Why do prices vary?

Abstract

Over the past year prices paid to rural producers of coffee, cocoa and copra have varied considerably from month to month. These changes in prices puzzle many people and many growers have not understood why the price for their product changes so quickly. This article attempts to explain how prices are fixed and why they go up and down. Coffee is used as an example but the same basic factors apply in determining the prices of tea, copra, rubber, cocoa and other commodities.