Evening star., 1950-01-01
Cotton Prices Held
In Narrow Range
After 1949 Drop
By Leon FrendIina
Associoted Press Market Writer

By Leon FrendIine
Asseeioted Press Market Writer
NEW ORLEANS. Dec. 81
Price fluctuations in the cotton
market were much narrower in
1949 than in 194S. and on the
spot average the market declined
about $40 per bale, compared with
1948's close. The volume Of trad
ing in futures contracts on the
New Orleans Cotton Exchange
dropped sharply.
Based on the close Of December
8 futures on the New Orleans Ex-
change ranged from $2.10 to
$1,000 a bale lower, or AZ to 212
points below the close of Decem-
ber 81, 1948.
The December 8 average price
was BOIL, which compares with
1929 at the end Of December,
1948. The high for the year was
reached on April rs, when the
price went to 33.47 cents pound
for middling 15/16ths inch. The
low was 29.48, established on Oc-
tober II.
High Set in May.
The high price for futures at
New Orleans was set by the May,
1949, delivery, when it reached
1884 cents pound on May II.
The low was set June 7, when the
October. 1850, delivery dipped to
t24.90.
The Government loan level on
15/16ths-inch staple declined to
29.43 cents a pound. This was
based on 80 per cent of parity
calculation and compared with
the loan rate of 30.74 for the sea-
son ended August 81, 1949, which
was based on a 921a per cent of
parity calculation. The present
parity price was set July 20, 1949.
parity is a price determination
calculated to give the farmer a
fair return in terms of goods he
buys)
Prices advanced moderately
during the early months Of 1949,
but later went into a gradual de-
cline that carried the market down
to near the 30.74 Government
loan level. The market then backed
and filled in an extremely narrow
range until near the close of the
year. Prices began to work higher,
and new season highs were reached
as the period drew to a close.
Federal Buying Helped. /
The early year advance was in
response to big movement of cot
ton into export channels under the
Economic Cooperation Admin
istration foreign relief program,
and heavy placements Of cotton
into the Government loan.
But general business uncertainty,
with declining prices in other COM
modities and in securities, began
to have its effect on cotton senti-
ment.
Business and prices in the tex
tile markets fell of sharply, ad-
ding to pessimism.
Came August and larger crop
ideas in the trade were confirmed.
The Governments first estimate
Of the current crop was 14.805, 900
bales. This figure subsequently
was revised upward and the final
estimate Of December 8 was for
a crop Of 16.034.000 bales, the
sixth largest on record.
Indecision over the price sup
port question was not dispelled
until late in the year after
months Of Congressional wrang-
ling. The big question had been
could Congress establish a Soto
80 per cent sliding scale. as. pro-
posed On the one hand, or con-
tinue a high support level Of a |
straight 80 per cent Of parity
price formula. As>finally enacted,
the new farm bill represented a
compromise.
Two Formulas Provided.
Two parity formulas are pro-
vided. For the 1950-51 crop, sup
port prices will be 80 per cent Of
parity II crop controls are in
effect. For the four years, 1885,
So, the old parity Is to be con-
tinued If it results in higher sup
ports, or else q new streamlined
parity calculation allowing for in
creased farm labor costs would be
used.
Once the price support question
was out Of the way, the market
gradually began to respond to q |
Frightening business picture, re-
vival of the textile markets, a
continued good rate of exports
and, Of course, the movement Of /
staple into the loan. Expected |
heavy hedging incident to the new
crop movement failed to develop
in the volume anticipated.
The larger indicated crop has
brought a move by Secretary
Brannan to establish acreage and
marketing controls on the 1950-5l
crop.
Rutland Railroad reported al
deficit Of $762.875 in IL months
orlaL 81