Surplus here, scarcity there

Because of the warm weather in the east coast, the rock salt business is going down. Rock salt is used to melt the snow or ice so the roads are more traversable. There is no snow so people have no need to use the salt. The salt companies usually stock up in the summer and fall and even the spring to get enough to be able to sell: to control the salt business. Now because there are few sales of the salt, the salt companies are losing money.

The excess salt is a surplus, which can be bad for the economy. When there is too much supply and not enough demand, there are fewer sales, so the sellers make little revenue. No one needs salt, so the salt companies are making little revenue. One way to generate more sales is to lower the prices so people will want to buy it. In that case, people will have no use for the salt that they buy, but the salt companies would still get more consumers than they have now.

The cold weather, though, is moving towards the middle of the U.S. The places that are usually not worried about the snow now have no rock salt. This is called a scarcity — where there is more demand than supply. No one has rock salt but they all need it. If the salt traders took into account the recent weather patterns rather than the weather that has recurred years before, there wouldn’t be a surplus or a shortage. It’s a win-win situation.

In order to have control over the trade, traders must be able to have more data of the conditions and focus more on recent news not a pattern that has occurred many times before. An efficient trade makes everyone happy.