U.S.+slashes+soy,+corn+stocks,+markets+soar+-+Kenny

**Date:** Wed Jan 12, 2011
 * Article:** U.S. slashes soy, corn stocks, markets soar
 * Source: Reuters** - http://www.reuters.com/article/idUSTRE70B6C020110112?pageNumber=1

The article argues that this year, 2011, will be an arduous year in terms of the supply of wheat due to the effect of natural disasters on two major exporters of what: Australia and Argentina, who are affected by floods and droughts, respectively. As there is a decrease in the supply of what around the world (caused by the LAND factor of production), the equilibrium quantity of wheat will therefore decrease and the equilibrium price will increase. With the change in EQ and EP, civilians of countries heavily dependent on food will be uneasy and riots or wars may occur over food. This is because food (especially wheat) is relatively inelastic (PED<1) as it is a necessity of life, and people will need it and therefore go at great lengths do achieve their needs. An increase in price for wheat products will also result in less shares bought for agricultural companies. The US Department of Agriculture has also decided to export more wheat as there is less competition from other countries, which will allow the US to maximize profit.
 * Summary:**

Commodity-a raw material or primary agricultural product that can be bought and sold, such as copper or coffee. Factor of production (LAND)-Natural resources and land that can be used for the production of a product Sustainable Development-A countries economic development that will ensure that future generations' resources will not be in jeopardy Inelastic Product- A product's whose price elasticity of demand is lower than 1, and therefore a necessity Macroeconomics-The study of interrelations between individual components of economics Demand-The need for a good or service Supply- The quantity of a good or supply offered Positive statement- A statement that is proved by the use of fact Normative statement- An opinionated statement
 * Vocabulary**


 * Graph 1: Global Supply and Demand for Wheat in 2011**


 * Evaluation**

Wheat, a major source of carbohydrates for the human body, is largely considered one of the most basic necessities for survival; therefore, the U.S. Department of Agriculture's prediction of wheat exports is a great indicator for the rest of the world about the upcoming year that faces humanity's hunger. The article's significance is that because wheat is a very inelastic product, many people will feel the effects of the changes in price and total supply of wheat. As the world's stock of wheat will "thin out", there may be civil unrest in poorer countries that are heavily dependent on major exporters of wheat. A rise in wheat price may also produce a negative effect on agricultural investors. I agree with many aspects of the article, especially the cause and effects as shown by how the article considers macroeconomics rather than just the supply and demand of wheat. The article also implies that the potential effects is that markets will soar, as justified by its use of normative statements. I agree with the article's urgency for sustainable development; however, the article does not state a plausible solution for the predicted shortage of food for many people in 2011.