In the same way a manufacturer may buy futures against orders he has accepted for goods, based on the price he expects to pay for his cotton. Or he may sell futures to protect himself on cotton he has bought but has not yet covered by cloth contracts. Hedging by manufacturers, however, particularly in the North, is not a common practice, because the cloth market is not elastic enough to follow accurately in the wake of cotton prices, and also because the mill treasurer rarely wants to hedge cotton in his warehouse, preferring to rely on his own judgment in matters of purchase. [Sidenote: _By the Grower_] Occasionally a grower may find it to his advantage to hedge his crop. If, for example, he is satisfied in August that the present price for December is likely to be higher than he will obtain later, he may sell December futures for a conservative percentage of his crop, thereby guaranteeing himself against a drop. [Sidenote: _Speculation_] By far the greatest part of the future trading, however, is done by merchants, because they are actually engaged in the business of selling cotton which they have not yet acquired or of carrying cotton for which they have no contracts. Speculation, of course, enters into the dealings on the exchanges as an important economic factor, in normal times tending to stabilize by discounting future trends, but in periods of extraordinary demand or supply frequently causing violent fluctuations in prices. At such times there is always a good deal of agitation for preventive legislation, but it is unlikely that dealing in futures will ever be prohibited by law. The present regulations of the large exchanges eliminate abuse as far as possible, and the futures markets are really a factor of safety for the entire industry. [Sidenote: _The Dissemination of Quotations_] All the large merchants, as we have seen, have branch offices in the South, and all these offices have wire connections with the chief markets. On the basis of the Liverpool quotations and the New York opening prices the head offices will send out to their branches and representatives their daily limits, above which they are instructed not to buy. Inasmuch as most of the small growers are dependent for their news of the markets upon the buyers, they are at somewhat of a disadvantage, but the keenness of competition prevents their exploitation by unscrupulous buyers. [Sidenote: _New York Cotton Contract_] A contract on the New York Cotton Exchange calling for the delivery of 100 bales specifies Middling grade, but the seller may deliver any grades which are tenderable by the Exchange regulations. These grades are from Strict Low Middling to Middling Fair, but if tinged, not below Middling Tinged. Stains are not tenderable. The grades are determined and settlement made on the basis of so many points on or off Middling, which, as we have seen, is the basis for all quotations. [Sidenote: _Buying Season_]