Cotton in demand and in short supply

6 03 2011

Link: http://www.danielstrading.com/resources/news/Futures-Market-News/Cotton-futures-gain-as-demand-trumps-supply_800444119/

The price has increased because of the decrease of supply and the increase of demand. The article mentions that the Chinese production companies that produce cotton had a shortage by 6%. A supply determinant could be the lack of resources to make cotton which increase the cost of production and causes the supply to decrease. A demand determinant could be the buyer’s expectations. Because of the low supply, buyers would wan’t to stock up on cotton, before the price increases. The decrease of supply and the increase of demand has caused to price to increase and the quantity to decrease.

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