Sandhusker: "I see where you're coming from, Man-of-the-Yucca, but your profits from demand depend on the level of your participation. Just because the commodity you are selling is doing well, it doesn't necessarily mean you are. Prime example is the fast-food industry. Industry sales could be thru the roof, but if everybody is buying Big Macs, Burger King gets nothing from the increased demand. Instead, they're weakened because their competition has gained strength."
Have done a little more head scratching about the subject (I don't dare do too much, 'cause the ol' hair is thin enough as it), and here are a few more thoughts. You say if everybody is buying Big Macs, Burger King gets nothing from the increased demand. I would venture to guess that if McDonalds are doing well, Burger King WOULD benefit from increased burger demand, riding on the coattails of the fact that "eating burgers is cool." Sure, McDonalds thinks that advertising pays, or they wouldn't be doing it. It does pay, and they sell more hamburgers than before. Their eating establishments get crowded, so a few people that would have eaten at McDonalds decide to eat at Burger King where it is less crowded. A few other customers think that Big Macs taste good, but decide they'd also like to try the competition. Soon all hamburger joints are doing well, but not as well as McDonalds because after all, advertising does pay.
Look at the long ago ads from Wendy's, where Clara Peller uttered the battle cry of the burger, "Where's the BEEF?" The whole Beef Industry benefitted from that famous ad. All other hamburger joints "rode the coattails" of the Wendy's campaign, and even the fancier steak houses, other restaraunts, and grocery stores saw increased beef sales.
If cattle prices are better than usual, the only producers that don't benefit from the increase in prices are those who don't sell during their window of opportunity. For instance, if a rancher is in the habit of selling calves at weaning time, and prices are at an all time high, it would be a darn poor time to experiment with retained ownership and feed those calves on out until they are "harvested." On the other hand, if calf prices aren't too good, and their banker sanctions the deal, then would be a good time to gamble and retain ownership.
Here is another can of worms that I'll open for conversation's sake. We all know that Ted Turner is the bad guy :wink: that is buying up way too much land and turning it into buffalo ranches. I sure don't like the thought of him ruining ranching as it used to be, but looking at it from a different perspective, he is in a way "helping" those of us who choose to remain and run cattle. The buffalo that he is introducing are displacing cattle that used to run on the land. That makes the cattle that are left that much more valuable, because less supply turns into more demand.
Feel free to correct me. I reserve the right to change my mind at any time. :wink:
