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JohnnyFnCliche t1_ja4hi8s wrote

We covered this in another thread a week or two ago...farmers pre-bought fertilizer for 2yrs worth last year, so demand dropped this year...

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jojoyahoo t1_ja5jm36 wrote

That only explains a small portion of it. It's not like all farmers in the world hold hands and lock in potash and ammonia futures at the same price on the same day.

These contracts are constantly being bought, delivered, and sold, so while it lags the spot rate, it's not unrelated.

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dscg24 t1_ja4u6pf wrote

Would you mind sliding a link to that thread in here?

My pea brain can’t find it.

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JohnnyFnCliche t1_ja4wy4b wrote

I'm going back through my notifications and can't find the thread...OP posted a DD about some powder or chemical that's used in fertilizer if I remember right, and some farmers chimed in saying they all bought 2 yrs worth last year because prices had been spiking...

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ImNoAlbertFeinstein t1_ja4xuxa wrote

farmers often lock in production inputs at some favorable price at for future delivery, in order to secure their production loans.

edit. Ag were prob the creators of the futures market bc of the seasonality of crop production. futes have been around long before the tulip crisis. the very first cash mkt soon had a futes mkt next door prob.

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kemmelberg t1_ja5gbpz wrote

This and I don’t see how fertilizer prices are dropping beyond this influence. The largest exporter of fertilizer was RUS.

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PAM111 t1_ja7nn8e wrote

And natural gas is hoarded (needed to produce fertilizer). But when that runs out... (note this not a weekly play. This is a long term play to watch over the next year or so.)

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rickert1337 OP t1_ja4qmgj wrote

American farmers? Can u link source? That just means those will have a hard time in the future against those that didnt.. its a risk to do that.. and if prices stay low that will mean the risk they took didnt pay off.. u cant say that prices will stay high because some farmers bought 2 yr worth of fertilizer.. then stores will buy from farmers that didnt.. ofc some will have contracts but then people will go to a store that does not. Its how the world works

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