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diff --git a/29915.txt b/29915.txt new file mode 100644 index 0000000..05431ef --- /dev/null +++ b/29915.txt @@ -0,0 +1,1851 @@ +The Project Gutenberg EBook of About sugar buying for Jobbers, by B. W. Dyer + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: About sugar buying for Jobbers + How you can lessen business risks by trading in refined sugar futures + +Author: B. W. Dyer + +Release Date: September 5, 2009 [EBook #29915] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK ABOUT SUGAR BUYING FOR JOBBERS *** + + + + +Produced by The Online Distributed Proofreading Team at +https://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/American +Libraries.) + + + + + + +about +SUGAR BUYING +for Jobbers + + +_How you can lessen +business risks by trading in +Refined Sugar Futures_ + + + +_by_ + +B. W. DYER + + + +A BOOKLET +FOR JOBBERS WHO +SELL SUGAR + +_Lamborn & Company_ +SUGAR HEADQUARTERS +132 FRONT STREET . NEW YORK + +Copyright, 1921 +LAMBORN & COMPANY + + + + +About Sugar Buying + + +Jobbers who have had considerable experience in exchange operations +will find in this booklet a simplified and non-technical description of +activities with which they may be in general familiar. + +We believe, however, that the inauguration of trading in refined sugar +futures on the New York Coffee and Sugar Exchange, Inc., throws open a +new realm of opportunity. + +We have attempted to outline briefly the chief advantages to be gained +by a jobber's use of this new market, assuming that those who have in +the past dealt in raw sugar as a protection for their refined sugar +needs will welcome suggestions as to the benefits to be derived from +trading directly in refined sugar. + + + + +Time, the Croupier of Business + + +Like a croupier at a vast roulette table, Time presides over the realm +of business. + +Time is the tap-root of most business uncertainties. + +No one can tell what will happen a year, a month, a day, a minute from +now--the future may bring floods and wars, pestilence and drouth; or it +may bring great crops and fair weather, happiness and prosperity. + +As business has become more and more complicated, the time element has +become larger and larger. The time element as we know it does not exist +in simple barter--a man weaves a piece of cloth and exchanges it for a +bushel of corn: time is of no account in the transaction. A small +jobber located in the same territory as refiners buys a small amount of +sugar today and distributes it to his trade the next--time is +negligible. A large jobber, buying perhaps for several branch houses, +or located at points which necessitate a delay of two or three weeks in +transit, may find it necessary even on a declining market to purchase a +considerable amount of sugar, and, as a result, weeks may go by before +his sugar arrives and is sold--time is vitally important. + +Time is an element in costs and prices, because over any extended +period of time many things may happen to influence costs and prices. + +All business planning must deal with Time. + +To the unenlightened business man, Time is a bugaboo--a gambler whose +cards are stacked and against whom there is no defense. Such a man +conducts his business from hand to mouth, in constant fear. He is a +fatalist, taking his profits and losses as if they were gifts or blows +of Fortune. + +The enlightened man works with Time as an impartial, exacting, +inevitable power for his own good or ill. He shapes his actions and +enlists the services of Time to prevent catastrophe on the one hand, +and to enforce prosperity and happiness on the other. Storms may come, +but so far as his mind may control it, he is "the master of his fate." + + + + +Cost and Selling Prices + + +That the element of TIME is important in the jobber's business no one +will deny. He does not base his selling price on cost, but rather on +the market price. Regardless of his cost, he must sell to meet +competition. It is equally obvious that the larger his business, or the +greater his distance from the source of supplies, the more important +part TIME plays in both his cost and selling prices. + +All jobbers, large or small, are obliged to assume greater risks (even +proportionately) and exercise greater care, than, for instance, +retailers buying in small quantities. A jobber's business may enlarge +by a perfectly natural process of expansion, but his purchasing risks +increase in greater ratio than his business expands. + +Similarly, under abnormal conditions, jobbers located at points +requiring several weeks in transit prior to delivery, must assume +greater risks than those located at the source of supply. In the event +of serious delays in deliveries or in shipments, even buyers located at +shipping points are confronted with this problem, and the difficulties +of those located at a distance are increased immeasurably. + +These difficulties tend to accentuate the importance of TIME in modern +business. As business grows, instead of decreasing--risks increase. Any +machinery which might operate to eliminate or reduce this uncertainty +or speculative element in a jobber's business, would, we believe, be +welcomed. Exchanges provide just such machinery. + +Other commodities, such as raw sugar, wheat, cotton, pork and coffee +have had this machinery for years and it was provided for refined sugar +on May 2, 1921, when trading in refined sugar futures was inaugurated +on the floor of the New York Coffee and Sugar Exchange, Inc. + + + + +Where Buyers and Sellers of Sugar Meet + + +The Sugar Exchange is a market place, where buyers and sellers of sugar +or their representatives meet to trade. + +The Exchange provides a concentration point, where, under any market +conditions, sugar may be bought or sold _at a price_. + +What that price is, is determined by how much sugar is for sale and how +many people want it. If the supply is large and buyers are few, the +price will be low. If sugar is scarce and buyers are numerous, the +price will be high. Or, to put it in another way, when there are more +sellers than buyers, the market declines; when more buyers than +sellers, it advances. If the supply and the number of buyers are +normally well balanced, the price will be determined largely by the +cost of production and transportation. If events or circumstances +operate to increase or curtail either the sugar supply or the number of +buyers, and such events or circumstances follow one after the other +alternately, the price will fluctuate. + +These are the results of the operation of well-known economic laws. + +In the case of all commodities which cannot be bought or sold at a +common market place (or exchange), price fluctuations are usually wide +and frequent, because no large group ever has common knowledge of +supply, demand and other factors that govern prices--purchases and +sales are made direct between individuals, and knowledge of the amount +asked or paid is restricted to a limited few. + +Through the common market place provided by an exchange, on the other +hand, market conditions and prices become common knowledge almost +instantly over the entire country. This tends toward stabilization--a +fact which, alone, helps to eliminate risks, and enables merchants to +buy at lower prices than if forced to deal direct with one another. +Sellers do not have to take such long chances and can thus afford to +sell on a smaller margin of profit. Competition is stimulated and freed +from many of its complications and uncertainties to the advantage of +the seller, the buyer and the public. + +It is now admitted that, had exchange trading in refined sugar existed +in 1920, a general use of the exchange by all branches of the trade +might have prevented, to a considerable extent, the abnormal advance in +sugar prices of that period, with the hardship and misfortune that +attended. + +The fact that an exchange always provides a buyer and a seller, _at a +price_, tends toward keeping business fluid. Jobbers are able to +protect their future requirements. Producers are sure of a market for +their crops. Crop financing is made easier because bankers are more +willing to loan on crops sold in advance--an operation made possible by +an exchange. + +Exchanges operate to take the gamble out of business. They help to put +and maintain business on a sound basis. That some people who have no +real interest in the commodity use the exchange speculatively does not +alter this fact. + +In providing machinery by which speculative risks incident to a +jobber's business may be shifted from the jobber to those who make a +business of assuming such risks, exchanges help to stabilize his +business and to remove a large part of the destructive uncertainty with +which he would otherwise have to contend. + +Exchanges are the creations of modern economic development, designed +and operated for the benefit of the commerce, industry and people of +the civilized world. + +Therefore we welcome trading in refined sugar futures and the +opportunity to offer you the advantages that may be derived from a +conservative, intelligent use of its services. + +The Exchange provides certain quality standards and other regulations +to safeguard your interests. But your real assurance of protection lies +in the _character_ and reliability of your broker. If your broker is +not strong financially you do not have back of your contract the +responsibility that you might otherwise have. + +If you had a favorable contract with a broker who became insolvent, you +would have no means of forcing the fulfillment of the contract, and no +way of securing the profit which was due you. The thing to do, of +course, is to choose a broker who is so strong financially that you +incur no danger in this respect whatsoever. + + + + +Use the Exchange when the Market is Favorably out of line + + +In considering the illustrative examples in this booklet, it should be +borne in mind that the measure of protection afforded is relative and +not absolute. The theory of exchange operations is that the exchange +market will move relatively the same as the market for the actual +commodity. + +This cannot be strictly true, although the exchange market must of +necessity follow very closely the actual market, because all the sugar +must, in the final analysis, come from the actual market. If thrown out +of parity with the actual market, the exchange market is bound to come +back eventually. + +In the exchange market anyone can buy and anyone can sell. The market +is subject to many outside influences, and the fluctuations reflect and +accentuate the varying shades of market opinions of many individuals. +But in the market for the actual commodity, the quotations are made by +comparatively few men, which means that there will be less fluctuation. + +Therefore, it is obvious that although the exchange market _should_ be +on a parity with the actual market, the unequal fluctuations of the two +markets will be constantly throwing them out of parity or "out of +line." + +There are times when the market will be so out of line that the _buying_ +of futures should result profitably. At other times, with conditions +reversed, _selling_ of futures seems obviously advisable. We do not +claim that jobbers can protect sugar purchases with absolute and exact +precision. On the basis of long exchange experience, we _do_ believe, +however, that by a discreet use of the Exchange, and by using the +market when quotations are _favorably_ out of line, jobbers can do so +to their decided advantage. + + + + +Selling of Futures--Hedging + + +As the word itself indicates, a "hedge" on the Exchange is a +protection. + +You hedge by buying or owning actual sugar, and "selling short" in the +same amount. You sell sugar futures although you do not own any. You +actually contract to deliver an amount of sugar during a specified +future month at a specified price. + +Eventually, you must either buy and deliver actual sugar to carry out +this contract, or you must buy another contract for futures to cancel +your short sale. This is known as a "covering" operation, and the +cancelling of one by the other takes place automatically through the +channels of the Exchange. + +From the jobber's point of view, the operation of hedging has three +outstanding purposes. He may hedge: + + 1. To eliminate the probability of speculative profit or loss, due + to market fluctuations. + + 2. To protect a profit on a favorable purchase of actual sugar. + + 3. To establish and limit a loss on an unfavorable purchase of + actual sugar. + + +HEDGING _to protect a normal jobbing profit by eliminating the +probability of a speculative loss or gain_. + +This operation is particularly useful to jobbers with whom conditions +are such that they desire to be assured that their cost will be at +about the market price at the time they dispose of their sugar, +regardless of whether the market be higher or lower. + +Although there are times when any jobber, no matter where located, will +find this a useful transaction, it is obvious that many buyers will not +wish to use the market in this way unless they feel it will decline. +But it is particularly of advantage to a jobber located in markets +necessitating a delay of from one day to several weeks in transit. + +For instance, on a certain day in April, two jobbers bought their usual +quantity of sugar. One was located in Syracuse, the other in New York. +Two days following the purchase, the market broke half a cent per +pound. In view of the fact that his sugars were still in transit when +the market declined, the Syracuse buyer was obliged to sustain this +entire loss, in order to meet competition. On the other hand, because +he received and distributed the sugar before the market broke, the New +York jobber was able not only to avoid a loss, but make his regular +profit. + + +CHART 1 + +---------------------------------------------------------------------------- +HEDGING +to protect a normal jobbing profit by eliminating the probability of +a speculative loss or gain +------------+-----------------------------------------+-----------+--------- +Initial | | +Transactions| Subsequent Transactions | Result +------------+-----------+---------------+-----+-------+-----------+--------- + |Liquidating| Condition |Price| Result| Figure | In each + | the hedge | of market | you | of | your | case + |(covering) | when you |would| hedge | sugar | the + | | "cover" | pay | cost | cost | same + | | your hedge | in | this | this | + | | |cover| way | way | + | | |-ing | | | +------------+-----------+---------------+-----+-------+-----------+--------- +You buy | When you | | |Profit |Actual cost| +actual sugar| sell your |It has declined| | |less profit| +at 6.00 | sugar (or |to 4.00 |4.00 |2.00 |6-2=4 | + | when it is| | | | | + | delivered)| | | | | + | you buy | | | | |You get + | the same | | | | |your + | amount of | | | | |sugar + | futures at| | | | |at the + | the market| | | | |market + | price, | | | | |price + | whether | | | | |at the + | higher or | | | | |time + | lower. | | | | |when you + | | | | | |sell it + | | | | | |(or when +At the same | | | | |Actual cost|your +time you | |It has advanced| |Loss |plus loss |delivery +hedge by | |to 8.00 |8.00 |2.00 |6+2=8 |is made.) +selling the | | | | | | +same amount | | | |No | | +of futures | |It stands at | |profit,|Actual | +at 6.00 | |6.00 |6.00 |no loss|cost | +------------+-----------+---------------+-----+-------+-----------+--------- + + +Naturally the greater the amount of sugar any one concern may have in +transit the greater the need for protection. We call this kind of +transaction particularly to the attention of buyers having branch +houses who find themselves obliged to make relatively large purchases +to supply their trade in the face of a market in which they have no +confidence. + +These disadvantages at which out-of-town buyers are sometimes placed +might be overcome by using the Exchange. On the other hand, when +refiners are badly behind on deliveries, even buyers located at the +source of supply will find themselves facing a similar problem the +solution of which may be found in a use of the Exchange. + +It is therefore evident that the selling of futures may be a transaction +the _sole_ purpose of which is to eliminate speculation from a jobber's +business. + +Regardless of how careful a buyer may be, there is an element of +_speculation in each purchase of actual sugar_. + +If the price goes up, there is a speculative gain--the sugar is worth +more. But if the price goes down, the buyer sustains a speculative +loss. + +The measure of protection afforded by the Exchange will appeal to those +jobbers who wish to reduce the speculative element in their business. + +In the example immediately following, as in all others, we have not +taken into consideration the difference between the Exchange quotations +and the Seaboard Refiners' quotations, which is explained on page 38. +This would simply inject an unnecessary complication, and would be of +no particular advantage for purposes of illustration. + +Suppose you should buy through your broker from a refiner, for prompt +shipment, an amount of _actual_ sugar at 6.00, which you plan to sell +within a short time after its receipt. Instead of worrying about +subsequent sugar price fluctuations, you simultaneously hedge this +purchase by _selling_ futures in the same amount on the Exchange. The +price at which you buy actual sugar and the price at which you sell +futures should be relatively the same, since Exchange prices generally +reflect refiners' prices. + +You should be able to figure the cost of your sugar at about the market +price at the time it is received or sold. (See Chart 1.) + +If the price of sugar should go down to 4.00 at about the time when you +sell it, your actual sugar, for which you contracted to pay 6.00, would +be worth only 4.00; but you would then buy to cover your futures sale, +making 2.00 on this transaction, which, subtracted from the price you +paid (6.00), brings the cost down to the market price of 4.00. In other +words, you have accomplished your purpose of being able to figure your +sugar cost at the market price at the time when you received it (or at +the time you sell it). That is, although every pound of actual sugar +was sold at a loss, this loss was balanced by the profit from your +hedge. + +If, on the other hand, the market should advance to 8.00 after your +original purchase and hedge at 6.00, the value of your actual sugar +would be increased by 2.00. You would then buy futures at 8.00 to cover +your short sale at 6.00, netting a loss thereby of 2.00. This loss +would be added to your original cost of 6.00, making your actual sugar +cost 8.00, which is the market price at the time. Had you omitted the +hedge, your sugar would have cost you only 6.00, but, in this example +we are assuming that you would sell only when you were willing to +figure your sugar cost at the market price. This you have accomplished +by foregoing the speculative profit you _might_ have made in favor of +your normal jobbing profit. + +If the market should remain relatively stable you would buy to cover +your hedge at approximately the same price as you sold for, your gain +or loss being practically nothing. In other words, you would obtain +sugar at the market price, which is the purpose in this kind of a +hedge. + + +HEDGING _to protect a gain on a favorable purchase of actual sugar_. + +All sugar buyers have had the experience of buying actual sugar, only +to see it advance or decline before they have disposed of it. How to +protect the gain, or minimize the loss, is described in the two hedging +positions which we now discuss. + +Suppose you have bought sugar, have _not_ hedged against it, and have +seen it advance. Finally you have said, "I think sugar is about as high +as it is going. I am going to sell against that to protect that +profit." + +On the other hand, the reverse might be the case. You might find the +market going down, and say, "The market is going lower. I want to hedge +against that, and limit my loss to a definite amount." + + +CHART 2 + +---------------------------------------------------------------------------- +HEDGING +to protect a gain on a favorable purchase of actual sugar +--------------+-----------------------------------------+----------+-------- +Initial | | +Transactions | Subsequent Transactions | Result +--------------+--------+----------+---------+-----------+----------+-------- + | Hedge |Condition |Price you| Result of | Figure | In + | |of market | pay for | hedge and | actual | each + | | when you | futures | covering | sugar | case + | | "cover" | to cover| operation | cost | the + | |your hedge| hedge | | this way | same +--------------+--------+----------+---------+-----------+----------+--------- +You buy actual| | | | |Price paid| +sugar at 6.00,| | | | |for actual| +but before you| |It has | | |sugar less|Your +have received | |declined | | |hedging |sugar +it (or before | |to | |A profit |profit |cost +you sell it) | |6.00 | 6.00 |of 2.00 |6-2=4.00 |is +the price | | | | | |2.00 +advances to | | | | | |under +8.00 | | | | |Price paid|the + | | | | |for actual|market +You now have |You sell|It has | | |sugar plus| +your sugar at |futures |advanced | | |hedging | +2.00 under the|at |to | |A loss |loss | +market |8.00 |10.00 | 10.00 |of 2.00 |6+2=8.00 | + | | | | | | +You feel that | |It stands | |No profit, | | +the market may| |at 8.00 | 8.00 |no loss | 6.00 | +recede and | | | | | | +eliminate | | | | | | +this gain, | | | | | | +so-- | | | | | | +--------------+--------+----------+---------+-----------+----------+-------- + + +In both of these cases, the operation is relative. If a man has a +profit, let us say 2c a pound, and he hedges, he maintains his profit +of 2c a pound as compared with the market at the time of delivery, or +at the time when he expects to sell this sugar, regardless of whether +the market is higher or lower. + +In the same way, conversely, if he has a loss on his sugar of 2c a +pound, by hedging he can limit that loss to 2c a pound, even though the +market goes still lower. In other words, his sugar cost at the time of +delivery, or at the time when he expects to sell the sugar, will be +about 2c above the market price, whether the market is higher or lower. + +We shall assume that you have bought from a refiner through your broker +a supply of actual sugar at 6.00. While your sugar is in transit or +before it has been shipped by refiners, the market advances to 8.00, at +which point it apparently is steady. You now have a _theoretical_ gain +of 2.00--that is, if you were to sell your sugar at once, you would +have an _actual_ profit of 2.00; but you do not sell because your +sugar is in transit or you need it for your trade. However, you do want +to preserve and protect this favorable position of having your sugar +2.00 below the market at the time you want to sell it. So you sell the +same quantity of futures on the Exchange at 8.00. + +Three things may occur--the market may decline, or it may continue to +advance, or it may remain steady. You have accomplished your purpose in +any case (see Chart 2). + +By the time you sell your sugar (or at the time of its delivery) it +becomes necessary for you to cover your hedge and if the market has +declined from 8.00 (at which point you hedged) and stands at 6.00 +again, your hedging operations considered alone would net you an actual +profit of 2.00. Your original sugar cost was 6.00. Your profit on your +hedge was 2.00, so that you would figure your actual sugar cost at +4.00. You would have accomplished your purpose of getting your sugar +2.00 under the market at the time of selling it (or at the time of its +delivery). That is, your delay in selling your sugar has cost you +practically nothing, even though the market has declined. + +If the market has advanced to 10.00, when it becomes necessary for you +to cover your hedge (at the time of selling your sugar or when it is +delivered) your hedging operations considered alone would net you a +_loss_ of 2.00. You would buy in futures at 10.00, which you sold at +8.00. Your original sugar cost was 6.00, your loss on your hedge was +2.00, so that you would figure your actual sugar cost at 8.00. But the +market at that time was 10.00, so that you have accomplished your +purpose of getting your sugar 2.00 under the market at the time of +selling it (or at the time of delivery). In other words, you would make +the same profit as though you had re-sold your sugar to second-hands +originally, instead of hedging, but had you followed this course, you +might not have had sugar in stock for your regular trade. + +On the other hand, when it becomes necessary for you to cover your +hedge, if the market has remained steady and is again at 8.00, the two +futures transactions cancel themselves without profit or loss. Your +original cost of 6.00, therefore, stands as your actual sugar cost at +the time of selling (or at the time of delivery). This is 2.00 under +the market and you have accomplished your purpose. + + +HEDGING _to establish and limit a loss on an unfavorable purchase_. + +This operation is identical in its working with the previous example, +except that you have a different end in view. + + +CHART 3 + +-------------------------------------------------------------------------- +HEDGING +to establish and limit a loss on an unfavorable purchase +------------+--------+---------------+-------+----------+----------+------- +Initial | | +Transactions| Subsequent Transactions | Result +------------+--------+---------------+-------+----------+----------+------- + | Hedge | Condition of | Price | Result | Figure | In + | | market when | you | of | actual | each + | | you "cover" | pay | hedge | sugar | case + | | your hedge | for | and | cost | the + | | |futures| covering | this | same + | | | to | operation| way | + | | | cover | | | + | | | hedge | | | +------------+--------+---------------+-------+----------+----------+------- +You buy | | | | |Price paid| +actual sugar| | | | |for actual| +at 6.00 but | | | | |sugar less| +before you | | | | |hedging | +have | |It has declined| | A profit |profit | +received it | |to 4.00 | 4.00 | of 1.00 |6-1=5.00 | +(or before | | | | | | +you sell it)| | | | | | +the price | | | | | | +declines to | | | | | | +5.00 | | | | | | + | | | | | | +You now have| | | | |Price paid|Your +your sugar | | | | |for actual|sugar +at 1.00 | | | | |sugar plus|cost is +above the |You sell| | | |hedging |1.00 +market |futures |It has advanced| |A loss of |loss |above + |at 5.00 |to 6.00 | 6.00 |1.00 |6+1=7.00 |the + | | | | | |market +You feel | |It stands at | |No profit,| | +that the | |5.00 | 5.00 |no loss | 6.00 | +market may | | | | | | +decline | | | | | | +still | | | | | | +further and | | | | | | +increase | | | | | | +this loss, | | | | | | +so-- | | | | | | +------------+--------+---------------+-------+----------+----------+------- + + +Let us say that you purchase actual sugar at 6.00. If the market +declines to 5.00 after your original purchase at 6.00, you have a +_loss_ of 1.00, in the value of your sugar. Facing the possibility of a +further decline and desiring to _limit_ this loss to 1.00, you hedge by +selling futures. In this case you should limit your _loss_ to 1.00 just +as effectively as in the previous example you preserved your _gain_ of +2.00, and by the same course of procedure. (See Chart 3.) + +By the time it is necessary for you to cover your hedge by buying an +equivalent amount of futures, the market may have declined still +further, say to 4.00. You sold at 5.00, you bought at 4.00, profit on +that operation, 1.00. Subtract this profit from your original cost +(6.00) and figure your sugar cost at 5.00. In other words, although the +market went still lower, you succeeded in limiting your loss to 1.00, +as compared with the market price at the time of the delivery of your +sugar (or at the time you sell it). Had you omitted the hedge, your +actual sugar cost would have been 6.00, which was 2.00 above the +market. + +After your original purchase at 6.00, and market decline to 5.00 (at +which point you hedged), the market might advance again to 6.00, or +remain steady at 5.00, but the operation is no different from that +previously described, and you in each case attain the same result. + + + + +Buying of Sugar Futures + + +Refiners do not make a practice of taking orders more than thirty days +in advance of actual delivery--but there are obviously times when it is +advisable to cover one's requirements for a longer period. A jobber may +do this on the Exchange where he will always find a seller at _some_ +price for the quantity he desires. + +This privilege is particularly valuable to: + + 1. Jobbers who believe that the market price of Sugar is going + higher and who desire to cover their future requirements beyond the + delay period which refiners will extend. + + 2. Jobbers, who desire to sell to manufacturing customers for + future delivery at a fixed price so that these manufacturing + customers may determine their selling price, may do so by the use + of the Exchange. + + +_1. Buying of sugar futures--Based upon the expectation of higher +prices_ + +No doubt many jobbers will recall occasions when anticipating their +requirements seemed obviously advisable, perhaps almost imperative. +Such a jobber would be one who believed in the market. His action would +be based on his opinion of the market. He might note in January, let us +say, that the price of May or July futures is favorable. He would like +to get his May or July sugar at about that figure. You yourself +probably can recollect many times in the past, when the general market +was in such a strong position fundamentally that anticipating your +requirements seemed advisable. You decided to buy a considerable +quantity only to find that refiners would not sell you to the extent +that you wished to purchase. When covering your future requirements on +the Exchange, you can buy any quantity desired. + +Consider also on how many occasions when you wanted and _needed_ a +definite future month of shipment, you have been told that "_as soon +as possible_" was the only acceptable basis. + +Or have you had the experience of placing an order and waiting +twenty-four or thirty-six hours without knowing if the refiner would +accept your order? Meanwhile the market might have advanced, and, if +your order had been declined, you would have had to pay an even higher +price for your sugar. The facilities of the exchange offer opportunities +for protecting requirements _quickly_ and without the uncertainty and +delay sometimes encountered from refiners. + +A jobber must anticipate the market in order to take full advantage of +it, and in this connection it should be borne in mind that the Sugar +Exchange, as in the case of practically all exchanges, usually +anticipates either favorable or unfavorable developments in the market +for the actual commodity. Consequently, prompt action is necessary when +either a higher or lower market is expected, as the Exchange market +will usually be the first to reflect changing conditions. + +Suppose you feel that the price of sugar is low and probably going +higher. You try to anticipate your requirements for some time to come, +but find that refiners will not sell for more than thirty days. + +You can go on the Exchange and buy futures in the quantity and month +desired. Assume then, that you pay 6.00 for your futures. Now, whatever +happens in the sugar market, you know you can get the quantity of sugar +desired at about 6.00 (see Chart 4). + +The market will advance, decline or hold steady. + +Say the market advances. When it seems advisable to close out your +Exchange contract and buy actual sugar, the price may have gone up to +8.00. You will then sell your futures at about 8.00, go into the market +and buy actual sugar at the same price, assuming, of course, that the +actual market has advanced in relative proportion--which is likely. +Although actual sugar has cost you 2.00 more than you had figured, you +have made 2.00 on your futures. Profit and loss cancel each other. Your +sugar cost is 6.00. + +On the other hand, suppose the market declines after you have bought +futures at 6.00, and goes down to 4.00, when it seems advisable to +close out your Exchange contract. You sell your futures at 4.00, a loss +of 2.00. But you will also buy your actual sugar at 4.00, which is 2.00 +lower than you had planned. Your actual sugar cost was therefore 6.00, +which is the price you had figured was favorable. + +If the price still is at 6.00 when you desire to liquidate, you would +sell your futures and buy your actual sugar at about the same price. +Thus you have neither gained nor lost, but you have been sure of +getting sugar at 6.00, which is the price you felt was low. + +The time to buy actual sugar is generally when the market becomes +strong and an advance in the price of the actual commodity seems +imminent; but the time to buy sugar futures is before the strength +develops. The future market invariably discounts declines and +anticipates advances. + + +_2. Buying of Sugar Futures to protect profits on advance sales to +customers_ + +While it may not be an established custom, we know numerous instances +where jobbers have sold sugars in small quantities for future delivery. +The examples to which we refer are small manufacturers buying sugar +locally, who, when the market appears in a strong condition desire to +be assured of their regular supply of sugar at a specified price. Under +such conditions we have known jobbers to sell them sugar for delivery +over several months. If at any time you are placed in a similar +position, and desire to take care of your customers in this manner, +without incurring too great a risk, the Exchange offers exceptional +opportunities for protection, as, of course, you would be able to buy +sugar for delivery in any month you desire, even as far in advance as +one year. + +It is clear that if you sell at a specified price for delivery at a +certain time, your only protection is your belief that you'll be able +to buy sugar cheaply enough to make a profit. + + +CHART 4 + +---------------------------------------------------------------------------- +BUYING SUGAR FUTURES + +1. Based on the expectation of higher prices. +2. To establish costs, pre-determine selling prices and protect profits + on advance sales. +---------------------------------------------------------------------------- +Initial | | | +Transactions | Subsequent Transactions |Sugar Cost | Result +-------------+------+----------+--------+-------+------+------------+------- + | |Condition | Price |Result |Price | Figure it | In + | |of market | you | of | you | this way |each + | | when you | would |selling| pay | |case + | |buy actual| obtain | your | for | |the + | | sugar |for your|futures|actual| |same + | | |futures | |sugar | | +-------------+------+----------+--------+-------+------+------------+------- + | | | | | |Price paid |Your + | | | | | |for actual |sugar + | | | |A | |sugar less |cost is +You buy Sugar|When |If it has | |profit | |hedging |6.00 +Futures at |you |advanced | |of | |profit |as pre- +6.00 to cover|buy |to 8.00 | 8.00 |2.00 | 8.00 |8-2=6 |deter- +future |actual| | | | | |mined +requirements;|sugar,| | |A | |Price paid | +fix your |you |If it has | |loss | |for actual | +price and |sell |declined | |of | |sugar plus | +take orders |your |to | | | |hedging loss| +on the basis |fu- |4.00 | 4.00 |2.00 | 4.00 |4+2=6 | +of 6c sugar |tures | | | | | | + | |If it is | |No | | | + | |still at | |profit,| | | + | |6.00 | 6.00 |no loss| 6.00 | 6.00 | +-------------+------+----------+--------+-------+------+------------+------- + + +It is equally clear that if a manufacturer names a price and takes +advance orders without pre-determining his sugar cost, his profit is a +matter of guesswork. He is not going to know the cost of his +manufactured product until he buys his sugar. + +Assume that you have contracted to deliver sugar to a manufacturer or +to any customer at a definite date and a specified price, without +buying sugar to cover your requirements. If the price of sugar is +favorable when you deliver it, you are fortunate and net a profit. But +sugar may have advanced to a point where you are forced to pay such a +price that your profit is lower than it should be. In fact there may +not be any profit at all. + +By conservative, wise use of the Sugar Exchange, most of this risk and +uncertainty can be eliminated and both you and your customer can go +ahead with your plans with your prices determined through a known sugar +cost. + +Suppose that in March or April, for example, the market appears strong +and you find that some of your manufacturing customers are anxious to +be assured of an adequate supply of sugar at a definite price. In such +a case, if these advance orders called for a sufficient volume, and +provided Exchange prices were favorable, you could take care of your +trade's future requirements at a fixed price, without yourself taking a +speculative position. We also believe that buyers making these +arrangements with any of their trade would be justified in requesting +the same proportionate marginal protection which it is necessary for +jobbers themselves to give the seller on the Exchange. There will no +doubt be many occasions when it would be worth while to solicit orders +on this basis. + +With your own sugar cost fixed by the use of the Exchange, you could +take proper care of these buyers without worrying about subsequent +fluctuations of the market, as you would know that your sugar cost +would be about the price paid for your futures which, let us say, is +6.00. (See Chart 4.) + +The market may advance so that by September, sugar is selling at 8.00. +(You are now making deliveries to your trade as contracted). So you +sell your futures at 8.00, go into the market and buy actual sugar for +about the same figure, assuming, of course, that actual sugar has also +advanced in relative proportion, which is likely. You pay 2.00 more for +your actual sugar than you had figured but you have profited to the +extent of 2.00 on the sale of futures. Profit and loss cancel each +other and you have your sugar at 6.00. In other words, although the +market is now 8.00 you are delivering 6.00 sugar to your customers, +with a profit to yourself. + +If the market declines after your original purchase at 6.00 so that in +September sugar is selling at 4.00, you will sell your futures at 4.00, +taking a loss of 2.00. But you will buy your actual sugar at about +4.00, also, which is 2.00 lower than you planned for. This gain of +2.00, while not to be termed an actual profit, may certainly be +considered as canceling the loss on the sale of your futures, so that +the cost of your sugar is really 6.00, your original price. + +Another way of looking at this is to add the loss of 2.00 on the sale +of your futures to 4.00, the cost of your actual sugar, making 6.00, +the price upon which you had based your plans. If you had waited, you +would have been able to get your sugar for 4.00, but by buying it ahead +you have had the benefits of protection and the elimination of +speculation and risk. + +If the market remains steady after your June purchase, or after various +fluctuations, returns to 6.00 by September, you sell your futures at +6.00 and buy spot sugar for about the same amount. Thus you have +neither gained nor lost, but you have been protected in your sugar +cost. + +This is essentially a "playing-safe" operation. It results in profit +insurance for the jobber who is willing to sacrifice the possibility of +a speculative gain on advance sales to customers. It is thoroughly +sound business policy and is neither expensive nor difficult to carry +out. + + + + +Point of Delivery + + +Although Chicago is the delivery point in all Exchange contracts for +refined sugar, it should be plainly understood that the Exchange is for +anyone, anywhere. Whether located in Chicago, or in Rochester, +Baltimore, New York or even San Francisco, a jobber can advantageously +use the Exchange. + +Deliveries of Refined Sugar Futures will be made only from the +Exchange-licensed warehouses in Chicago. But, regardless of the +prospective buyer's location, the delivery point is not of any material +importance as it is an established fact that in operations on all +exchanges the percentage of actual deliveries taken is exceptionally +small. In fact, the examples used in this booklet are all based on the +supposition that the buyer may find it more convenient _not_ to take +delivery. + +The usual procedure followed in sugar exchange operations is for the +buyer to close out his exchange transaction prior to the period calling +for delivery and purchasing actual sugar from the refiners, executing +both transactions practically simultaneously. + +Possibly the most important problem in connection with the organization +of any commodity exchange is to reduce the possibility of corners, +however remote, to the smallest possible degree. + +In the case under discussion, the Chicago delivery point, by virtue of +its accessibility for producers and consumers from all parts of the +country, operates to that end. + +Practically every refiner of cane sugars in the East and West, as well +as the Southern refiners, carries large stocks in Chicago, and its +favorable location in connection with the beet sugar industry also +makes it highly desirable. Its situation in regard to the offerings of +the Louisiana producers is also an additional protection and advantage +of considerable importance. + +The Exchange-licensed warehouses in Chicago are under the direct and +constant supervision of Exchange representatives. Facilities are +provided for testing and grading sugar so as to maintain Exchange +quality standards. + + + + +When are Refiners' Prices and Exchange Quotations in line? + + +Since exchange quotations for refined sugar futures are net cash +ex-exchange-licensed warehouse, Chicago, while refiners' quotations are +f.o.b. refinery, less 2% for cash, it is obvious that there must be a +difference between refiners' prices and exchange quotations. + +It is equally obvious that the differential should approximate the +freight rate between Chicago and the Seaboard, where the refiners are +located, with allowance also for the cash discount. When the markets +are in line such is the case. Conversely, when the differential is +higher or lower, the markets are out of line. + +Therefore, in order to tell whether the markets are out of line, or to +what extent, it is necessary to determine on a differential to +represent the normal difference between the two markets. There is no +one figure, however, that will satisfy all conditions at all times, for +the reason that there are various freight rates between the Seaboard +and Chicago. It is inaccurate, for instance, to use 63c as the basis +for the normal differential. The 63c rate is one rate--the all-rail +freight rate from New York to Chicago. + +Other important routes and rates are as follows: + + Routing: Freight Rate: + + New Orleans--Chicago (barge and rail) $0.50[1] + New York--Chicago (rail and lake) .58 + New Orleans--Chicago (all rail) .60 + Philadelphia--Chicago (all rail) .61 + New York--Chicago (all rail) .63 + Savannah--Chicago (all rail) .63 + Boston--Chicago (all rail) .63 + + [1] The cheapest routing (48c) takes about two weeks' more time + in transit than the New York all-rail routing (63c). Interest + charges on finances involved, etc., for this extra period will + bring the expense of this routing to approximately 50c. + +After a study of the amounts of sugar shipped over these various routes +we have arrived at an arbitrary figure to represent the normal +differential between refiners' prices and exchange quotations. We +believe that 57c will serve as a safe basis for calculation, but 58c or +59c might be equally--or more--accurate. In fact, anyone is entitled to +an opinion. 57c is our opinion. It is not an average of freight rates, +but is an arbitrary figure. + +When the markets are in line, using 57c as a basis for calculation, 2% +should be deducted from refiners' prices, and 57c added to determine +what Exchange quotation should be. Conversely, 57c should be deducted +from Exchange quotations and 2% added to determine what refiners' +prices should be. + +If you are willing to accept 57c as a safe figure, you may find the +following chart useful in determining the condition of the market: + +ARE REFINERS' PRICES AND EXCHANGE QUOTATIONS IN LINE? + +Based on a 57c differential and 2% cash discount + +When Exchange +Refiners' Quotations +Prices Are Should Be + + 4c 4.49 + 4.05 4.54 + 4.10 4.59 + 4.15 4.64 + 4.20 4.69 + 4.25 4.73 + 4.30 4.78 + 4.35 4.83 + 4.40 4.88 + 4.45 4.93 + 4.50 4.98 + 4.55 5.03 + 4.60 5.08 + 4.65 5.13 + 4.70 5.18 + 4.75 5.22 + 4.80 5.27 + 4.85 5.32 + 4.90 5.37 + 4.95 5.42 + 5.00 5.47 + 5.05 5.52 + 5.10 5.57 + 5.15 5.62 + 5.20 5.67 + 5.25 5.71 + 5.30 5.76 + 5.35 5.81 + 5.40 5.86 + 5.45 5.91 + 5.50 5.96 + 5.55 6.01 + 5.60 6.06 + 5.65 6.11 + 5.70 6.16 + 5.75 6.20 + 5.80 6.25 + 5.85 6.30 + 5.90 6.35 + 5.95 6.40 + 6.00 6.45 + 6.05 6.50 + 6.10 6.55 + 6.15 6.60 + 6.20 6.65 + 6.25 6.69 + 6.30 6.74 + 6.35 6.79 + 6.40 6.84 + 6.45 6.89 + 6.50 6.94 + 6.55 6.99 + 6.60 7.04 + 6.65 7.09 + 6.70 7.14 + 6.75 7.18 + 6.80 7.23 + 6.85 7.28 + 6.90 7.33 + 6.95 7.38 + 7.00 7.43 + 7.05 7.48 + 7.10 7.53 + 7.15 7.58 + 7.20 7.63 + 7.25 7.67 + 7.30 7.72 + 7.35 7.77 + 7.40 7.82 + 7.45 7.87 + 7.50 7.92 + 7.55 7.97 + 7.60 8.02 + 7.65 8.07 + 7.70 8.12 + 7.75 8.16 + 7.80 8.21 + 7.85 8.26 + 7.90 8.31 + 7.95 8.36 + 8.00 8.41 + 8.05 8.46 + 8.10 8.51 + 8.15 8.56 + 8.20 8.61 + 8.25 8.65 + 8.30 8.70 + 8.35 8.75 + 8.40 8.80 + 8.45 8.85 + 8.50 8.90 + 8.55 8.95 + 8.60 9.00 + 8.65 9.05 + 8.70 9.10 + 8.75 9.14 + 8.80 9.19 + 8.85 9.24 + 8.90 9.29 + 8.95 9.34 + 9.00 9.39 + 9.05 9.44 + 9.10 9.49 + 9.15 9.54 + 9.20 9.59 + 9.25 9.63 + 9.30 9.68 + 9.35 9.73 + 9.40 9.78 + 9.45 9.83 + 9.50 9.88 + 9.55 9.93 + 9.60 9.98 + 9.65 10.03 + 9.70 10.08 + 9.75 10.12 + 9.80 10.17 + 9.85 10.22 + 9.90 10.27 + 9.95 10.32 +10.00 10.37 + + (This chart works both ways. That is, when the exchange quotation + is given, if the markets are in line the refiners' prices should be + as shown in the first column.) + +It should be borne in mind that the above calculations are based upon a +normal difference in price of 20c per hundred pounds between beet and +cane sugars, which is the ruling difference as quoted in the Exchange +contract. Should beet refiners elect to sell at greater discounts than +20 points under cane refiners' Seaboard prices, the amount in excess of +20 points would have to be subtracted from our arbitrary figure of 57c. + + + + +The Function of the Sugar Broker + + +If you should organize your company so that it could attend to all the +details of sugar buying economically, you would probably still profit +from the assistance of a sugar broker whose specialty is sugar buying, +whose horizon is a sugar horizon, whose thoughts are sugar thoughts and +who must necessarily know more about sugar than the average buyer would +ever consider it desirable to know. + +The sugar broker's service to you is unaffected by prices--his prices +and all other brokers' prices are the Exchange prices; his commissions +are based on the same percentages as all other brokers' commissions. +His only distinction can come from the actual service he can render. + +This service may be good or poor, depending upon whether his +experience, his organization, his information and his judgment are good +or poor. If, added to his knowledge of sugar, he also possesses a broad +knowledge of economic fundamentals and a perspective upon and contact +with world activities as they affect all phases of the business of +sugar, his service will be many times more valuable than if he were +limited by a small organization, by a definite locality or by +experience in only a few phases of this business. + +A sugar broker who merely _accepts and transacts orders_ is giving no +service worth the name. To give service in accordance with the highest +modern standards, he must stand as an adviser, as a constant seeker +after opportunities which will benefit his clients, as a partner whose +interest in his clients' profits and progress equals his interest in +his own. + +Our experience has convinced us that the client secures the greatest +amount of protection in filling his sugar needs when one broker handles +all sugar transactions. + +These exchange operations should be carried out when the market is out +of line in your favor. You need the best kind of advice, based on an +intimate knowledge of your business. + +A single brokerage house becomes thoroughly acquainted with the +client's business and personnel, with the result that the two +organizations work in harmony virtually as partners, confusion and +misunderstandings are avoided, quicker and more advantageous +transactions are made possible. + +The choice of that broker should be a matter of great care, for in +addition to the willingness to serve, he must have the facilities and +the financial stability. For, bear in mind that the broker with whom +you deal is the responsible party for the fulfillment of the contract. +Your contract is as good only as the reliability of your broker. + +Lamborn & Company has become known throughout this country and abroad +as an institution for the service of all those who have a business +interest in sugar. + +Lamborn Sugar Service is rendered through our head office at 132 Front +Street, New York, and through branch offices in Philadelphia, Chicago, +Savannah, New Orleans, Kansas City, Mo. and San Francisco. + +Lamborn Service in all its phases is available to you as a jobber. + +We shall be very glad to explain either in person or by letter what a +brokerage relationship with us involves, how it may be accomplished and +how transactions may be carried out. + + + + +LAMBORN & COMPANY + +_Sugar Headquarters_ + +132 Front Street: New York + +7 Wall Street: New York (Securities) + +Havana and Cienfuegos, Cuba Paris, France +THE LAMBORN COMPANY LAMBORN & CIE + +_Branches in the United States_ + +Philadelphia Savannah New Orleans Chicago +Kansas City San Francisco + + +_Members of_: + +New York Coffee & Sugar Exchange, Inc. +New York Stock Exchange +New York Cotton Exchange +New York Produce Exchange +Chicago Board of Trade +London Produce Clearing House, Ltd. + Cable Address: Lamborn + + +Contract between Members of the New York +Coffee and Sugar Exchange, Inc. + +The Standard Fine Granulated Sugar contract is as follows: + +Sold for ... to ... 800 bags (of 100 lbs. net each) of Standard Fine +Granulated Sugar at ... cents per pound, manufactured in the United +States or insular possessions, packed in cotton-lined burlap bags, +deliverable from licensed warehouse in Chicago between the first and +last days of ... inclusive. Delivery within such time to be at Seller's +option, upon seven, eight or nine days' notice to the buyer. If +Domestic Beet Standard Fine Granulated Sugar be delivered in +fulfillment of this contract, Seller to make an allowance of 20c per +100 lbs. + +The Seller shall have the right to deliver Foreign Cane Standard Fine +Granulated Sugar in fulfillment of this contract by making an allowance +to the Buyer of 25c per 100 lbs., and foreign beet standard fine +granulated sugar by making an allowance of 45c per 100 lbs., provided +such sugars comply with the Types adopted as Standard by the New York +Coffee and Sugar Exchange, Inc., and all duties have been paid thereon. + +This contract is subject to an adjustment for duty, as provided in the +Sugar Trade Rules. + +Either party to have the right to call for margins as the variations of +the market for like deliveries may warrant, which margins shall be kept +good. This contract is made in view of and in full accordance with the +By-Laws, Rules and Conditions established by the New York Coffee and +Sugar Exchange, Inc. + + (Written across the face is the following) + +For and in consideration of one dollar to ... in hand paid, receipt +whereof is hereby acknowledged ... accept this contract with all its +stipulations and conditions. + + +Brokers' Commissions + +The broker's commission for either buying or selling each contract of +800 bags of sugar depends upon the price at which the transaction is +executed. The following table gives a range of prices and the +corresponding commissions: + +For the sale or purchase of each lot of 800 bags: + +_Contract Price_ _Commission_[2] + +Up to 9.99c, per pound $15.00 +10c to 12.99c, " " 17.50 +13c to 17.99c, " " 20.00 +18c and above, " " 25.00 + + [2] These commissions apply to transactions in the United States, + Porto Rico and Cuba, from non-members of the New York Coffee and + Sugar Exchange, Inc. + + +Minimum Trading Basis + +A "lot" of refined sugar consists of 800 bags of 100 lbs. each, or +80,000 lbs. This is the minimum amount which can be sold on the +Exchange. + + +Delivery + +The date upon which sugar shall be delivered on an Exchange contract is +at the option of the seller, provided that date come within the month +named in the contract. Notice of the date of delivery must be given to +the buyer seven, eight or nine days preceding the day on which delivery +will be made. + +If you are not going to fill your actual sugar needs by accepting +delivery from the Exchange warehouses, you should close out your +contracts within two weeks, or, at the latest, ten days of the first of +the month in which delivery is specified, as after notification of +delivery has been given, there is usually not sufficient time to make +other plans. + + +Orders + +Except in nearby localities, orders should be sent by wire, addressed +to: SUGAR FUTURES DEPARTMENT, 132 Front Street, New York, N.Y. +Inquiries or orders will be given prompt attention at any of our +offices, but time will be saved and execution facilitated if they are +sent direct to New York. Unless otherwise specified, orders are good +only for the day on which they are received. If they cannot be executed +at the price named before the closing of the Exchange on that day, or +if they should arrive after the Exchange closes, it will be understood +that they are automatically cancelled unless specific instructions are +given for the execution the following day or unless formally renewed by +wire. If you desire to place an order, good until countermanded, you +can do so. The general term applied to such orders is "order good till +cancelled." The general abbreviation in the trade is G.T.C. + + +Exchange Trading Hours + +Hours for trading on the Exchange are from 11:00 a.m. to 2:50 p.m., +except on Saturdays. + +Saturday hours are from 10:30 a.m. to 11:50 a.m. + + +Delivery and Warehousing Charges + +If you make delivery on the exchange, the following are your charges: + + Storage 3c per 100 lb. bag + Handling in and out, charged + with first month's storage 5c per 100 lb. bag + Negotiable warehouse receipt 50c + +If you accept delivery on the exchange, your charges are: + + Carloading 1-1/4c per 100 lb. bag + + +Acceptance of your order + +The form of our acceptance of your order reads as follows: + +In accordance with your instructions we have this day made the +following transactions in STANDARD FINE GRANULATED SUGAR for your +account and risk, subject in all respects, and in accordance with, the +Rules, By-Laws, Regulations and Customs of THE NEW YORK COFFEE AND +SUGAR EXCHANGE, Inc., and the Rules, Regulations and Requirements of +its Board of Directors, and all amendments that may be made thereto. + +All transactions made by us for your account contemplate the actual +receipt and delivery of the SUGAR and payment therefor. + +The right is reserved to close transactions when margins are exhausted +or nearly so, without notice. + ++=================================================+ +|Bags of Refined Sugar | Month of Delivery| Price | +|----------------------+------------------+-------| +| Bought | Sold | | | +|----------+-----------+ | | +| | | | | +| | | | | +| | | | | +| | | | | +| | | | | +| | | | | +| | | | | +|__________|___________|__________________|_______| + + + + +Raw Sugar Futures + +Prior to the inauguration of trading in Refined Futures, Raw Sugar +Futures were used by many jobbers for hedging and protecting their +Refined requirements. + +The theory of operation is that the raw price will be about equivalent +to the refined price after duty and the charge for refining are added. +While the Raw Sugar market will at times get out of line with refined, +both favorably and unfavorably, this cannot continue for any long +period. + +When the Raw Futures market is favorably out of line, it may be more to +your advantage to use this market, rather than the Refined Futures +market. At the present time there is the added advantage that the +volume of trading is greater in Raw than in Refined. + +When buying or selling Raw Sugar Futures, you may figure that the +variation on a minimum lot of 50 tons would be equivalent to the same +variation of 1120 bags or 320 barrels. + +We give you below herewith details of contract and trading conditions: + +All contracts for future delivery shall be for 50 tons of 2,240 pounds +each and multiples thereof. + +CONTRACTS: Sold for ... to ..., 50 tons of 2,240 pounds each of sugar +in bags, deliverable from licensed warehouse in the port of New York, +between the first and last days of ... inclusive. The delivery within +such time to be at seller's option, upon 7, 8 or 9 days' notice to the +buyer. The sugar to be of any grade or grades of Raw sugars based on +Cuban Centrifugal of 96 degrees average polarization outturn at the +price of ... cents per pound in bond, net cash with additions or +deductions for other grades according to the rates of the New York +Coffee and Sugar Exchange, Inc., existing upon the afternoon of the day +previous to the date of notice of delivery, and shall embrace all +Centrifugals first running. The foreign sugars deliverable other than +Cuban Centrifugals, are: Centrifugals from British West Indies, +Demerara, Surinam, San Domingo, Brazil, Peru, Java, Mauritius, +Venezuela and Haiti, all basis of 96 degrees average polarization +outturn at .2512 cents per pound (difference in duty) less; but no lot +of 50 tons is to consist of sugar from more than one country of origin. + +Allowances on Centrifugal sugars to be .03125 cents per pound per +degree above 96 degrees, up to 98 degrees and .0625 cents per pound per +degree below 96 degrees, down to 94 degrees and .09375 cents per pound +per degree below 94 degrees, down to 92 degrees, with fractional +degrees pro rata. + + +Exchange Trading Hours + +Hours for trading in Raw Sugar Futures are from 10:45 a.m. to 2:45 p.m. +on week days and from 10:15 a.m. to 11:45 a.m. on Saturdays. + + +Trading Differences + +A fluctuation of 1c per 100 pounds is equivalent to $11.20 per lot of +50 tons. + + +Margins + +An original margin in New York funds must accompany all orders, we +reserving the right to call for variation margins when contract shows +depreciation. We also reserve the right to close transactions when +margins are exhausted or nearly so without further notice. The amount +of this original margin will of necessity fluctuate with conditions +existing at the time orders are placed. At the present time in +localities that are in position to make prompt remittance for any +variation margins required, the margin is $400. + + +Commissions + +For either buying or selling each contract of 50 tons + + Based upon a price + + Below 4 cents $12.50 + 4 cents to 9.99 15.00 + 10 cents to 12.99 17.50 + 13 cents to 17.99 20.00 + 18 cents and above 25.00 + +NOTE: All orders for Raw Sugar Futures shall be in accordance with the +By-Laws and Rules of the New York Coffee and Sugar Exchange, Inc. and +the New York Coffee and Sugar Clearing Association, Inc. + + + + + +End of Project Gutenberg's About sugar buying for Jobbers, by B. W. 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