Question 2

Question 2

During 2001, world cotton prices, as measured by Cotton Outlook "A" Index, showed a precipitous decline falling from 65 cents per pound in January ?01, down to 35 cents by November of that same year. Reasons for the decline will be covered in more detail, but in short, 2001 was a year where cotton supplies outran cotton demand.

Relative to last year, most countries are expected to see lower production. Exceptions are Paraguay, Turkey and Argentina, where USDA is calling for small increases. Australia is expected to see a significant decline of 1.2 million bales due to drought conditions (Mankiw ...