How much are dealers paying for Urea now????

[classicalliberal]

Was that Fortis? A lot of derivative products in the world trade over the counter through dealers such as foreign exchange that trades 2 trillion per day, or credit default swaps that have a total value of approximately 62 trillion dollars. The problem with these however is that there is counterparty default risk and they are very highly leveraged meaning that you don't have to put up much money or margin calls. In the futures markets that have a central clearing house, there is not much default risk because positions are closed out if people can't make their margin calls when the market moves against them. There has never been a default on a North American futures exchange yet.

[dave4441]

Give me a break. I never said I want to pay more for fert, and my input bill is probaly amoung the lowest, i watch every penny. I keep machinery costs low as possible. I will buy as low as I think is possible on fert. I bought some 28-0-0 at $500/mt and was wrong but will still average down (it was my decision at the time made based on all info i had and at the time it was correct, not becuase a dealer forced it down my throat). I do not beleive the input dealers are crooks, and OVER THE LONG RUN, probaly are lucky to have a decent return on investment. I do not villify anyone for doing that. I sure did not when I sold Durum last year at $12 and the market came down to $5. I agree that the dealers made some big money in fall 07 and are giving it back. Our farm had a huge year in 08 and we will try and keep every pound of return in the bank and not give to a dealer. What i said was that the dealer will not and should not sell for his purchase price today. Nothing else. To think he will is a waste of time. To think he should is a waste of time, becuase he will not. I hope farmers band together to bring offshore product into the country. It is a free market and we are fortuanate to have these options. And if fertilzer dealerships are easy money than open your own, do not just talk about it. On that note have a good Xmas.

[LWeber]

There has never been a default on a North American futures exchange yet.


Not so...
http://www.time.com/time/magazine/article/0,9171,947729,00.html

But Simplot has a reputation as a wheeler-dealer in his favorite commodity, and last week he found himself entangled in the biggest potato-futures default in the 104 years of the New York Mercantile Exchange.

Even by the standards of the often rowdy commodities market, the potato bust was bizarre. It resulted in 50 million Ibs. of potatoes, worth $4.2 million, not being delivered on schedule, sending almost 1,000 potato-futures contracts into default. That in turn promised to touch off scores of lawsuits and an investigation by Government regulators.

[classicalliberal]

Dave444 you are right on the money.

[cottonpicken]

I predict dozens of defaults in the futures market in the next 24 months.