138 WHEAT PRODUCTION IN NEW ZEALAND 



demand as determining market price is often obscured. 

 Isolated forces are regarded by the casual observer as 

 being the sole determinants of price for short periods, 

 whereas actually these forces are only a part of the 

 system under which is worked out the tendency of 

 demand and supply to come to equilibrium. Any factor 

 operating to obstruct the natural course of this tendency 

 has a corresponding effect on prices. On this account 

 prices in a great market like the London market vary 

 from day to day. Thus, if news is received that the 

 monsoon in India is overdue ; that the drought in Kansas 

 has been broken; that the navigation on the Danube 

 is unusually early; that an Australian drought is 

 threatening the wheat crop there; that the Manitoban 

 supply has been seriously impaired by a pest, or that 

 bad roads in the Bed River Valley are preventing 

 delivery, prices rise or fall to a degree that corresponds 

 to the importance attached to the news. But once the 

 extent of this new factor is realised normal conditions 

 once more operate to bring about a new equilibrium 

 between demand and supply, thus determining market 

 price. Any attempt to study the factors determining 

 price must therefore commence with an analysis of the 

 forces operating on demand and supply. 



(a) Factors on the Supply Side. By the supply of 

 wheat is meant the amount of wheat which will be offered 

 for sale at a given time. Factors operating on the supply 

 side are many and various. Of these the most important 

 are : 



(1) Changes in climatic conditions, including the 

 abundance of rainfall, which exert a great 

 influence on the yield of wheat. 



(2) The opening up of new producing areas such 

 as the recent extension of acreage in Australia. 



(3) The decrease in acreage owing to the growth 

 of more profitable crops in certain regions, e.g., 

 fruit in California, or pastoral farming in New 

 Zealand. 



