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Camrose, Alberta | I don't believe that a falling price of natural gas and oil are going to cause fert prices to come down. On the other hand if natural gas and oil rise then fert will as well. Its just like at the gas pumps the price always goes up faster then it comes down. Fert manufacturers will charge what they feel the market can bear (what they think farmers can afford). If you read some of the statements that CEO's of fert companies have announced to shareholders the message basically is that fert prices haven't hit thier highs yet, since high grain prices give the farmers a greater means to afford higher priced fertilizer.
I have purchased some fert (25%) for 2009, I think a guy needs to cost average his fert price from now until next spring (buy some every month). I can't afford to make the mistake of buying 100% of my N at $805 and then have grain prices fall to previous levels ($4 wheat, $7 canola, $3 barley). I would rather have to buy some of my N at $1200/ton next spring with grains at current prices or higher. Especially since I have little means of pricing my 2009 crop right now. Most companies will not buy canola out farther than 2-4 weeks. I know I can hedge myself on the future markets and make my own margin calls, but I have not. I have personally suffered the cosequences of selling my grains too early and too fast and missed rallies, so I feel that a more strategic approach is to sell/buy grains and inputs over the whole year and cost average.
I think the two big factors in the fert prices are the commodity speculators (hedge funds) and the size of this years corn crop. I do not like the instabillity of the stock market right now. It seems we keep hearing "experts" tell us everything is fine and there is no need to panic, but that is what they always say. If fund companies need qiuck money to cover their losses in other areas (housing market for example) and they sell off their positons in the commodities, it could trigger a huge sell off. Since more and more speculators have entered the market, voilitility has gone way up. Fundamentals still play a role, but it seems gains/losses often get exaggerated by the speculators who use technical analysis for buying and selling.
The size of the corn crop I think is more important, if it comes in short of expectations (like a lot of guys that post on this forum believe it will) corn will skyrocket and take fertilizer prices along for the ride. It sounds like an early or even a normal frost in the U.S. will have drastic effects. Its just my opinion but with current prices of corn and soybeans and fert prices, I would think guys would lean toward beans rather than corn. Corn seems to be oversold in comparison to beans. So its likely that corn will have to ralley at some point before spring in the battle for acres. | |
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Fert prices WTF to do eh.
