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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Clothing Prices To Rise

5 03 2011

Cotton prices have doubled within the last year. This trend is also going to continue as it is expected to increase 10% within the next few months. The price has risen to $1.90 per pound which surpassed the previous record of cotton prices. The previous record was $1.89 during the American Civil war, 150 years ago. The production cost of cotton has increased due to bad weather cut harvests in major producing countries such as China, Pakistan and Australia. There has also been a restriction on exports from India which is the world’s second biggest producer of cotton. What also has driven up prices is the increased demand of cotton due to number of buyers increasing due to the recovering economy.

Here is the link to the article





The Business of Fashion: Clothing Prices on the Rise

5 03 2011

http://www.nbcnewyork.com/blogs/threadny/THREAD-Clothing-Prices-To-Rise-Up-to-20-By-Fall-117178343.html

The price of cotton has more than doubled in cost over the last year, and as a result many fashion retailers are forced to charge customers a higher price for clothing. This rise in the cost of cotton is caused by both a decrease in supply and an increase in demand. The supply of cotton has decreased as a result of the cost of factors of production, because the costs of manufacturing and labour in countries such as China and India are increasing. Also, the number of sellers has decreased because floods in Pakistan and heavy rains in China slowed production, and so fewer cotton farmers were able to cultivate the land and sell their cotton. The cotton market is experiencing an increase in demand from developing countries, and this is likely because of the increasing number of buyers, though the reason is unclear in the article. The result of a decrease in supply of and an increase in demand for cotton has caused an increase in its equilibrium price; however the quantity of cotton exchanged between sellers and buyers is unclear in the article.