Demand and supply in action - Chinese Take a Cotton to Hoarding

Here´s an example of another factor, aside from PINTSWC, which can influence the supply curve of markets. “Yu Lianmin, a cotton farmer in Huji, China, harvested 6,600 pounds of cotton this year. Despite record cotton prices, he didn’t sell any of it.” In this case it seems that producer expectations of higher prices in the future are persuading them to withold supply. This would have the effect of of shifting the supply curve for cotton inwards and thus raising its price.

Individually the actions of these cotton producers alone probably wouldn´t have the effect of shifting the supply curve for cotton inwards, however, “the apparent hoarding has the effect of making an already tight market—production has been falling as demand is increasing—look even more strained.” Increasing world-wide demand for cotton will certainly shift the demand curve for cotton outwards and therefore will tend to increase it´s price.