The fertilizer bill should be lower this year, but the transportation system may not be able to accommodate a late surge in delivery orders
Cash flow or storage concerns causing you to hold off on booking fertilizer?
That could be a costly move if you wait too long.
“With the way the commodities have tailed off in the last few months, some guys may be looking to push (fertilizer purchases) back a bit due to cash flow concerns,” said Colin Bergstrom, agronomist and president of Point Forward Solutions in St. Albert.
“It’s going to put a pretty heavy load on logistics to get all that product in place in time for the planting season.”
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Even though fertilizer prices were down sharply earlier this winter, it didn’t spark a surge in buying. Bergstrom said he hasn’t seen a “big difference” in year-over-year sales, nor has Adam Newstead, manager of crop production services in Lacombe.
“It’s about the same dollar amount (of fertilizer) that we’ve sold in previous years,” said Newstead.
Since hitting a low in early December, fertilizer prices are trending upward, he said, in part because of clogging in the rail system.
“The grain shipments are slow, which also puts pressure on the retailers,” he said. “I don’t think there will be any availability issues. It will just be how much can come through the system at one time.”
He advises producers to keep an eye on the markets and consider buying earlier rather than later.
“There may be some cost-savings as opposed to waiting to buy on demand in the springtime,” said Newstead.
Taylor Snyder wishes he could.
“This year, there’s such a backlog that we won’t actually be moving any wheat from the 2013 crop until the beginning of 2015,” said Snyder, a young farmer still establishing his operation in the Bonnyville area. “We have to sit on 50,000 bushels of wheat that potentially could be used to pre-buy fertilizer.”
He said he expects to buy his fertilizer in March once his bills are paid.
“I’m not sitting on piles and piles of equity and cash in order to pre-buy whatever I wanted,” he said.
Storage is another concern.
“We don’t have enough bins,” he said. “When we have pre-bought fertilizer, we’ve had trouble storing it.”
One province over, producer Jim Hale isn’t having the same type of storage issues that Snyder is seeing on his farm.
“I moved a lot of product off the combine,” said Hale, who farms near Lancer, Sask. Without as many cash flow and storage concerns, Hale has already purchased most of his nitrogen needs for the year.
“I pre-bought this year earlier than I do normally,” he said.
Lower fertilizer prices are a bright spot for the grain sector, said Bergstrom.
“Commodity prices have definitely softened, but so have fertility prices,” he said. “It is going to cost guys less to fertilize their crop this year.”
