farmers going for broke

Seeding has begun here in the WA wheatbelt and it is a very early start with generally fantastic subsoil moisture reserves. Canola sowing has begun and there will be a large swing to this crop. All oilseed crops have strong pricing prospects going forward being somewhat linked to the price of oil. Oilseed crops are big users of N, P and K. Wheat will also dominate plantings and it too is a major user of N and P especially. Pastures are being turned over to crops and that means a much higher fertilizer need for those farmers. There are shortages of second hand seeding machinery because of the number of sheep farmers becoming grain farmers (time to buy meat futures and any stocks exposed to meat like AAC?).

You can speculate all you want but the reality is if you want to capture these high prices for grain, you have to use the fertilizer that is NEEDED. Demand from the crop is not a negotiable need.

I actually expect nitrogen (the fossil fuel fertilizer) prices to now move up a cog and be the star performer for the last half of 2008. All three nutrients will not see demand decrease in the foreseeable future. A lot of people will die if this is the case since it would translate to less food coming from farmers in an already tight global market for staple foods.

Next input to hyperinflate for us will be herbicides (NUF is on a breakout). The ag stocks will shine bright in 2008!