# N price impacts from Pressure on Nat Gas



## Hayman1 (Jul 6, 2013)

the cold weather is putting a lot of pressure on the price of natural gas and we are just into winter.

Has anyone seen any info on potential price impacts on N in March-April?


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## somedevildawg (Jun 20, 2011)

Hayman1 said:


> the cold weather is putting a lot of pressure on the price of natural gas and we are just into winter.
> Has anyone seen any info on potential price impacts on N in March-April?


That's a good question and something that has been causing concern for myself as well, I believe we could certainly see a up-tick......can't stand any more...


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## hillside hay (Feb 4, 2013)

Definitely going up. That's the brave new business model. Any excuse to raise any price on any product. Remember last summer they (nat gas cos) were lamenting the overabundance due to the Marcellus being better than predicted


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## hog987 (Apr 5, 2011)

I like the old days when prices would follow something. Now a ceo wakes up with a sore toe so that means the price of natural gas. oil, cookies at walmart ect, must go up.


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## vhaby (Dec 30, 2009)

Increased N price depends upon when fertilizer manufacturer's natural gas contract ends. Of course they don't need to wait for the contracted gas price to terminate if they want to increase profits by raising the price now. Used to be, the fertilizer mfg contracted natural gas prices several years ahead. Don't know if they still do this now.


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## hog987 (Apr 5, 2011)

Right now there is an over supply of natural gas. Anyone who says different is lying or does not know better. With the horizontal drill that took place in Canada a few years ago and the expansion of the oil field in North Dakota and south Sask.

There is a big polyethylene/ethylene plant here. One of the biggest in the world and they are doing a billion dollar expansion having the gas piped in from this oil field. This plant figures they can get cheap natural gas for at least the next 20 years.

Now for the price of nitrogen. They will charge as much as they can get away with and not be left with too much inventory. But nitrogen has less and less every year to do with natural gas prices.


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## rjmoses (Apr 4, 2010)

Here's an article from today's St Louis Post-Dispatch on propane:

http://www.stltoday.com/business/local/propane-crunch-squeezes-rural-missouri/article_66a3fde2-eedd-543b-b6b6-6102e25f5109.html

Any smart, big volume user of any commodity, like natural gas, is buying way ahead.

But different strategies apply:

A large supplier will contract with a large buyer for long term delivery so that, as a seller, they cover their fixed costs and known variable costs and keep the supply operation running. They lock the buyer in at a particular price (and maybe a variable percentage or annual percentage increase). A buyer is happy to lock for 2-5 years because they know the cost and the product availability.

The market fluctuations affect small buyers and sellers the most. They usually don't have capital to lock in a price nor can they forecast sufficiently to determine what their needs and availability is going to be 2-3 years down the road.

The small operations, buyer and sellers both, end up absorbing market fluctuations the most. The large operations can offload short term surpluses at a big discount, or jack up the price big time when demand is high, to the small operations.

As small operations (even big farmers are small relatively speaking), farming tends to get hit hardest with price increases because they have to buy at the time it's needed. Likewise, they can seldom afford to buy large quantities when the prices are steeply discounted either because of limited capital, limited storage or limited need.

It's basic Economics 101. The under-capitalized tend to have to pay the premium,

Personally, I'm all in favor of a limit on business market share, i.e., a particular business could only control a smaller percentage (like 5%) of a market segment before having to split.

A good example is potash--only 2 companies supply all the potash. This causes a lot of implicit collusion (if not outright price fixing). Suppose a 5% market share limit exist--we'd have 20 companies and, probably a very competitive market place.

Just thinking.....

Ralph


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