Fertilizer '09 ?

[boarderbloke]

have many of you here purchased '09 fertilizer(some of your needs or all)??? i'm getting quotes now in the low to mid $800's(with no one offering any price protection)! looking at commodity price signals, i don't see much info that would justify putting down $70.oo/Ac for fert, along with an increase in fuel(from last April) and also the increase in herbicides that are also being talked about. perhaps if one holds the production from '09 into 2010, as i'm wondering if there won't be a steep decrease in fert use for '09(hence, lower yields globally[ can China and India afford these prices any more than we can]) i'm starting to wonder if this is a "band wagon" i want to jump onto. the 'hike' in prices seems like a lot of 'hype', and it's farmer hyping farmer as much as it is retailer hyping farmers. i wonder if this fertilizer hike is as much about a shortage as it is about helping farmers relieve themselves from an income tax situation before year end(and of course helping out the retailers bottom line and adding to their Christmas bonuses) this is a 250% increase from last year at this time!!! and it's not like we're coming off a low in fert prices as was the case with wheat(a 250% increase from $2.75 to $7.00)
just wondering if others here would like to comment on the situation with '09 fertilizer prices? i would just hate to flip out $850 now and find by spring the price is in half, all because some wanted to buy a tax deduction and the hype suckered more along for the ride.

[Kodiak]

I've booked (not yet paid) my '09 Nitrogen at .78/lb for 28-0-0. 10-34-0 quoted at $1200/MT and they want to deliver now. I have the storage. Most years I've paid for the tanks each time I used them. This time, I'm not so sure.

I have the same questions and concerns as you boarder. Starting to hear that 'insiders' expect a price decline by spring.

So do I follow through with these arrangements, or do I wait. Uncertain times for sure.

[silverback]

Lots of talk in this area about cutting right down to bare minimum and even lower. Nitrogen only for some guys until things improve?

I asked in another thread if anyone has prices from border areas of the US?

Summerfallow talk is getting stronger and even the sacreligous word ORGANIC was heard yesterday!

[Ron]

I would rather pay a hog or dairy/poultry neighbor for manure than get screwed over by a Fert dealer yet again. Look at pulses manure foliars or even gasp summerfallow. Variable cost on peas looks 150 per acre less than canola.

[Ron]

Phosphate, I would price. Nitrogen is a whole another story.

Is it just me, but Crude is starting to scare me. If we close below 122-123/barrel. I think Crude could see some major pressure. If I look at the nearby, looks like some pretty major support in this 122-123 level. If Crude tips........LOOKOUT!!! Grains will follow. There is no way in hell I would locking in 80cent Nitrogen, with the uncertanty in the markets right now. Fundamentals are out the window right now. This is liquidation right now, and it can get scary.

CP made a comment in another thread about a 60% retracement.......... I don't think this could be impossible.

[dave4441]

I have the opposite view, i have booked 28-0-0 at CDN $500. It is also only about $75/mt more then I paid a couple months ago to finish seeding. I can not grow a crop without N. I agree with the price of oil, but I think energy input cost of N is only one factor in total price P is a different story, and can get away with lower rates for a couple years. As well P prices have been at this level for a couple months (replacement cost in spring) and seems more stable. Everyone has heard the $2000/MT number, but it is just someone's guess.

[SASKFARMER3]

Dave the prices for our product have basically started to crash. Dropping over 30% since their high were back to normal prices for our product. With a average yield most farmers will break even this year.
Fert Companies are trying one last kick at the Can to get guys buying. I said it before what if we all told them to go to He-- and didn't buy.
HM
Dec 20, 07 395 382 321 563

Jan 03, 08 390 374 351 1400

Jan 10, 08 413 388 349 1400

Jan 17, 08 425 378 356 1400

Jan 24, 08 425 365 390 1400

Jan 31, 08 510 343 396 1400

Feb 07, 08 522 323 388 1400

Feb 14, 08 553 328 389 1400

Feb 21, 08 565 329 405 1400

Feb 28, 08 565 324 414 1545

Mar 06, 08 565 338 442 1545

Mar 13, 08 560 377 453 1545

Mar 20, 08 558 397 458 1727

Mar 27, 08 535 398 459 1727

Apr 03, 08 515 393 452 1727

Apr 10, 08 480 422 494 1727

Apr 17, 08 450 495 494 1727

Apr 24, 08 463 540 490 1727

May 01, 08 453 605 482 1727

May 08, 08 438 625 485 1727

May 15, 08 429 643 489 1727

May 22, 08 No prices

May 29, 08 434 648 421 1727

Jun 05, 08 445 625 420 1727

Jun 12, 08 453 625 430 1727

Jun 19, 08 510 618 455 1727

Jun 26, 08 525 634 461 1727

Jul 03, 08 545 683 462 1727

Jul 10, 08 545 727 460 1727

Jul 17, 08 625 758 464 1727

If you think the Americans are not suffering think again. If your cutting back what about a person in China and India.

[mcfarms]

We've been dealing with this question the past week or so too, that was the root behind my question on Pea prices. I have come to the conclusion that prices may rise a bit more but not as much as "threatened" but will likely be range bound, not much higher but not lower yet the stockpiles are empty in the big shed at the agrium plant near us, the local dealers sheds were swept clean this spring I took the last 650 urea out of the one a month ago to top dress canola under the pivots and they were scraping the back wall for me. We have to rebuild stocks in the near term, with China stopping exports of products after the earthquake and the issues with the barges this spring in the US it's going to take a while. Take into account there are pretty good crops over a big area in the world that'll take a lot of nutrient replenishment and I don't see a lot of use reduction next year. maybe next year this time we may see some down ward pressure but not yet I'm thinking. Or maybe next week as we just covered 75 percent of our phosphate and 40 percent of our N needs this week . ( With product that still has to be brought in) I'd be happy to be wrong though.

[dave4441]

I agree with you SF3, alot of risk when my expected fert costs are $80/ac on cereals and HRS looks to be $6-7/bu this year, let alone next year. But it could go higher, in fact I beleive 28-0-0 is already at $600/mt at some locations. I spread my liquid in the fall and I only have another couple months to buy it anyways, so bit the bullet.

[BreadWinner]

Just a note of caution, natural gas prices are on a spiral down from a high of over $13.50 now to just over $10.00. I think the energy price argument just got a little weaker and guys are saying just hold on a second here. I sure am not going to run out and price right now and if everyone else does the same they will be forced to lower prices. Sure India and China could buy lots but if prices drop, they will probably back out on the deal just like when they buy our grain and the price falls. It is always easier to sell to a buyer when you know they cheque is good.

[Kodiak]

Both arguments - buy now or wait - hold credence. A tough call indeed.

Another potential market mover is the macro economic situation with the US international inflation/deflation battles, the US and international banking situation and US deficits etc. How are those problems going to work themselves out? Throw in geo-political tensions like Iran and wow, I don't think its ever been less clear what the future holds.

[parsley]

Russian fertilizer, anyone?


QUOTE
WINNIPEG FREE PRESS
July 24
by Larry Kusch

CWB to send less grain north

The Canadian Wheat Board said Wednesday it expects to export "significantly" less grain through the Port of Churchill this season because of low pre-harvest supplies.

That would be a temporary setback for the port, which is coming off a banner 2007 season that saw grain volumes soar and featured the first inbound cargo shipment -- a load of fertilizer from Russia -- in recent memory.

Last year, the wheat board shipped 640,000 tonnes of grain through the northern Manitoba port -- a three-decade high -- as it attempted to maximize exports in a high-price environment, CWB spokeswoman Maureen Fitzhenry said.

But Prairie grain bins are now virtually empty. And that's bad news for Churchill, which relies on carryover stocks at the start of its short shipping season. "We do expect a (shipping) program through Churchill that's significantly reduced from last year for that reason alone," Fitzhenry said, adding she couldn't speculate on how much grain the CWB might direct through the port.

Also working against the Churchill port, Fitzhenry said, is the fact some foreign grain buyers are holding off on purchases right now in the hope that prices will fall.

Normally, the first ocean vessel arrives in Churchill in late July.

This year, the first ship, the Dimitris S, is due on Aug. 3. It will carry 46,000 tonnes of red spring wheat bound for Sudan. A second vessel isn't scheduled to arrive until Aug. 10.

But Michael Ogborn, managing director of operations for Denver-based OmniTRAX, which owns the port and the rail line leading to it, said he's optimistic Churchill can overcome the anticipated slow start and enjoy "a pretty decent year." Last season, the port did not handle any non-CWB crops, something it hopes to rectify this year, he said.

In the last dozen years, Churchill has shipped as much as 710,578 tonnes of grain (including non-board shipments) and as little as 318,411 tonnes, according to the Churchill Gateway Development Corp.

Meanwhile, Ogborn said, Churchill will again receive "at least one shipment" of fertilizer from Russia, likely in the latter part of next month.

It is also involved in negotiations to handle other products, but these likely won't materialize until at least 2009, when a new bulk handling facility at the port is set to be built, he said.

The port received a boost last fall when Prime Minister Stephen Harper paid a visit and announced a $68-million port and rail-line improvement package, in partnership with the province and OmniTRAX. UNQUOTE

larry.kusch@freepress.mb.ca

[Fransisco]

At this point I'd say flipping a coin will give you as good an answer as any. If we knew what oil was going to do over the next 12 months we'd know what to do about our fertilizer needs.

[boarderbloke]

guys, thanks for all your responses, and discussion! just to comment back to some of them..
Kodiak, you've got one good retailer if he'll let you price today with now money down, the three i'm trying to deal with here say "their quoted price is only good for one day" not one week, not a couple days, just today! and only if you put the money down today!
Silverback, talk of summerfallow isn't wide spreed here, many are still dreaming about how high grain prices still might go! i however and seriously considering a chemfallow program and am asking about glyphosate quotes at the same time(we're on the dry side here anyway)
Ron, we don't have manure in the area, and as far as pulses go, i am certainly looking at increasing that area and are seeking quotes for granular inoculate now, but nobody wants to give a quote on new product! the problem with pulses, is that they'll be flooded with '09 production and we'll soon see 10-12 cent lentils and $3.oo peas!
Snappy, my understanding is that it is possible to skip a years application of phosphate without much difference in yield(netting out the input cost) if you have been regularly been applying phosphate over the years! i will be doing this and spending my fert allotment on what gets me the biggest bang for the buck! if crude prices were to fall back to that 70-80/bbl range, basically half from it's high(because of USA economy, or global economy or congress's threat to go after speculators, or Obama's push to green energy, Wall street thinks the 'energy cow's been sucked dry' or whatever...) fert will have to drop big time, and that could all happen before spring(the USA's general election is only about 100 days away!
Dave4441, if you've bought already, you might be laughing all the way to the bank as i was last year when i'd bought in Aug. but does anyone here give any credence to the Sask Ag's "Crop Planning Guide" i printed it off the internet yesterday and inserted up dated numbers for fert , fuel, & chem on the expense side and using the PRO(after freight and handling) and using the same yield of 31.7(thought it might be reasonable if i cut my fert rate some) Crap, there wasn't much profit left!!!
SK#, thanks for keeping us up on the whole sale fert prices, i often go to that 'yara.com' site. i agree, i just don't see China and India paying that much for fert, and China will back out of a deal if it sees prices dropping. corn'09 has been going down basically for the last 6 wks and will be under $5.oo/bus by months end(that's just the futures price, not net) that's a long way from $8.oo something.
Mcfarms, i tend to agree with you that fert prices, despite the hype, might very well be at or near their highs. but the other half of the equation has to be taken into account, that being as you said, global grain production will be up across the world, and even though supplies will still be tighter than we all are use to "grain buyers will go back to their old pattern of buying hand to mouth, that way keeping prices suppressed" i won't be prepared to pay 2.5 times the avg historic fert price and watch '09 grain prices drop. if weather cooperates with the US bean and corn crop from now out to harvest, that will be all it takes to slash '09 crop price offers. the US growers will think twice about fert use(besides, they have programs)
BreadWinner, i agree completely, i too have been watching gas prices, and if fert prices hold and gas prices drop, there'll be more money in buying shares in gas companies than there will be in buying fert, the capital gain and div will certainly pay for the glyphosate to chemfallow! i also agree with your comment about China backing out of deals.

[Kodiak]

I have to pay for the 28-0-0 and the 10-34-0 by Sept 15 to hold these prices. No price protection.

As it looks now, the 10-34-0 will be delivered by then, but not the 28-0-0.

Think what I might do is buy 75% of P and 100% of N. Gamble on the K and S.