Retailer Responds to Flory Position

October 10, 2012 09:40 AM
 

The Inputs Monitor posted Chip Flory's Advice, Analysis and Position Update for fertilizer yesterday.

Flory's advice on nitrogen pointed out that, " There are some significant price differences within crop districts right now. For example, central Iowa has an anhydrous price low of $765/ton and a price high of $845 with an average of $799. If you can get the $765 anhydrous, book it. But, stay clear of the $845 and even the $800 anhydrous."

(Click here for Chip's Position Update)

Gene Mitchell of East Central Iowa Cooperative filed the following in response:

"I agree that if conditions are right farmers should apply NH3 in the fall. We won't get all the work done if everyone waits until spring, especially if spring is late/wet. I disagree with not purchasing the higher priced NH3. If there are substantial corn acres planted next year, demand for nitrogen will be high and will drive prices even higher.

Last Wednesday, Dec 13 corn futures closed at $6.43 per bushel, a really good price for a "normal" yield. I would recommend hedging any fertilizer purchases with a corresponding sale of CZ13 futures. That way you've locked in the spread and the worry about pricing is "off your plate". Logistics will still play a big role. The work has to get done on a timely basis. If mistakes are made here, yield losses of 20 -50 bushels per acre would be conservative. 50 bushels at $6.43 is $321.50 per acre. Now the fertilizer price doesn't seem so high does it?

You mention that this isn't the year to go with your standard fertilizer recommendation. I maintain that this might be the year to build soils to a higher level. Most farmers have crop insurance and they will collect if yields were poor for them. If they don't collect on crop insurance they will sell a pretty good yield at really good prices. They might actually be better off this year than if the country had raised crops above the trendline and corn prices fell to $4.00 - $5.00 per bushel. Most farmers are going to have a good year economically and will be looking for expenses in December.

If the world is going to demand 300+ bushels per acre yields, the infrastructure will have to be there to support it and fertilizer is a pretty important building block."

We at the Inputs Monitor greatly appreciate Mr. Mitchell's feedback and we would like to hear from you as well. Email your thoughts to dmichaelsen@profarmer.com.


 

 

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