In what situation do prices generally increase in agribusiness markets?

Prices generally increase in agribusiness markets when demand exceeds supply. This situation creates upward pressure on prices because there are more buyers seeking a limited quantity of goods. When consumers are willing to purchase more than what is available, sellers can increase prices in response to increased competition among buyers. This fundamental principle of supply and demand dictates that when demand outstrips supply, the prices will rise until a new equilibrium is reached where quantity supplied matches quantity demanded.

In contrast, if supply exceeds demand, prices typically decrease as sellers attempt to entice buyers to purchase their excess inventory. Similarly, a decrease in production costs could lead to lower prices if producers choose to pass on savings to consumers. The availability of seasonal crops may affect prices temporarily, but this is more of a supply factor and does not inherently lead to a general increase in prices across the market. Thus, the situation where demand exceeds supply directly aligns with the observed market behavior of increasing prices.