Tuesday, February 07, 2006

BBQ Commodities Market

I don't know a lot about investing in commodities, but I have always read and heard that commodities are high risk and that only the most sophisticated investors invest money in them due to their volatility and unpedictability.

It occured to me recently that as a barbecue fanatic, I am affected by the commodities markets directly, but I really had not put much thought into it. The values of lumber, pork, beef, steel, and oil have a direct affect on my barbecue. As the supply of those commodities decrease or the commoditites increase in price, the price of barbecue goes up for everyone.

The Barbecue Commodities Equation can be defined simply as the Inputs + BBQ Process = BBQ Product. As the price of the Inputs increases, barbecuers everywhere whether contest competitor, restauranter, or backyard enthusiast are forced to make a conscious decision about whether to risk sacrificing the Product or the Process for the sake of saving money on the Inputs. You see the quality of the meat directly affects the quality of the barbecue. Good meat usually equates to better barbecue, and likewise cheap meat and short cuts to the process of barbecue usually results in below average barbecue.

To illustrate this point, the next time you purchase a brisket at the local butcher or warehouse club store, buy a cheap brisket flat and purchase a CAB or prime grade brisket and cook them both and compare the results. I would be willing to bet that all things being equal in the cooking method that the better grade of brisket (CAB or Prime) will produce a better tasting end result. Since the better grades of brisket are in relatively shorter supply, the price is higher.

There are several intangibles to barbecue that might warrant the extra investment or higher commodity prices such as: entertainment factor, fun factor, and the opportunity to learn or experience something new.

Everytime we write a check for a barbecue contest entry fee or pull out the debit card to make a meat purchase, we make the conscious decision that the intangibles outweigh the tangibles.

Just some food for thought.

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