Chapter 3

When the markets are in line, using 57¢ as a basis for calculation, 2% should be deducted from refiners' prices, and 57¢ added to determine what Exchange quotation should be. Conversely, 57¢ should be deducted from Exchange quotations and 2% added to determine what refiners' prices should be.

If you are willing to accept 57¢ 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 57¢ differential and 2% cash discount

When Exchange Refiners' Quotations Prices Are Should Be

4¢ 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 20¢ 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 57¢.

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 20¢ 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 25¢ per 100 lbs., and foreign beet standard fine granulated sugar by making an allowance of 45¢ 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 9.99¢, per pound $15.00 10¢ to 12.99¢, " " 17.50 13¢ to 17.99¢, " " 20.00 18¢ 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 3¢ per 100 lb. bag Handling in and out, charged with first month's storage 5¢ per 100 lb. bag Negotiable warehouse receipt 50¢

If you accept delivery on the exchange, your charges are:

Carloading 1-1/4¢ 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 1¢ 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. Dyer