Presented by: Ed Jernigan CEO, Chairman The Jernigan Group, LLC
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Presented by:Ed Jernigan
CEO, ChairmanThe Jernigan Group, LLC
• NYBOT Cotton Futures Allow for Delivery of U.S. Cotton Only
• SLM 1-1/16” is the Quality Basis for the Contract
Terms:
Weekly Basis Fluctuations Experienced Between January 3 and August 8
CIF Asia Offering Price: Nearby Shipment versus Nearby NYBOT Futures
Physical Prices Obtained from the GLOBECOT Matrix
Basis Fluctuation
High 12.43 Feb. 2112.67 May 30
Low 5.48 Mar. 144.78 Jul. 3
U.S. Cents per Pound
Central Asian SM 1-1/8 G-5 CIF Asia: Nearby Shipment vs. NYBOT Nearby Futures
4.005.006.007.008.009.00
10.0011.0012.0013.0014.00
U.S
. Cen
ts p
er P
ound
Jan. 3, 2003 Aug. 8, 2003
Basis Fluctuation
High 13.93 Feb. 2113.67 May 30
Low 5.78 Mar. 14
U.S. Cents per Pound
Uzbekistan SM 1-1/8” G-5 CIF Asia Nearby Shipment vs. NYBOT Nearby Futures
4.00
6.00
8.00
10.00
12.00
14.00
16.00
U.S
. Cen
ts P
er P
ound
Jan. 3, 2003 Aug. 8, 2003
Basis Fluctuation
High 12.42 May 30
Low 2.90 Mar. 14
U.S. Cents per Pound
Syrian SM 1-1/8” G-5 CIF AsiaNearby Shipment vs. NYBOT Nearby Futures
0
2
4
6
8
10
12
14
U.S
. Cen
ts p
er P
ound
Jan. 3, 2003 Aug. 8, 2003
Basis Fluctuation
High 10.18 Feb. 21
Low 1.53 Mar. 14
U.S. Cents per Pound
Mali T-Juli/S 1-1/8” G-5 CIF AsiaNearby Shipment vs. NYBOT Nearby Futures
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Jan. 3, 2003 Aug. 8, 2003
• Forget the textbook• Become very aware of the logistics of the
NYBOT contract• Become very aware of U.S. supply-
demand outlook• Actively manage the hedge• Avoid the nearby month at least 30 to 45
days ahead of first notice day
• Requires a study of past fluctuations• The volume and supply-demand of growth to
be hedged should be considered• U.S. Farm Program effects should be
considered• Requires time and resources• Overall price direction should be considered
• Ability to apply NYBOT hedge profits to offering prices providing a major price advantage over competitors
• Provides ability to gain market share• Gain customers through flexibility of on-
call prices
• Avoid price risk on inventory
• Maintain competitive advantage even if prices fall after fixed price purchases
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