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 Red 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. 
