 3-15/32 | 15/32 | 0.15 | 0.04 | 14.3 | 4.6 | 1.22 |
|1899-1900| 4-15/16 | 3-29/32 | 6-1/16 | 25/32 | 0.63 | 0.12 | 43.6 | 12.8 | 2.48 |
|1900-1901| 5-1/8 | 4-5/16 | 6-1/2 | 2-3/16 | 0.53 | 0.13 | 42.7 | 10.3 | 2.54 |
|1901-1902| 4-3/4 | 4-9/32 | 5-11/32 | 1-1/16 | 0.24 | 0.09 | 22.4 | 5.0 | 1.89 |
|1902-1903| 5.35 | 4.42 | 7.12 | 2.70 | 0.78 | 0.13 | 50.5 | 14.6 | 2.43 |
|1903-1904| 7.04 | 5.78 | 8.92 | 3.14 | 0.91 | 0.33 | 44.4 | 12.9 | 4.83 |
|1904-1905| 4.86 | 3.63 | 6.01 | 2.38 | 0.71 | 0.15 | 48.9 | 14.6 | 3.09 |
+---------+---------+---------+---------+--------+------+------+------+------+------+
Price movements in different markets.
"Futures" are not used in all markets--for instance, they are not to be
found at Bremen; and in those in which they are used they play parts of
different prominence--at Havre, for instance, the transactions in
"futures" are of incomparably less relative importance than they are at
Liverpool. But it is futile to seek the effect of much dealing in
"futures" in the differences between price movements in the various
markets, because (1) demand expresses itself in different ways--in
Germany, for example, spinners buy to hold large stocks--and (2) the
markets are in telegraphic communication, so that their price movements
are kept parallel. Mr Hooker has shown with reference to the wheat
market how close is the correlation between prices in different
places,[7] and the same has been observed of the cotton market, though
the correlations have not been worked out.[8] It is worthy of note that
Liverpool "futures" are largely used for hedging by continental cotton
dealers.
+----------------+-----+------+------+------+------+------+------+-----+-----+------+------+-----+------+
| | | Jan.-| Feb.-| Mar.-| Apr.-| May- | June-|July-|Aug.-| Sep.-| Oct.-|Nov.-| Dec. |
| |Spot.| Feb. | Mar. | Apr. | May. | Jun. | July |Aug. |Sep. | Oct. | Nov. |Dec. | Jan. |
+----------------+-----+------+------+------+------+------+------+-----+-----+------+------+-----+------+
|Nov. 18th, 1895 | 4.34|27 |28 |28-1/2|29-1/2|31 |32 |3 | .. | .. | .. | 27 |27 |
|Jan. 18th, 1899 | 3.8 | 6-1/2| 6-1/2| 7-1/2| 8-1/2| 9-1/2|10-1/2|1-1/2| 12 |12-1/2| .. | .. | 6-1/2|
|Sept. 14th, 1899| 3.36|24-1/2|25 |25-1/2|26 |27 | .. | .. | 30 |28 |26-1/2| 25 |24-1/2|
+----------------+-----+------+------+------+------+------+------+-----+-----+------+------+-----+------+