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

[ProFarmer]

If there is a dealer out there with a heart I know you have to have a markup but for direct delivery cash payment you should be able to give us the farmer your cost price. Larry Weber has a good blog but these are retail prices. I'm looking for a cost to retailer. Tia

[classicalliberal]

Today, urea landed into dealers is around $400 to $450 but most of them bought in the summer and early fall when it was $900. I bet some of them will go broke this year. Pretty stupid to buy the highest priced fertilizer it has even been without having it sold while the markets are going down. Grain and fertilizer prices have a strong correlation.

[dave4441]

Profarmer-why do you think a retailer would sell you (or should) sell you fertilzer at cost. Long term fertilizer margins are 6-10% and prices were normally way cheaper than they are today, it really was a handling margin. Most growers realize they will actually need the retailer over the long term and having them go broke will not be good for anyone's bottom line.

I am not a retailer, but did work in the chem industry at one time. Lots of good, decent retailers kept farmers afloat through tough times. Alot of this ranting on this issue would never be done in public as people have anonymity here and can talk tough. In practice I would hope people have a bit more class. And yes I do get it before SF3 tells me I just don't get it.

[Jay-mo]

I also don't understand how any dealer would sell you fertilizer for no profit. They are a business, they need to make money.

Dave411, I do agree with you on the nature of big-mouths and anonymity. However, it's the internet. You can be the smartest sounding guy around on here but face to face in a room of fertilizer dealers not have a single thing to say.

[skhadenuf]

There you have it folks (supposedly)farmers telling the fertilizer companies hey boys we're bent over so let us have it, not only let us have it make sure there's a hefty guaranteed bonus in it for youselves because you must absolutely guarantee yourself and not your customers a profit!! What a crock of shit, Talk about hiding behind the internet, Please identify yourself lots of farmers around our area would love to know who you are.
As far as what dealers mark up, most dealers in terms of last year supply had sheds full of product from the previous year and did they sell that for 6-10% profit, bullshit they did, the only guys that got caught were the ones purchasing around harvest for the upcoming year but if you average the screw job they gave us last year they're still not going to loose a cent.

[gregpet]

What about the usual fertilizer appreciation that a dealer realizes. They normally buy cheaper product in summer and late fall. In the spring when prices have risen are they still only taking their 6-10% profit. Nope, market price plus their margin. Just can't feel sorry for them this year.

[classicalliberal]

People only get screwed by the amount of competition there is in their particular area. The fertilizer dealers who bought last year while the prices went up made what speculators would make and will lose what speculators will lose this year. If there were no competition and restrictions on world trade, there would be low grain prices and high fertilizer prices because these turkeys bought it at a high price. When it comes to making profit, if the retailers shouldn't make profit off farmer's backs, then we shouldn't sell our canola for $16 or flax for $20 and netting a 35 to 40% return on investment this year. We should have sold it to the crushers for our costs which is closer to $9 or $10 under that same kind of thinking. The market will bear exactly what it is worth in a competitive system. Even if it is not a competitive system, if the prices are too high, then demand will take a bite out of it. If fertilizer costs more than what its benefits give, then don't use it. It will price itself accordingly. I don't happen to agree with many of the people that I know and it is really nice to have anonymous blogs like this to get stuff off your chest. I enjoy the comments and the arguments from all angles of the political spectrum.

[TOM4CWB]

skhadenuf;

There are frugal folks out there... and then there are many co-ops... that didn't speculate in the past... and don't have a margin account built up to cushion this hit.

Agrium will have to take a big write down... no doubt.

Greed is an interesting animal... we will know this spring who got caught... and who was smart!

It may just be the intelegent thing to do... to either pick up the fertiliser... or leave it on the co's line of credit... till we do actually take delivery!

What about trust accounts?

There is massive risk here... so make sure you know your dealer... of some of Cottonpickens Money supply mop up... will involve your cash!

GRIN

<( > :{

[SASKFARMER3]

To Huey and Dewey Dave and Jay the dealers got smoked blow-ed up their back side by big fert companies. Buy product buy product the dumb farmer is going to make a few pennies its good time to clean house, they will buy at what ever price you charge. Then the Crap hit the fence and guess what the fert companies are turning their back on their dealer network telling them to work it out. Really nice isn't it. But one thing to remember the fert dealers did have sheds full of very cheap product that they sold to you for very expensive price. So yes bought the year before cheap and made huge profits. Then bought high and make huge losses. Gee maybe their like farmers. Simply paying to much for inputs is a recpy for disaster. Merry Christmas to one and all.

[classicalliberal]

That is why farmers need to learn about risk management so they don't have to deal with the ups and downs of the market. Most farmers try to speculate and get higher prices. I would rather move all of my grain Aug-Feb, picking up any basis improvement and if I think the prices will go up, buy some call options so that you lock in a minimum price but be able to participate in the rally. It is better to own the paper than it is to own the physical, because the paper never gets heat damage or bugs.

[TOM4CWB]

Thanks Charlie!

And if your out there Lee... Merry Christmas!

Do you ever sneek back and peek Lee?

Merry Christmas everyone... and may the Good Lord bless you with mountains of wisdom & hope in 2009!

There couldn't be a better time to do a study on Proverbs... as a direct connection to the wisest guy that ever lived... wouldn't hurt help us to prepare for VOLITILITY!

Being humble... can't hurt!

[TOM4CWB]

ClassyLiber,

I heard last night... of some EU brokers in trouble... that will be the next shoe to drop!

[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.