Sugar is a wonderful thing to have around the house many of us use it for coffee and other drinks that we love to have at our disposal. The article I read from the Wall Street Journal states that sugar is in high demand. The problem seems to exist in the port areas where the sugar is exported from. Brazil is the country we normally receive our sugar from and they have yet to harvest. There was a contract that was signed before Brazil’s harvest and it doubled the cost of sugar for us. Russia who has never been an exporter of sugar has decided to export for the first time in twelve years.
Expert’s and economist believe that once Brazil has harvested there will be so much overage of sugar the price will fall. However out of all of the countries exporting Brazil seems to be the only one that can maintain at the levels we need.
A demand schedule is a table showing how much of a good or service consumers will want to buy at different prices. Let’s imagine a demand table for sugar. The world has a demand for sugar and it assumes all sugar is of equal quality. According to the table if sugar costs one dollar a pound, consumers around the world will want to purchase ten billion pounds of sugar over the course of a year. If the price is one dollar and twenty five cents a pound, they will only want to buy eight billion pounds. If the price is only sixty cents per pound they will then buy twelve billion pounds and so on. Basically what this boils down to the higher the price goes on this item the less that is actually bought. If the price rises the quantity demanded of sugar the actual amount consumers are willing to buy at some specific price falls. There are shifts on a Cobb p.2 demand curve as well though. Even though sugar prices might have been higher in 2012 than they were in 2010.
In a video from March 26, 2012 provided by The Wall Street Journal, they speak about why prices are not falling. There is a global surplus of sugar. The sugar is purchased and bought but they cannot get it out because of port capacity. There is a very limited number of deep loading docks. In India there are certain policies that are not allowing the sugar to move from the ports. The crop taking longer to develop is affecting the sugar shortage until the overage from Brazil comes in. There was a drought that has drastically affected Brazil harvesting at its normal time. Certain companies in America such as coke and Pepsi are looking for ways through March of 2013 to lock the prices in and continue to get sugar for their drinks and products.
By studying supply and demand we can see that if there is no change in supply then there is no change in demand. If there is no change in demand price declines and quantity rises. With no change in demand prices may rise and quantity of the product decreases. If the demand shifts outward prices rise and quantity rises, if it shifts out the supply shifts out the quantity rises, prices could be higher or lower depending upon relative size of the shift. If the demand shifts out while supply shifts in we see prices rise. Quantity could rise or fall depending upon relative size of shifts. If we…