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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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-Face_McShooty t1_ja4ix2k wrote

That's not how this works. Companies use high prices as excuses to raise prices. They rarely bring them back down when they can charge the same and make more profit until enough people complain.

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PotatoWriter t1_ja4qmko wrote

> Until enough people simply stop buying

Nobody gives 3 rats asses who complains.

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rickert1337 OP t1_ja4q18h wrote

Ah yes because competition isnt a thing in capitalism

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Burnit0ut t1_ja4u88h wrote

Not in the American food industry. It’s like gas stations. They work together to keep prices high

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SnooDonkeys1685 t1_ja5p6g0 wrote

Maby in the processing and packaging part of food industry but at the farm level. Farmers are price takers and pay the shipping both ways meaning they pay the shipping for the products they need and pay the shipping for the products they sell. Look at the beef industry. There are four major packers and they control how mutch they pay by being able to buy imports and label them a product of the USA and charge whatever the market will stand without reducing demand to mutch. The beef packers record profits. Beef producers not so much.

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nestpasfacile t1_ja5imm4 wrote

In a purely theoretical and idealized vision of capitalism sure.

We live in reality though where the rich have captured pretty much all industry and very much do collude to keep prices high. Why compete when you can make more money not competing.

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imposter22 t1_ja6sw7b wrote

Theres only like 4 companies that own every food product that hits the shelves at most grocery stores.

General Mills, Nestle, Kellogg, Tyson.

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crazysal t1_ja4zbfn wrote

Inflation still spiking. There is 0% chance of a soft landing

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JeromeJGarcia t1_ja53qan wrote

Add in China stimulating their Econ which offsets a lot of the tightening others are doing. Inflation should be hanging around longer than anyone expects.

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rickert1337 OP t1_ja56sle wrote

U sure do know things for sure, im not sure so i opened this discussion, but saying theres a 0% chance of it is just ignorant to everything

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CaptainCrypto1969 t1_ja4gvry wrote

I thought we were heading for a recession? Which means increase prices at the supermarket

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VisualMod t1_ja4ggnr wrote

>Yes, the market always looks ahead. This is good news for farmers and food producers, as it will lower their costs and increase their profits. In time, this will also lead to lower prices for consumers.

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Unknownirish t1_ja4o8e0 wrote

I don't get you. One minute you're helpful. Then the next you're a dick. Pick a side!

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Unknownirish t1_ja4o38m wrote

If it'll affect the consumer prices. If people continue buying like they do, why would companies slash prices? Though Walmart would likely 😆

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technoexplorer t1_ja53jup wrote

Over time is the key point. With 7% general inflation, if it causes food to only increase 1%, then, over time, prices will be relatively lower.

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Unknownirish t1_ja54cuq wrote

The key in succeeding the Fed 2% inflation target is average 😆

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technoexplorer t1_ja5a0yh wrote

Yes, if you make something, you want it to inflate at like 5% while your servants' wages are inflating at like 0%. Then, you get an average of about 2%.

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reditor75 t1_ja4ulf1 wrote

Nope, more profits in the future img

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link_dead t1_ja4u9n9 wrote

The reason the price is going down is the giant shit that the Fed have taken on the economy.

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ruphustea t1_ja4y22k wrote

Some farmers found out that they can now skip the nitrogen on the beans at least once bc it was too high and they went without last year. Yields still respectable considering the cost savings.

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tinfoilhat113 t1_ja7pusk wrote

Usually no nitrogen is applied on soybeans except what is in MAP or DAP fertilizer that whichever is a small amount. The only time I know you would put N on soybeans is if you were going for very high yield like to win a contest. Beans are a legume. Farmers certainly skipped dry map application when it is expensive.

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ruphustea t1_ja88i6l wrote

Yep you're correct it wasn't N on the beans it was that stuff.

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suazb95 t1_ja6rx1s wrote

I do think we are on the way to one. The economic data is somewhat confirming of the possibility.

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TheRealHotHashBrown t1_ja6wqxp wrote

Also, they’ve figured they can just use poop instead 💩

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lightwhite t1_ja6ykfd wrote

Is it low because the poor countries went bankrupt and can’t even buy fertilizers anymore? Pakistan can’t even print more money to buy dollars for settling trades, I heard.

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Johnny-infinity t1_ja7sync wrote

The party has only just started. People haven't started defaulting on debts yet.

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VisualMod t1_ja4gg3b wrote

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