Notice on NH3

[cottonpicken]

Dont let the numbers freak you out.

I'd love to sit at a poker table with you guys.

[Choice2U]

This is a simplified but relatively accurate explanation of how nitrogen is priced in western Canada. It is based on the New Orleans port price barge cost to Minneapolis transload cost freight to southern Manitoba a small premium for guaranteed supply from the Canadian fertilizer plants (this varies based on the time of year). Now mix in a little competition between Agrium and Saskferco/Koch Ind/Westco and you get the western Canada price.

A smaller version of this concept also exists in the Peace region which explains why the NH3 price in that area is significantly more than in southern Sask. Agrium is the major supplier in that area and their competition is an Alaskan plant, Saskferco (Regina) and a little dribble from Sheritt (Edmonton). It is not easy to get NH3 up to the Peace block in a timely fashion (2 weeks in the fall or 2 weeks in the spring) using railcars from southern Saskatchewan and storage is expensive. The dealer's bullets only hold about 90 MT.

The price is obviously not based on cost but rather adjusted from what the US producer will pay as the actual international competiton begins at New Orleans. Most of Canada's production goes into the US so that becomes the starting point.

If you're not sure about this just bring in a load of urea from offshore. Not so easy is it. Now add in the affects of "out of season" versus "in season" and you can understand why the price usually goes up the closer it comes to spring. Large retailers can bring in offshore product out of season but the major producers will remember this "in-season" when the rush is on and a retailer needs product right away.

A major storm is hitting us and I better send this before the power goes out....sorry for any mistakes that should have been picked up by proofreading.

[silverback]

So what is the difference between the US and Canadian costs right now just across the border?

Anyone know?