A little note to the agrium dealers?

[kamichel]

Huh, Agrium down 18 percent so far in overnight trading. Ouch. Maybe there is some truth to this.

[wedino]

Gleaned from DTN:

N, P Prices Decline
By Russ Quinn
9/29/08 1:22 PM

OMAHA (DTN) -- As with the grain market, some wholesale nitrogen- and phosphorus-based fertilizer prices have been declining over the last two months. Wholesale urea prices, for example, have fallen at least 25 percent and DAP prices about 20 percent since August 1.

"The margin for both fertilizers are still very high and hopefully there is sufficient competition around to move prices lower," said Ken Johnson, DTN fertilizer columnist.

Seasonality is also another reason for the dip in some fertilizer price. With harvest just beginning in most areas of the Corn Belt, there really is not a big demand for fertilizer as farmers' full attention is upon harvest, said Bryan Hoffman, department head of agronomy sales for the Battle Creek Farmers Cooperative in Battle Creek, Neb.

"I know we haven't seen much product moved recently as guys really begin to start harvesting and it just seems to be a lull in the year," Hoffman told DTN.

Another factor that has an effect on fertilizer prices is the world market for fertilizers. Prices of nitrogen have dropped partially because the demand worldwide for such fertilizers has waned a bit, Hoffman said.

"We have seen this pullback in grains and the fertilizer seems to be following this a bit, but you have to also think about the economic concerns we have seen. I think this also has an effect on the price of fertilizer," he added.

While nitrogen and phosphorus prices have dipped on the wholesale market, the retail price for what farmers pay for fertilizer has yet to see a noticeable decline. The information on the DTN Fertilizer page would seem to back this up. DTN surveys cash fertilizer bids from roughly 70 locals in 14 states. This information is available daily to paid subscribers on the Farm Business page.

Comparing the price range of eight different fertilizers late last week, retail fertilizer prices were very comparable to the prices of Aug. 1. At some locations for certain fertilizers, the late September prices are slightly higher than the August prices. Many retailers peg prices to acquisition costs, so they typically lag wholesale market conditions. At the retail level, urea is still trading in the $750 to $1,250 per ton range, and DAP at $1,000 to $1,250 per ton.

Lower fertilizer prices have not come to the southwest corner of Minnesota, said Bob Worth, who farms near Lake Benton with his son Jon. As with many Midwestern corn and soybean producers, Worth has kept a close eye on fertilizer prices and has heard about lower fertilizer prices but has yet to see them locally.

"I keep looking and hoping for the lower fertilizer prices but as of yet we haven't seen anything on the retail side," said Worth from the cab of a tractor Friday while he was harvesting soybeans.

But fertilizer analysts think relief may be in sight. "Prices are coming down from a spike and my belief is they still have some way to come down," DTN's Johnson said.

He would encourage farmers not committed to their spring nitrogen and phosphorus fertilizer needs to wait and see what happens to fertilizer prices in the coming months before locking in prices.

Worth said he does not even have the option of locking in fertilizer price because his banker objects to locking in fertilizer prices so far ahead of spring application.

"He has some concerns about [the security of fertilizer deposits at dealers]," he said. Worth deals with a solid business, "but in the long run, the banker is the boss," he said. "We are borrowing more money than ever before, so I do understand his concerns. We are farming in kind of a spooky time."

Russ Quinn can be reached at russ.quinn@dtn.com

[kamichel]

Worth needs a new banker or he needs to reassess how he does business. I don't believe the banker should be anyones boss.
Buying fertilizer is a business decision made by the person running the business and the banker is not that person.

[silverback]

Depends how deep in the hole you are.

Some farms get to the point of having the banker approving those decisions.