Posted by JDseller on July 19, 2012 at 15:34:37 from (208.126.196.144):
In Reply to: buy next years inputs? posted by Bob Bancroft on July 19, 2012 at 09:42:58:
I would hold off for right now. I have a good friend that is a merchandise purchaser at one of the large multi-national grain guys. HE buys salt and fertilizer for a five state area. He is not buying right now. The whole Ag sector is too volatile right now for any type of major purchase. I don't think you are going to be able to out guess the big guys.
Also I learned a long time ago that the local fertilizer guy is the last one to talk to about when to purchase. First off he has no "skin" in the game. He will not stand behind anything he told you. If fertilizer prices go down or up he will be the last guy to know about it. Second, he is paid with some type of commission included. So he wants to sell to you anytime and place. Kind of like asking the fox to guard the hen house.
Plus there are tax reasons to hold off. Your income is going to be down so you don't really need the deductions this year. Hopefully next year will be better so then you will need the deductions.
You actually are not buying your inputs unless you are taking delivery. So if you are just pre-paying the local supplier then you are taking a risk. IF that supplier has financial difficulties then you are an unsecured creditor. Quite a few farmers lost big money here about five years ago when a local Coop went belly up. They did not get their inputs and it took them three years to get 40% of their money back.
I have boughten next year's fertilizer before. I have it delivered when I buy it. A couple of concrete bays in an old barn will hold all of my dry fertilizer for the next year. I have tanks to hold my 28% nitrogen if I want to buy early. I don't use anhydrous too dangerous for me plus makes your ground like concrete. I am not going to trust any company with that kind of money to just hold. I have seen some guys get really reamed by pre-paying inputs and also delayed pricing of grain. Both are games the Coops/suppliers make money on.
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