The Washington herald., 1921-11-21
COTTON REACTION
AFTER RAPID RISE
SURPRISES SOUTH
Official Crop Estimate
Had Been Taken Too
Literally.
NOT MUCH DAMAGE
Hedging on Futures Saves
Buyers From Heavy
Losses.
NOT MUCH DAMAGE

MEMPHIS. Tenn. Nov LIT is
posted business circles in the cot
ton country that a penalty is now
being paid in a measure for the
too-rapid advance in the price of
cotton some weeks ago. Those who
entertain such views say that when
prices almost over night shot up
ward several cents a pound, reach
ing their climax when the govern
ment's final crop condition report
was issued early in October. indi-
eating, according to the official sta
tisticians, a yield of 6.537,eOo bales
of 500 pounds, there was too much
confidence in the accuracy of such
conclusions and also too much dis
regard of what the worlds eco
nomic conditions were.
The reaction from above the level
of about % cents for contracts in
New York. with spots in the belt
proportionately high. was moder-
ately heavy before the recent sur
prise came when the census depart
.ment issued its figures showing
that to November l there had been
ginned more bales than were ten
tatively estimated for the entire
crop. Following that startling in
formation, which showed another
rather serious underestimation by
the offlcial suessers. came further
attacks on values and a rude shock
to prevailing ideas in the South.
Buyers Were Hedged.
Demand for the actual, which had
already begun TO show considerable
reduction, became very poor and the
effect on sentiment was important.
Fortunately. there had already been
liberal selling during the period of
keen demand and rising values, while
the general easing of the financial
situation throughout the country con-
tributed its share to the ability of the
holders and producers to weather
the storm of receding values.
1t was feared at first that per-
haps during the rise in values. even
despite the scarcity of ready funds
and the unwillingness on the part
cotton had been bought for purely
speculative purposes and would be
shaken out by the break. But this
does not yet appear to have been
the case, and most of the cotton
sold by the producer and not moved
on to the consumer was in the hands
of the buying part of the trade,
which played safe by having il
hedged with futures. The latter
was one of the main sources of Of
ferings which helped to depress
values, but will also have beneficial
effect on values when the spots are
disposed of and the hedges are
taken out by being bought in.
Tone New Improving.
With another ginning report just
a few days ahead and the market
displaying more signs of resistance.
helped by the apparently favorable
progress of the armament confer
ence at Washington. a degree Of
cheerfulness is beginning to be felt
again. 1t is felt that the ginning
report viii not catch the South
mapping, as the last one did, and
that it will comprise practically the
entire crop, for nothing has inter-
rupted picking or ginning for the
post two weeks.
The 'lull in buying has Influenced
trade in general adversely, but
there Is confidence in the worlds
needing all the supply, and expecta-
ton that as soon as doubts of how
snort II is are removed there will
be revival of demand. There are
bullish features vet to be fully APP
preciated, argue most people in the
trade, while 1t cannot be conceived
how world affairs can get worse
then they have been, but IT is easy
to see how Improvement can come.
The chief disappointment con-
tinues to be the lack of demand
from Great Britain and Europe, the
domestic mills having bought
freely. but the position of the befr
is now such that a warm contest
will be had before the unsold por-
tior of the crop and the carryover
will be turned loose at current or
Ia