I’ve been quiet lately

At times I feel out of touch with western Canadian agriculture and I’ve always believed that if you have nothing to say you should keep your mouth shut.  Or your fingers still as the case may be.

I ran into a nugget of information today though that is worth mentioning.  One of the world reference points for nitrogen pricing is the Arabian Gulf which reflects the importance of supply from that region.  Approximately 1/3 of the world’s seaborne urea exports come out of that region.  Given how unstable the area can be that’s a huge risk for farmers.

So the message is to keep an eye on the mid-East as you make your purchase decisions for 2012.  Urea has come off a long way from its highs of 3 or 4 years ago and the market is soft right now.  But if you take 1/3 of the export supplies out of any market it will tighten up real quick.  The list of traditional exporters doesn’t include any of the countries that we typically think of as anti-western but Iran is a sometime exporter and any one of the Islamic countries could easily turn against the west if public opinion dictated.  The real risk is that some internal crisis such as the one in Libya could disrupt production or exports or both.

The big domestic pricing story is the continued advance of the Canadian dollar against the US dollar.  While that makes your grain harder to sell it also directly reduces the cost of imported inputs.  The more you think the dollar is going to appreciate then the less eager you need to be to lock in a price for next year’s fertilizer.