News Article Analysis Essay Example | Topics and Well Written Essays - 750 words

News Article Analysis - Essay Example As asserted, due to the apparent higher expected supply of corn in the current year, the FAO index was reported to have exhibited an average of 199.1 points for the month of September; which was measured to manifest a 1 percent decline from the average points reported in the month of August. The more prominent change was reported to be a significant 5.4% decline from the average points reflected at the start of 2013. These trends were accurately pinpointed to be sourced from the significant level of production or supply of corn; of which the United States was reported to contribute as much as 348 million tons, or a 27% increase, from the production level in 2012. The favorable weather conditions this year, in conjunction with the greater expanse of acreage allotted to corn production were instrumental in the increased supply for corn in 2013. The article is related to the economic topic of demand and supply, particularly how markets respond to changes in demand and supply. From the e xplanation that was provided, there is an apparent impact on the increase of supply of corn to the world prices of food. With greater supply, and assuming a constant demand, the impact would evidently mean a decrease in prices of commodities affected by the abundance in supply of the mentioned product. In this situation, the global cereal production, composed of wheat and corn, was projected to manifest an increase in supply. It was clearly revealed that â€Å"global cereal production, which includes wheat and corn, is expected to be 8% higher over 2012’s level, at 2.49 billion tons. The U.S., the world’s largest corn producer, is responsible for the bulk of the increase, expected to harvest a record crop of 348 million tons—that’s 27% higher than the previous year† (Rai, 2013, par. 4). Likewise, another international agency, the International Grains Council corroborated the trend through their own projections that indicate production of corn to in crease to 943.2 million tons; while wheat supply would reach 692.6 million tons. Therefore, given that the demand remains on a fairly stable level, with no significant or considerable increase, the impact of the increase supply would be an evident decrease in prices of food, which is measured through the FAO index. The article provided greater insights in terms of the repercussive effect of economic components of demand and supply from one market or economy to another market or to the global market, in general. The incident could actually be evaluated as macro-oriented in terms of the supply of corn and wheat being instrumental in impacting other food products that uses them as their raw materials or main ingredients. Evidently, the impact is not restricted in the domestic market, such as the United States where the supply or abundance in production was seen to rise to significant levels. The fact that the U.N. FAO regularly monitors demand and supply of basic commodities only confi rm that there is a stronger repercussive effect as markets are seen to be closely correlated through economic activities and movements of economic indices. Since the United States has an overpowering impact as a powerful nation to other international economies, any significant changes in basic raw materials would have important effects to other economies in terms of prices of commodities. It would therefore be crucial to anticipate these changes to prepare other