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Senior Advisor

So.........

I asked the question this question last week...........not many thoughts, or at least thoughts that were shared...........

 

how is demand destruction defined...........if the overall world consumption of course grains, oilseeds, and fiber maintain or grow.........then is it really destruction???????.............

 

when you break down supply and demand to a basic level............we are really talking about demand for commodities that are supplied from ariable land............doesn't matter who buys it and who sells it, doesn't matter which commodity it is, doesn't matter where it comes from...........from a global supply and demand stand points its pretty basic, cut and dry.........

 

however when we think about supply and demand for US grown crops............maybe thats where we see demand for our products slow or shift thus creating that illusion..........more feed wheat being used in livestock rations will take from corn demand but add to wheat demand, the net effect on consumption could be ZERO...........while the net effect could be ZERO it shifts demand dynamics across commodities and countries...........

 

thoughts...........

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5 Replies
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Contributor

Re: I found this definition and an example

Web definitions
  • Demand destruction is an economic term used to describe a permanent downward shift in the demand curve in the direction of lower demand of a commodity such as energy products, induced by a prolonged period of high prices or constrained supply.

  • a method of reducing energy consumption via economic recession (people who are unemployed or otherwise in financial problems use less fossil energy)
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Honored Advisor

Re: So.........

I really hate it that people use the term "destruction ".....I agree that demand is being shifted or slowed, but not destroyed.  The crop condition continues to erode. It seems to me that the slowing of demand is exactly what is needed. I'm not sure that the demand is being slowed soon enough. Every time the prices drop, it means another buying opportunity for the end user.

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Senior Advisor

Permanent............

based on Boars post...........demand is sloping downward........

 

I would argue NO WAY.........

 

thus demand is not be destroyed............AAAAAAAAAAAAAAAAAA...........the only argument the bears have...........thus the reason they have lost the fight for over a year...........and the reason this is not 2008............

 

study up all.........its going to get wild...........

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Veteran Advisor

Re: Permanent............

Locally, I see a lot of people turning to other things than corn, like feedlots using more hay in the ration, more distillers grains, etc.  However, I see this as a temporary thing, as most everyone has some leftover hay from good rains the last 2-3 years.  However, this year, it was dryer, and more hay is being fed.  By this time next year, decent hay may be very hard to come by, requiring more grains be fed again.  Otherwise, herds are going to be cut, and we WILL have a long-term demand slump.

What is going on elsewhere, I don't have much of a handle on, but this is what I see locally.

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Honored Advisor

Re: Permanent............

Locally,  I have a neighbor who told me that he was going to buy propane this fall and not corn for his corn burner....yep, a demand slump.

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