Fertilizer prices set to soar, are we going back to 2008 prices?

I personally hope that we are not headed back to the days of $900 Urea and $1400 phosphate. For those of you with short memories, they weren’t good for anyone but the greedy fertilizer manufacturer.  Today with high crop commodity prices it seems that we are headed towards a very bullish fertilizer market for the next 4-6 months.  At first it makes you want to get involved and make sure you buy before the market runs; which is understandable.  There are a few factors one needs to consider when looking at buying fertilizer in the summer months: when do you really need the fertilizer? Carry (interest) cost? Storage costs?  Storage issues with fertilizer setting up in the bin? And of course what the market will be when you really need it (spring for most of us)?

Here is some recent information to give you an idea of what the forward pricing in the world and Gulf look like at this time.  Remember the market can change very quickly.  It gives you a sense that there is more downside then upside but that is simply my interpretation of the graph.

I am a firm believer of the Back To Back trade.  If you are able to sell your canola (physical or paper market –options or futures) and then lock in a margin that is in line with you ROI you are looking for; then do it.  It makes complete business sense.

It will be interesting to see how this market tracks in the summer and fall.  Stay in touch and if you like this kind of information and want to have access to it throughout the year, join Know-Risk Farm Management (www.know-risk.ca)  Feel free to call me and discuss 403 519 7707

Remi