The price received for cotton is dependent on the quality of each bale. Cotton prices are quoted for ‘base grade’ 31-3-36, G5 (refer to Figure 3). Premiums and discounts apply for higher and lower grades, respectively.  Cotton merchants generally present actual classing results in an easy-to-read report displaying the AUD $/bale premiums or discounts. These pricing adjustments are calculated using their ‘Premiums and Discount (P&D) Schedules’ or ‘Differential Sheets’. Australian merchants P&D schedules are formatted similarly, and the adjustments are generally quite similar, but there may be some differences. P&D schedules often change between seasons and sometimes within the season; the merchant will generally set the seasons P&D around ginning time. From this time, they can be requested from your merchant.  Premiums or discounts may be displayed in either USD $/lb or USD points/lb. There is 100 points in a cent. For example, a 300-point discount is equivalent to -$0.03. To convert from per pound to per bale, multiply by 500. To convert into Australian dollars, divide by the USD/AUD exchange rate (ask your merchant the exact exchange rate which is applicable).

For example: A total discount of 800pts/lb = -$0.08/lb = -$0.08 x 500 .85 = AUD -$47.06/bale

Multiple adjustments may apply to one bale of cotton. One adjustment for colour – leaf – staple length, while all other characteristics have their own adjustments.

For more information talk to your merchant or their classing facility.

Refer to the following websites:
Australian Cotton Shippers Association (www.austcottonshippers.com.au/)
FIBREpak (www.cottoninfo.com.au)
www.cottoninfo.com.au/publications/basic-guide-cotton-pricing-and-quality