Cotton+Futures+Soar+161.3%+-+Vivien

Article: Cotton Futures Soar 161.3% Source: The Street - [|http://www.thestreet.com/story/11027566/1/cotton-futures-soar-1613-this-year.html?obref=obinsite] Date: March 1, 2011

This article written by Andrea Tse speaks of the rising cotton demands for more supply in China. China has long been known as the main exporter of cotton but has recently been importing cotton at record levels.The reason behind these record levels, is the decreasing acreage and farmland devoted to growing cotton and the soaring economy's need to expand its textile industry. There is a shortage for supply for cotton in China thus China must import cotton to keep pace with its insatiable demand. The irregular weather hindering the growth of cotton is also a factor to the shortage in cotton. A determinant of supply is nature and weather changes and due to inclement weather, supply has decreased in effect. Government intervention is another determinant of supply in this case. Governments are decreasing the acreage for farming to increase its industrial factor.
 * Summary:**

Macroeconomics -The part of economics concerned with the study of an economy as a whole and economy wide issues such as unemployment, inflation and growth. Demand: How much a consumer is willing and able to buy a product. Shifts on Curve for Demand Curve: a shift to left or right is made to match the quantity supplied. Supply -The quantity of a good or service which is needed and is available in a market. Shortage -When quantity demanded is greater than quantity supplied in a market. Determinants of Supply - Factors that decisively affects the nature or outcome of supply, that affect how willing and able the the consumers purchase goods. Market -A place where products are traded or exchanged. Quantity Supplied -The amount of a good or service which producers offer to supply over a given period of time. Sustainable Development: -Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
 * Vocabulary:**

Graph 1: This is a graph of the supply and the demand of cotton and how due to inclement weather and decreased acreage due to government intervention, the supply curve has shifted to the left, resulting in a shortage of supply for cotton so in order to reach equilibrium, the price must be increased to reach equilibrium.
 * Description:**

In order to fix the shortage of supply for cotton, it can be seen in the graph that the cotton industries must increase their prices or take in more export from other countries. Export from other countries increases the supply for also costs money for the cotton industries to export rather than grow their own crops. Consumers may switch to substitute goods if cotton prices rise significantly thus the cotton industries is in a middle of dilemma. The government should take notice of this cotton crisis because if China continues to reduce farmland dedicated to cotton farming then supply will continue to decrease and the exports will continue to increase. Demand is still high due the global textile trade liberalization and the soaring economy thus I believe China should invest more in agriculture or at least find a way to balance growth in the industrial factor and the agricultural factor. The government should not be decreasing acreage, even maintaining the current acreage devoted to cotton farming may not be enough. Due to the increasing irregular weather as a global problem for agriculture, China should invest more money into agricultural technology to find new ways to improve or boost the growth of cotton or somehow protect cotton from bad weather. This way, sustainable development can be fulfilled and the future will be prepared.
 * Evaluation:**