When is best time to buy fertilizer before year end?

[farmaholic]

Hopper, why don"t you just do an optional inventory adjustment in 2012 (or in any tax year as far as that goes)to increase your income to whatever level you want? You don't need to have your actual "cash" income numbers where you want them. As long as you have grain inventory or prepaid expenses, you can add an amount into your income and claim the deduction the following year.

I always use this to make sure my company is taking advantage of as much income available at the right rate.

And now that Saskatchewan tax is 13% on the first $500,000, I will make sure I take my income to that level so that 2013 is easier to manage.

[ado089]

I buy my fert in March every year and
take delivery just before road bans, I
likely pay more than I should but until
I don't think $20-30/mt is payment
enough to guarantee agriums cash flow,
production and to cover their storage
shortfalls. it's my little rebellion
against the system.

A neat little project now that everyone
has a little extra cash sitting around
would be to buy 50% more fertilizer this
year and store it instead of flipping
machinery. This would send a message to
the machinery folks that $500k is not an
acceptable price for a tractor or
combine and it would also cut fert sales
by 50% in the following year. The only
thing that scares shareholders more than
reduced profits is irradic cash flow.
Haha crazy thoughts

[fjlip]

I like that idea.
All the papers in the mail are full of used unsold machinery.
Wonder if these will sit on the lot?

[TOM4CWB]

SKfarmer99,

I agree. Inventory allowance allows bad years to be floated over with no income tax... yet building a base for the good years. A person can continue 100 percent dep of equip... stick that aginst inventory in the field or bin... (On cash Accounting basis) and build a reserve for the deducton in good years.

Buying needed fert also reduces income... May ways to reduce taxes on a good year...

Cheers!

[bobofthenorth]

Bucket I don't know whether "gouging" is the right word, more like "what the market will bear". Are you selling your canola for $10 or are you taking all you can get for it too?

And the big eff'n-eh announcement has a lot more to do with maintaining membership sales than it has to do with actually turning nat gas into NH3. Their revenue model depends on memberships - brokering product is more of a nuisance than a revenue stream.

[tipsy]

B of the north if you can explain to me the difference between gouging and what the market will bear, You could then probably sell me some ocean property around Phoenix also. For me the WHOLE petroleum industry is all about consumer GOUGING, or in your words "what the market will bear"..

[wade]

farminggal-
There are alot of variables to your question. Do you plan on taking delivery and storing (do you plan on buying storage also) or simply to prebuy? Or?
I agree, at this time of year there seem to be "deals" around. The idustry cannot physically produce and handle all the volume at seeding time.
I have only ever purchased at this time of year what I can use this fall. I don't have storage and have seen good fertilizer come out of storage bad. I usually buy at year-end and take delivery at seeding time. Usually (but not always)it is cheaper then than in spring. When there used to be more independent dealers, they would "price protect". Also, if you have a good relationship with your dealer and it does go down in price, they can be more sympathetic in some of their other pricing(blending, spraying, equipment rental, etc.)
It's the same as selling grain- shop around, educate yourself and pick a price you can work with.
It feels like I should add a disclaimer here-lol
Good luck!

[vvalk]

Wow. Will direcct this to bucket but all others in
agreement with bucket as well. Gouging? What
are you talking about? Do you think an IPad
costs $700 to make? You could go on all day with
examples. They charge what the market can bear.
As for fertilizer there has only been 1 year in the
last 10 where buying fert in the end of summer/fall
did not pay big time. I have paid for my bins
dozens of time over. In some single years alone
you could have paid for each bin 3 times over.On
top of huge savings you have the safety of having
the product on farm. How many time of we seen
guys talk on here about not being able to seed
because they can't get fert? What does that cost?
Not saying this is the case bucket but sounds like
you can't afford to buy right now so your justifying
why you shouldn't buy. Without a doubt buying
fert at the end of summer has been the biggest
input savings, of any input, on my farm. Nothing
comes close

[bucket]

Nope I can buy, once I clean out my fertilizer bins.

It just pisses me off when the industry feeds a line. We are not all that stupid.

Fertilizer based on its main feedstock - natural gas - is overpriced. And if you look at international prices it is as well.

The price at our door should be the same here as half way around the world located next to an equivalent fertilizer plant. Since we live in a global economy now.

[bucket]

BTW even if 46-0-0 was reasonably priced at 400 - 500 a tonne the fertilizer companies would still be showing exceptional returns to the shareholders maybe better because their tonnage would be up.

Their feedstock - natural gas is costing them nothing right now.

Whenever you have groups like FNA or the company building in Iowa, deciding to build fertilizer plants you know fertilizer is overpriced.

Although the bakken field has to get rid of the excess gas somewhere - it might as well be fertilizer.

Just think, when companies used to flare gas off, how much fertilizer could have been made.

[vvalk]

Until these new fert plants are built and we
get more N production the price of natural
gas will have nothing to do with urea
pricing. Bucket what case can be made that
delaying fert pricing is the right thing to
do over the last 10 years. Now add in the
slow barge traffic and high commodity prices
and what makes you think pricing will drop.
It might but I'm not willing to chance it

[bucket]

I am not saying to anyone delay pricing or otherwise. Actually, don't take advice from me, I just use this to think outloud, for other opinions.

But the current line is that fertilizer is following canola prices and that the american farmer will use more than usual because of high crop prices.

Not sure I follow the logic. A drought doesn't use alot of fertilizer. And the guys that got burnt something terrible with disease in their canola this year are looking at other alternatives.

For instance it might make sense to drop 20 bucks/acre of the fertilizer bill to buy a disease package for the canola.

The guys that spent tons on fertilizer are finding out others that spent less ended up with better crops because of timing of seeding, missing the heat wave etc.

There is more to farming than just sinking a shitload of inputs to your crops and expecting the best crop in the country. Some of it is luck, some of it is careful study of the land and some is watching mother nature.

I watched guys spin their wheels in the mud and now ther are just spinning their wheels trying to justify their expenses. Their crops were not that good.