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NC | try to think about the retail price much like your fertilizer retailer...............say N is rising in price and your retailer buys a bunch @ 300.00 in fear because market chatter is that in 2 weeks N price is going up possibly another 50.00-100.00. well instead of the market continuing to rise, in 2 weeks he can buy the N for 275.00.
it is plausible to suggest that he bought @ 300.00 to help save his customers some money and instead, he ended up being long inventory at a higher price than the spot market was trading now. if placed in his shoes, what would you do? most will trim some margin and try to be competitive, hopefully garnering enough loyal business to make it to a point where he can buy some cheaper N and began pricing it in manner to break even on the higher priced stuff. this is a very simple scenario, reality is much more involved & stressful.
there is a lot of risk going out there and buying transport loads of gasoline when the market is resting on it's highs, for fear the market will break and you sit there on top of a bunch of higher priced inventory.
that is not to say some retailers don't take advantage of a pricing situation when it presents itself by any means, but it's not roses either. | |
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Crude has gone from around 89 a barrel several weeks
