Adrian’s Supply and Demand Assignment

Market: Wheat

Article: http://abcnews.go.com/Business/story?id=4017581&page=1

Wheat prices have hit a new record price at $10 a bushel as traders worry about tight world supplies. The United Nations called for aid to poor nations that are being pummeled by shrinking food stockpiles. In March, wheat contracts surged above $10.09 per bushel, before closing at $9.66 which is double the price of a year ago.

Wheat prices are jumping for a number of reasons, including bad weather in exporting nations such as Australia. Since there is bad weather in Australia, it becomes harder to supply the amount of wheat needed.This, combined with cropland being turned into corn for ethanol, makes the supply very low. Demand for wheat is also increasing in developing economies such as India and China. The supply determinant is change in number of suppliers (decrease), and the demand determinant is change in number of buyers (increase). These two combined factors result in the price of wheat increasing dramatically.market

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