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| It is exactly the same other than one thing. Both sides have a price they want to sell at although you have someone (the CME, which is made up of thousands of buyers) who is absolutely offering a price at least 5 days a week. Fertilizer sellers don't have that. However, if a fertilizer seller has an offer price and someone is willing to pay that price then that price is a market price. You may not agree with it just like you don't agree with the CME or what the local elevator is offering but all of them are real prices offered to the market. Does the fertilizer producer sell enough to be able to maintain that price is the issue (up or down). It is a fact that fertilizer prices move higher and lower based on demand and many of the same factors influence the CME or local elevator prices for grain. If a price doesn't work it gets changed. And don't be upset that you're local fertilizer seller raises his price based on something that is happening hundreds or thousands of miles away because the grain markets and all other commodity markets do the same thing.
My take away from this conversation is that you don't agree with the prices available to you and you're frustrated you can't influence them. Fertilizer producers are very knowledgeable about what prices "should" be based on dozens and dozens of factors but they are frequently frustrated with the prices they have to sell at. I have no idea what you base your ideas on but I'm confident you don't have as much information as people who do it every day. The reality is that all markets are imperfect and prices change for that reason. Ag commodities are seasonal so each one of them might move at a different pace. So rather than complaining that you're getting screwed why don't you find a way to take advantage of the imperfections. However you'd probably need to add storage, add transportation assets, spend a bunch of time on international politics and economics and more specifically the energy and transportation markets. I suspect you already spend time on grain markets and the inputs into those prices. With all that you might be able to shave a few dollars off your fertilizer bill or maybe the volatility gets you and you end up paying more. | |
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Anhydrous verses UAN and Urea
