Author: Osamu Tsukimori
Date: Sep 21, 2012
Analysis about Japanese corn market with the real application of supply-demand model and elasticity theories
It is reported that Japan designs to import almost half more wheat than its March estimate to satisfy the domestic need for animal feed food. A serious of negative factors, especially the serious drought in USA, resulted in the skyrocketing price of corn. The demand for corn has fiercely decreased and Japan is forced to buy more wheat as substitution instead. Without fitting weather, key producers consider the production estimate nearly unpromising as the global supplies of grain have been tightened. Japan government also takes measures to impose the price ceiling to protect local residents and farmers.
The impact of climate change in most areas will result from changes in water scarcity. The long-term drought in USA has bad effects on the growing conditions for corn. Consequently, the supply curve for corn shifts to the left from S to S’ (as it did in Figure A). So the market price for corn rises (Chart I shows how the price of the corn went in the last 3 years) and the total quantity produced decreases. Typically, there are
some others main factors leading to this situation, such as transportation costs due to rising prices of fuel and fertilizer. The relationship between the quantity supplied and the influential factors would be represented with the following equation Qs=F(P,T,I,Prg,e)
where P is the price of corn, T is the improvement of new technology, I is the residents’ income and Prg means the prices of related goods. P
Chart I from Nasdaq.com
It can be properly implied that if some advanced technology to improve irrigation system is invented or fertilizer costs...