[This is part of the series: 5 Ways To Market Your Cotton]
As a cotton grower, the first way in which you can market your cotton is with the cash sale.
This is as simple as it gets.
You grow your crop and harvest it.
Finally, you gin the cotton and then send it to a warehouse for storage.
Once all this is done, you get your grading sheets (“recaps”) back from the classification office.
A cash sale is now simply sending your recaps to a cotton buyer and asking what they will give you for your cotton.
The price is usually quoted at a flat price, or as a discount to the current futures price.
“For this lot of cotton I will give you 400 points off Dec.”
So if the futures price of December cotton is 75 cents / lb., the buyer is offering you 71 cents / lb.
Once you agree on a price, the gin (typically) will transfer title of the cotton, and then the cotton buyer will wire the money to you (or the gin) for payment.
Done, and done.
Also published on Medium.