Over the past few years cotton has gotten cheaper and cheaper. Yet, It’s gotten to the point where people start to wonder when history is going to repeat itself. In 2010 cotton prices looked like they did when America was in a civil war. Cotton reached a total price of $1.20 per pound. (Wall Street Journal 2013) The price of cotton now is about ninety-two cents per pound. (NYMEX - CME Group 2014). As you can see cotton prices have gotten cheaper, but many things can happen to cause the price of cotton to go up or for it to even come down lower than it is. The biggest factor in Americas cotton value is China. Yes, a country that we are in debt to is causing us to go in greater debt. Other factors are the quality of the cotton, and even mother nature and her weather that’s near the area where the cotton was grown at. These three things are the major reasons why cotton prices go up and down, but they aren’t the only ones. Various factors result in the fluctuating price of cotton.
China is the biggest reason for our countries high cotton prices. China has an issue with hiding 45 to 50 million bales of cotton from us in a warehouse and when the time comes, they will release them out on the cotton market and prices will begin plummeting. (Southwest Farm Press, Smith 2013) Some may ask, why would China do this? Well, they did it in 2010 and it caused prices to go up. They know if they do it now it will happen again. Markets are scared just knowing that this amount of cotton is available because they know it will cause the prices to plummet.
China grows over 50% of the worlds cotton today and because of this they know they can do whatever they want to and we will listen. It’s almost like if they say jump, we say how hi...
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...l remain neutral in the price range and nobody will have to worry about it. New factors may come up that affect the price of cotton though because various factors will always cause the price of cotton to fluctuate.
Works Cited
Hanes, C., & Rhode, P. W. (2013). Harvests and Financial Crises in Gold Standard America.
Journal Of Economic History, 73(1), 201-246. doi:10.1017/S0022050713000077
Howard, F. (2014, february 26). Cotton prices to drop 10%. Retrieved from www.agweb.com/article/cotton
Robinson, E. (2006). Domestic cotton prices likely to increase Chinese plantings. Southwest Farm Press, 33(10), 8.
Smith, R (2014). How China Effects Cotton Prices. Retrieved from http://southwestfarmpress.com
Wexler, A. (2013, 11 4). Cotton prices fall on china concerns. Retrieved from http://online.wsj.com/news/articles/SB10001424052702304391204579177322368742800
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Friedman, Milton and Jacobson Schwartz, Anna. A Monetary History of the United States, 1867-1960. Princeton, 1963
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Ritter, Lawrence R., Silber, William L., Udell, Gregory F. 2000, Money, banking, and Financial Markets, 10th edn, USA.
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...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.