Is $20 Canola Coming? + Should You Buy Fertilizer for 2027? - What The Futures Episode 140

[00:00:00] Speaker A: When you get a second chance to buy urea at prices established in June, should you do it? That was my question to Josh Linville this week and we got him to join us for episode 140. Coming at you right now. Hey folks, welcome to the what the Futures podcast, your quick guide to better farming decisions. All right folks, welcome into episode 140 of the what the Futures podcast. Of course. My name is Ryan and I'm the host of the show. Hope you're having a wonderful positive Friday. We've got of course Josh Linville joining us this week. I am in the UPL studio here each and every week and big update out of out of the the MJHL and upl. Just a couple weeks ago, UPL signing a two year sponsorship deal of the Manitoba Junior Hockey League. Rural hockey, rural communities, rural roots. Fantastic work from the folks at the MJHL and UPL as well. Great hockey program there. And you see upl, they were, you know, with the SJHL doing some great things there. Just very natural to see them in Manitoba here as well. So good on everybody. That was a part of that deal. If you are enjoying the what the Futures podcast, you like the content that comes out every week, why don't you go and subscribe on YouTube or on your favorite podcast platform? You can also subscribe to the email blast that goes out on Friday mornings. You can do that at ryandenee Ca. And don't forget, I don't have a mailbag segment I guess right at the moment here. But don't be a stranger if you have a crop marketing question here during harvest, by all means. Ryanhatthefuturespodcast. Ca. That's my email. Send it in and I'm happy to get to it on a Friday episode or maybe an episode of Insiders. If you're wondering what Insiders is, well, that's a private podcast that we started a couple of weeks ago. They're between five and ten minutes in length. Just a quick crop marketing update. And if you want to see things like, you know, where my next canola target is, that is the spot that that information is hanging out. So again you just email me if you want to join Insiders. We will automate this process at some point in the next few weeks, but for right now it's a manual process of entering your email and getting you guys on the Insiders list. So if you emailed me and you're not there yet, that's because if you're not getting them, I camp a lot and I've been away for half of the month here. So I apologize. But we'll get there, guys. We will get there. Shout out to Tyler, producer Tyler, who's behind the scenes here this week. We've made a change. A couple weeks ago you may have noticed that Aaron's been doing some great work for us here the last couple episodes. Now Tyler is taking a run at it. So big thanks to Tyler for keeping things tidied up and, and looking pretty for me. Of course, as I mentioned earlier, uh, Mr. Linville, the uh, like the, the godfather here of, of fertilizer, he's the man, uh, he joins me this week to talk kind of all things impacting the fertilizer market. And as Josh says, like it is just, it never ends these days. There's always something going on and the poor guy's going to take a vacation here and get some well needed rest because it's if it's not Morocco, it's India. If it's not India, it's China. If it's none of that, it's the straight of Hormuz and so on and so forth. So I wanted to figure out, we had an opportunity to go and lock in a fertilizer price that when it was first put out was not the low of the market, it was just kind of above. And then we kind of forgot about it. And then the farmer remembered, hey, we have this offer, let's just double check. And sure enough, the offer still stood. So went and grabbed a urea price that was at least $75 a ton lower than the other prices for the same payment, same delivery, same everything. So had a chance to go and snag that. And yeah, you know, sometimes it may not have been perfect, but it looks pretty darn good here at least, you know, as we get towards the, the end, the end of August or the middle to end of August here. So, you know, and with that, you know, saying that, you know, I want to give a shout out here to, to folks that are, that are grinding like our, our harvest on our farm will start like if you, if you, you know, want to put down the, the pre harvest spray application as starting harvest, maybe that's when you start. But we did spray some peas this week so we will be getting after it here in the next couple days by Monday for sure. So harvest 2026 starts for our farm here momentarily. So the pressure was on here guys. I had to get the, the playlist done. I've been doing this playlist since I think 2020. I do a spring playlist for planting this crop. I do a harvest playlist. This is all in YouTube music. It's. It's free. You can go and grab it there. It's what the futures. Hashtag harvest26. And you can go and check out the old ones as well. Best not to duplicate songs. I try to keep it to about 100, so, you know, you got like four to five hours of entertainment. I usually throw some goofy stuff in there as well. And, and I, I know that the, the listeners of that playlist, they wonder, they really wonder about my musical taste because I kind of go everywhere. And way back in the day, I used to DJ small town dances and weddings and I got range. All I can say is I got range. So Song of the week again, this is on YouTube music. My kids wanted me to go with Bad Bunny. There's this song, I don't know, DTMF or something like that. I don't even know what it means. I should probably Google this before I say it on. On YouTube or on a podcast. But my kids, they. They think that Bad Bunny is speaking French when he sings, but it's Spanish. Anyways, they wanted me to put Bad Bunny on there, but instead we are going to go almost the polar opposite. I'm gonna go with. With an oldie here and with Prairie Roots, I'm gonna go with Wide Mouth Mason, my old Self, which I believe is on the debut record. And that band out of Saskatoon, Saskatchewan debuted in 1995. All right, now, did I. Was I into widemouth Mason in 1995? I don't think so. I think it was closer to like my college years is when I got into Widemouth Mason. But they're actually on tour in Alberta here right now. So that's my first. That is my very first song here off the Harvest playlist. Harvest 26. Again, type in what the Futures in YouTube Music. It'll pop up and you'll see. We go places, we feel things on this playlist. All right, guys, so enjoy that one here. And I do tweak it over the next few weeks as well. I go and tweak it a little bit. I'll start, I'll listen to it. If something's not hitting me, right. Like Macarena was a late addition to the spring playlist. I know that was a fan favorite out there as well. There'll be some tweaks that happen. It's mostly clean, but this one's a bit more. I don't know if this summer, sitting by the campfire, if I was A bit more hair metal inspired, but definitely more 80s 90s metal in this one. It's a. Maybe a bit heavier, but pretty decent for. For language and stuff. So, yeah, should be okay there. All right, positive moments for this week. Let's see here. We. We did have. We had the grandparents. My mom and dad were. Were visiting for this week. And earlier this summer, uh, my dad was bidding on. On a tractor, an old John Deere LA tractor. Actually, I have the model behind me on the. On the shelf. I bought that in the same auction, but it was the auction where we were bidding against each other and we didn't really know that we were bidding against each other. So anyways, I went and picked up this tractor and of course talked about on the show, go and get this darn thing doesn't start. Nothing's working. It took a while. That's how it goes right from the auction. But anyways, all good. Once we got it started there, it started, no problem after that. And so he came and picked up his putt putt, his little John Deere tractor. It's like a 1942 or something like that, this little lla tractor. And again, it just goes, putt, putt, putt, putt, putt, putt. It's the beautiful sounding thing. And Finn, well, he was intimidated by this tractor. It was different than our other tractors. And he was a little bit, you know, nervous to go for a ride. But we get. We did get to go for one cruise before we loaded it on grandpa's trailer and. And sent him off. So. So that was fun having. Having the grandparents around here for, for a couple of days also, you know, later this week, I think this weekend. You know, it's been 10 years since the Tragically Hip went and, and toured Canada one final time. Gord Downie suffering from brain cancer, I believe. And they're releasing an album and, and there's a live show here this, this weekend as well, a rerun or a. A replay of that concert from that year. And I went to that concert and I tell you, you know, the. To see a, you know, the teleprompters on stage with Gord Downey, you know, the giant words, because he could not always remember the lyrics to the songs. He was losing his memory a little bit at that time. And to see him go out there and put that out on. Live on. On stage. A phenomenal performance back in 2016. And I still get chills thinking about that night. And some of those songs just really, really even now, you know, they still, they still hit me when I, when I hear them. So I was actually listening to a couple live tracks here before recording and yeah, it was, I'm looking forward to, to catching, catching this again this weekend. All right. Other than that, you know, some decent weather again here, again excited for harvest and just to get some of this crop going in the bin here as well. All right. Yeah. Before we get to the crop marketing monologue, again, just a reminder, Crop Marketing Made Cool tickets are available. You can use the code unhing to save 100 bucks. And you can find our agenda here at Ryandani ca as well. So if you want to come hang out with us. Brandon Manitoba. December 1st and 2nd, that's the crop Marketing Made Cool conference. We've got a phenomenal lineup of crop marketing speakers and experts, and we're going to create the 2027 crop marketing plan, which this is going to spin me here into the monologue because for, oh man, I guess for four years, three years maybe, when it came to crop marketing, we were coming out of the highs of 2022 and forward contracting and being aggressive, you know, made a lot of sense. You know, trying to sell as fast as you could before the market went lower and lower. You were, you were trying to, you know, to get ahead of it as best you could. And the reason I started the podcast here, the reason I started with the futures and the reason I started the Crop Marketing Made Cool conference was, you know, I was frustrated with the lack of confidence that farmers had in forward contracting and navigating these, you know, these challenges and, and that's starting to evolve and starting to change. Like my crop marketing plan is starting to change with the times now. You know, I, I, I'm optimistic. I'm, I want to be excited about higher prices here moving forward. It's going to take time and I hope it comes to fruition. I'm certainly not putting all my eggs in that basket, but, but happy to participate in upside as it comes. But our crop marketing, when, when you start to change to, you know, a market that is making, you know, higher highs and then higher lows, building an uptrend, you kind of sit there and say, okay, well, now I produce this crop and I, I need to generate money, but I want to hold this as long as I can because it's going up in value and I really, I don't really want to part with it until I have to pay that bill. Right. It gets to be a little bit challenging in, in that way. I talked to a grower today about, you Know, logistically, wanting to move a lot of crop, you know, at harvest time here, and. And I get it. And that's okay. You can do that. Like, you can move the crop and then participate in futures upside, but a little more difficult to do on the basis side. Right. So anyways, our crop marketing is. It's kind of evolving here just a little bit. And I even started to think the other day, you know, what. What happens, there's a lot of folks, analysts, grain merchants, really banking on, you know, a harvest low. Even myself, I'm banking on a harvest [00:15:12] Speaker B: low [00:15:16] Speaker A: because I want to. I want a second chance at some of this. Right. I've talked about it on the show a couple weeks ago. I want to reown some of my position here. I'm not gonna go, you know, full riverboat gambler and reown the whole works, but, you know, I want to take a portion and say, hey, you know, I. I feel like this market, this trend is. Is up. These signals are good. I want to try to enhance my sales, and I think that's. That's okay. But I started to think, like, what happens if. If there isn't a pullback here or not a major pullback, you know, what could that set up? It's. Again, it's a little bit crazy talk, right? Like, it. What are you talking about? There is. There's got to be some type of harvest pullback. And I'm sure there. There will be. But, man, if you don't get much of a pullback here, that sets up a very, very interesting, very, very interesting scenario. So I wanted to look, because we. We go. I'm just pulling up some charts here as I'm recording. I'm supposed to do this before I hit the button, but want to look at 2020 and 2021. So 2020, the market really, really kind of starts to take off at harvest time. Like, we trade. We hit a peak here in mid January of 2020. And then we come back and we start to build what I would say is like, meaningful momentum into the September long weekend just after the September long weekend of that year. And again, it's not big moves. We're kind of. It's a little bit. The volatility is just not quite there. Pardon me, but we. We actually rally right through harvest. We get a little bit of a. We do get a pullback in late September, you know, bottoms out in late September, and then starts to climb here once again. That's not the big. The big, big move, though. I don't think I Think we have to go to 21 and I'll just, I'm just looking at Canola right now. I could look at wheat as well. So in 21. So we, so again we rally, kind of just build upward momentum. The start of 2021, a little bit of a pullback here in June. Then we take off again in July. Again we had, you know, pretty significant drought concerns. So canola goes from 650 to 950 from June 18th to, to like July 18th, like a month. It really takes off with the drought, then it trades sideways. But we, we rally, you know, basically making a little bit of a low here at 8.50ish September 21st. So a little decline and then off we go. So, yeah, there's probably going to be some type of, of decline, but it'll be very, very intriguing to see what develops here, this harvest and, and how this kind of plays out. Will we get a traditional pullback and will it take until 2027 to build some momentum? Will it take, you know, a bit of a, a spark here from the El Nino or a production issue next spring that really gets this, gets this going? You know, we were even, you know, of course when you, when you're sitting, like when I'm sitting around with, with my dad, you know, it's hard not to talk markets, right? But we were, we're just talking about the European rapeseed crop which oil world reduced, you know, year over year. I don't know, it's not quite a million tons, I don't think. But the rapeseed crop actually did not too bad this year. It was very, very hot, obviously in parts of Europe. But it did okay because it's, it's a winter planted crop, a fall planted crop. Right. And over winter. So, you know, this is where it gets interesting. Planting it now, you know, into next spring. This is where it gets really interesting if this El Nino has, has an impact there. So anyways, is there something that, that sparks this, you know, further? When is that going into next. Next. Next year? So yeah, I, again, I don't know if I don't know how this all plays out, but I find it very, very interesting. And I, I will say, like my crop marketing plan, it's slow, it's slow to change. It's not like you sit there and say, oh, the market had a good week. I'm now going to change my crop marketing plan. But you know, for unhinged in Brandon, you know, this is about, this is different than the first two conferences. The first two Conferences were about, you know, how to be very defensive and how to protect and how to. This is about. It's going to be a little bit different this year. We went through a lot of interesting scenarios in 2026 as well. We're going to talk through, through those scenarios and work through them as a group. So it should be, it's gonna be really, really interesting. Anyways, the other thing I want to add here in my crop marketing monologue is that I was a little bit worried and I just had to say it out loud a couple weeks ago or the last two weeks about demand being kind of quiet. And that all changed here this week. Now, you know, you try to sit here and not talk about specific areas and specific locations because it's not like this for everybody. But for many of you, you know, you are now your buyers are, you know, they're, they're getting off their, getting off their chair and, and they're, they're trying to buy something from you. They're trying to, trying to get you to do something. If it's not for September, it's for October. If it, if it's not that. I saw some January specials today. You know, there are, there's a bunch of stuff now. There's some strong demand there. Prices are working higher. You know, again, will that continue into harvest? What type of. Once these first trains fail, does it completely fall apart for a few weeks? You know, some areas will have big crops, heavy crops that, that will cause elevators to be a bit more plugged up and a little slower. But honestly, yeah, you got to do a little bit of homework right now because there are some premiums out there, big spreads between companies. I'll talk about that in a second. So, so we're going to get into it here with Josh Linville and then I'll come back. I've got some crop marketing. I don't know, just a couple comments around some price stuff and then eating your veggies here. So, yeah, double episode this week. Hey, I don't know if you guys caught the Thursday episode, but if you get a chance, you have to let me know. Did I cross the line on that one? Did I cross the line again? Very, very frustrated the last couple days of a posted basis. Again, like, I don't know if we need to make a, write a book about this or make a movie. Can someone get a hold of Spielberg? Because this is insane, but The Friday basis, 20 cents. The Friday basis, 20 cents. The Monday buyout using a buck 29 basis. So $1.09 better. And yet they, there's no, there's no compromise reasoning. It is, it is nuts. And then the other really, really interesting thing is that the posted bid, there's a posted bid with a low number and then underneath there's a special. And not everywhere. Can you tie in that special on your futures first contract. It is, it is really, really very, very interesting. And yeah, I don't know. I, again, I think our, our parts of our industry are phenomenal, but man, parts of our industry are. There's some stuff that we allow to happen that's just. I don't know, guys. I don't know how, why, I don't know why. But go and check that out on Thursday. Let me know if I cross the line there. Kind of got rambling and going and, and when I looked up, it had been like 20 minutes. I'm like, oh, boy, I've said too much. All right, folks, let's get into it here with Josh Linville. Let's talk fertilizer. All right, folks, I've got Mr. Josh Linville from Stonex joining us once again here on the what The Futures podcast, episode 140. So we are ratcheting up here, Josh. How's the summer been going? [00:24:30] Speaker B: It's busy. I'll tell you what, the fertilizer markets haven't given a whole lot of breathe. And my wife would be more than happy to tell you I'm exhausted. This has been like an adrenaline drip since that first missile was launched at Iran back on February 28th. She's taken me to actually take a week off here in a few weeks. She's like, I don't care what's going on. You've got a good team around you. They can handle stuff. You need some days off. [00:24:51] Speaker A: Yeah. [00:24:52] Speaker B: What a. [00:24:52] Speaker A: You know, it got amplified this year, but also before that, it wasn't like it was quiet either, you know, like, it's been a, a busy run for almost many years now, so. [00:25:02] Speaker B: Yeah. Yeah. [00:25:04] Speaker A: Well, I appreciate you taking some time out of your schedule for us this week. I, I had to, I had a little bit of like, FOMO here, like, fear of missing out for Friday because I was like, oh, what day do you want to record? And he gave me a couple days. And you're like, but Friday, I'm going to swing the clubs on Friday. I'm like, oh, man, that sounds really nice. I'd like to get out one of these days, too, so. [00:25:24] Speaker B: Good for you. That's the problem. I'm not going to be swinging the clubs and we're sitting at one of the putting greens, the holes, and just sitting there talking to everybody as they come through. So the problem is I'm so freaking busy with my job, I don't have time to golf anymore. And you know how it is. You don't play fairly often. What's the point? I. I count my. I don't count strokes. I count the number of balls I lose. [00:25:43] Speaker A: Yeah, yeah, I started with 12. And how many do I finish with? Yeah, well, my dusty clubs are sitting right there. They have not moved. You could look back at this podcast all year long and they're sitting in that exact position. So, yeah, I. I'm gonna move them once yet this fall. I know. I will. I will. So. So, Josh, I had a unique situation pop up last week where we. We got a. A price for some urea. That was basically when we had that little dip in June. It was a price that kind of represented that time frame, but yet there was still some availability here in August to secure the. Not the lowest price of the year, but not far off of the lowest price. I reached out and said, hey, you know, what do you think? Where are we at from a summer fill? If we want to call it summer fill? Maybe for some it'll be a fall application, but are we in a buy type of mode? Is it. Is it just really extreme out there and too expensive right now? Like, maybe those are different scenarios, but [00:26:45] Speaker B: where we are, yeah, it's okay today. And again, I don't like to look at just the price. Right. Because there's so much more that goes into farm marketing than just look at the flat price of the input. The output. It's a whole, whole package. Right. That really tells the story. And you look at some of the urea prices that we had gotten down to, you look at some of the grain prices we're looking at today, and it's okay. It's kind of in the mix of. It's in the middle. It's not the cheapest thing we've ever seen, but it's not the most expensive thing we've ever seen either. And yeah, when. So, you know, I spent a lot of time looking at barges. New Orleans, Louisiana, barge trade. This summer, the lowest price we got down to was about $340. Now that's USD short term. Let's make sure we're talking apples. Apples here. [00:27:26] Speaker A: Yep. [00:27:27] Speaker B: That then ran up to about 440 bucks. We routed about $100 and then demand disappeared. Everybody's kind of like, yeah, I'm Good. I don't need anything. Prices fell back down to Monday trade 375. We're back up again today at 405. So we've got this down big freaking yo yo thing back and forth. And again, it's not as much to do domestically North America. It's more to do with all the stuff going on around the world. The India Uria purchase tender, the straight of Hormuz, Brazilian demand that's looming. There's a lot of things going on in this market. It just seems like it's jumping its shadows, it is scared of its own. It just doesn't know. One day somebody might be tired and there's a little bit of bearish news out there and the price falls 15, 20 bucks next day, people are excited, they got a good night's sleep. And also the price jumps quite a bit. So it's all over. But that's a very long winded way of saying yes, some of these values we're looking at today, could we see prices down a little bit more? Yeah, we could under the right circumstance. But I think by Christmas that stuff's going to look pretty good. [00:28:28] Speaker A: Yeah, yeah. That's like the last number of years here. It's, you know, to buy at this time of year and to store it on your own farm or facility and apply it the next spring. Like that has been the trade that has worked and worked and worked. And I don't know if there's anything different for this year, but I know the India tender, there was a bit of action around that or maybe surprise. And then China exports as well. Right? Is China exports are, are okay. They're exporting more now. [00:29:04] Speaker B: So when you look around the world, you've always got to kind of know what shape are the biggest players in the marketplace. Where are they at, how are they feeling? And China is usually the second, third biggest exporter out there. They usually export five, five and a half million tons. They get exported maybe half a million tons January through June, not very much, just like last year. But now all of a sudden the government is allowing more exports, they're laying more tons to part. And it does look like they're going to hit that five, five and a half million ton range. So that's good. And it was great for India. They were looking for about 1.7 million ton. And it looks like today they've issued their letters of intent that means everything is wrapped up. They easily got their 1.7 million ton. I think it's what shocked the market. And as we're starting to find out. It looks like China played a big, heavy part in that, and that was the unexpected situation. So that's great for buyers around the world. It was kind of one of those shocks like, ooh, yeah, maybe later on down the road, there's going to be tights of supplies, but right now, not a whole lot of demand. Production drawing the place that it is. There's a little bit extra supply out there, and that's why you see prices down from. [00:30:07] Speaker A: From like, any significant gains in production, though. Like, we're like all the problems that existed before earlier this year or last year or the previous years out of Europe or elsewhere. Like, none of that's changed, though, right? It's not like you guys didn't build anything in the last couple of weeks, did you, to get more exports? [00:30:28] Speaker B: I know. I. I sure didn't. Nothing I've seen. No, it's. Yeah, you're right. The European production rate is still about 75% of normal. That's been the same as late 2122. Chinese exports are restricted. Even though they're in better shape, they are still controlled by the government. So everybody's nervous. They could shut that thing down at a moment's notice. Russia, Ukraine. War continues to go on. It hasn't impacted fertilizer in a major way, but it would not take much for Ukraine to expand that drone technology to start hitting more fertilizer ports or production or vessels. The big thing, probably this week, that's changed at least the last couple of days. It looks like peace talks with Iran are basically done. They're saying there's no route forward. There's not going to be any sort of common ground, I guess, if you will, you and I are smart enough to know what that means. Biden's getting ready to resume, and we all know that means basically vessels are going to struggle to get through that body of water. I mean, yeah, we're great about shooting down missiles and stuff like that. We're not real good about attacking a small drone that's zipping across the top of the water. [00:31:33] Speaker A: Yeah, that whole Strait of Hormuz situation, it. You know, the last tweet I read here this week was, you know, Trump was considering bombing or going after Oman, Right? Like going in. Because Oman and Iran were talking about someone, you know, controlling the boats, vessels coming in and some controlling the vessels going out or something like that. And Trump was like, no, no, no, no, no. Not on my watch, anyway. So, okay, so straighter, horror moves. Still a mess. China exports still restricted. But some positivity there. Europe production still a mess. Russia, Ukraine maybe Russian new development on, on how they need to maybe change how they're defending them themselves, because Ukraine obviously has a hold on some new technology here that can go farther and do more damage. Russia's still trying to figure that out. So, so that's, yeah, no, not great there. Okay, now where there is maybe a bit of a bright spot here. Would we look over at, at Morocco and, and I, I pretty sure I saw pictures of celebration around foss arriving on U. S. Shores. [00:32:49] Speaker B: Yeah, I, I'm not sure I didn't get to see any of the video, but they might have actually been firing fireworks off of that vessel when it pulled in. I've never seen so much fanfare for a vessel everybody expected to see arrive. But I get it. I mean, from a U. S. Perspective, it is a great political thing for a lot of the agriculture industry, it's a way of celebrating saying, listen, president Trump suspended these duties and products come in. It's a fantastic thing. Look, we actually had the physical boat arriving. The market, the fertilizer market, knew that thing was coming weeks ago. There is nothing about that boat arriving that the market's like, that's new. The market's like, no, that's absolutely what we expected to have happen. So unfortunately, you're not seeing it really impact the pricing. That was the expected case. I know folks were hoping that we'd see prices just careen off a cliff, but that just doesn't look like it's reality today. [00:33:40] Speaker A: The question that I get asked the most from farmers in western Canada is should I be putting my hand up in securing my foss needs for 20, 27 margins slowly improving? I think we could say that, you know, we want the wheat market to show us a little bit more yet, and, and we want some of the other smaller acre crops to, to rise yet as well, but it looks like we are trending towards some, some better margin. And so they're wondering, hey, I kind of, you know, I'm looking at urea. I kind of have a handle on that. But is foss the big watch out here? Because sulfur is, is part of, of creating the, the Foss product. Right. Like, I don't know how any of this works, but aren't they kind of intertwined? And if sulfur is going to climb in value, there's a good chance phos is going higher as well. [00:34:33] Speaker B: Yeah. When. So when you look at phosphate production, there are two major inputs that we watch their variable cost. Number one is Anhydrous, which has plenty of global supply problems. The straight of Hormuz is blocking three of the biggest exporters. Russia is a shell of their former selves. There's a lot of the anhydrous problems. The sulfur is the other one. And the Strait of Hormuz accounts for about half the world's tradable supply. Russia has blocked exports, which is another 17%. So of the world's tradable supply, we're missing two thirds of today. When Quan actually every month he looks at the estimated cost of production for a ton of dap in the Gulf. Basically we're looking at Florida today. When we look at the last month, July, and we look at just the sulfur cost part of the production, and you carry that back to 23, 24. There are 14 months where the total production cost of the ton of dap was as much or less than just the sulfur cost today. [00:35:35] Speaker A: Okay, all right, so. [00:35:37] Speaker B: And that's where I keep sitting there telling people, listen, number one, China's not exporting. That's 10 million tons a year that's missing. Saudi Arabia is an exporting. They're the third biggest exporter in the world because they're blocked behind the Strait and Red Sea. And then when you look at the rest of the manufacturers, we need to ramp up production. If the price were to fall any further, you would destroy even more production because the manufacturer is saying, I have a finite amount of sulfur, I have a finite amount of phosphate rock. I'm not going to produce it. A loss. I am a business. I'm here to make money. And that's the big worry. And that's why I've continued to sit there and say these things like Moroccan product coming here. Is it a good thing? Which would have been Dapper Map, not Triple Super Phosphate. It's just not a popular product. But P205 units is better than nothing. But if our price starts to fall, they're either going to slow down production or exports will pick up. So going back to your question, should I be buying my stuff for 20, 27? Depends. I know that's a very political answer. Right. [00:36:33] Speaker A: Thanks, Josh. [00:36:34] Speaker B: Yeah, yeah, I'm here for you. These are the questions we've got to ask. Do we think China's going to export or not? I don't believe that they will this year. I don't know if they will first have next year. So that's probably a reason to do it. Do we think the Strait is going to reopen, which helps all the manufacturers? I don't think so. I think Iran keeps dragging this war out for the midterm elections and that hurts Trump and puts him in a worse spot. So I don't see a big correction coming short term. But then it comes down to can you go without, without hurting your yield potential for next year? I think that's the biggest question. [00:37:06] Speaker A: Yeah. I think the straight of Hormuz might have that gas pedal break at certain moments where something for a few weeks settles. We may be just leaving that, though. We may, we were probably already there. Now we're leaving that calm. So, yeah, but yeah, it's, it is not, it's not really fun to think about, Josh. It's about your fertilizer purchasing for 2027. [00:37:33] Speaker B: So that's so much of a struggle. Everybody's like, well, what do you think? What do you think? There's actually some reports that came out this week where they're, they're making calls on 2027 price expectations. And when I was asked about it, I was like, well, what set of circumstances are they using to come to that conclusion? What do you mean? It's like, oh, is China exporting or not? Is the straight of Hormuz open or closed? Does the Russia Ukraine war go away or does it expand? Does European gas prices rise or fall? I mean, there are so many events going on in the world of fertilizer today that's impacting supply, that's impacting price. I could write a book and I still wouldn't hit all scenarios. [00:38:08] Speaker A: Yeah, yeah, okay. Well, let's switch gears then to there's a mechanism out there that you could use to maybe hedge your, your urea purchase here. Has there been any traction in that contract? I think it's. Was it Chicago? Is it Chicago? Yeah. Cme, is there more traction on that right now, on that futures contract or what's going on? [00:38:39] Speaker B: As I'm looking at. So it's a 10 ton nola urea contract and folks might be like, well, I'm not nola, I'm not New Orleans. It's the same thing as like corn is Chicago, right? We have our basis point. NOLA is our basis point for fertilizer. I will tell you today, and I'm just doing a rough count here as we're recording. I am estimating, as I look at this, two to two and a half, maybe upwards of three to three and a half dozens contracts trading between September and October. It's seen a fair amount yesterday, probably saw similar value or volume. Three, three and a half dozen contracts trading Over September, October, November, it has been active. It is something I know folks are always like, well, liquidity is bad. The CME's employee market makers, where they constantly put out a bid and an offer so you can go hit a number if you're interested. It's been doing very, very well. And I think it's to your point. It's another tool we can have in the toolbox we want to pull it out and use. [00:39:35] Speaker A: Might be something, a tool that you use to, you know, instead of making a big purchase decision on a product on your, on your urea, maybe you. You do a portion and. And then you go and do a hedge or something like it's. And what I'm hearing now is I am seeing some brokers based out of the prairie, some, some futures brokers that are starting to circulate material around, training on, you know, how to look at this contract, how to strategy around it. Just more conversation as well, getting familiar. So it is gaining traction on the education side as well, which is great. [00:40:13] Speaker B: Yeah, it's going to. It's going to take a little while. But this is exactly why I started pushing for this before COVID it was even a thing. I remember sitting down with our contact at the CME and saying, hey, we really need to consider a smaller contract. And the reason behind it was it brings in a new layer that truly needs the help that truly needs it. And frankly, the farmers kind of understand hedging stuff like that better than some other layers of the industry. So does it need to completely change the way you do things? No, but it's nice to have that when you need it. Going into spring, for example, prices started coming off for those farmers who are worried about supply but hated the price. They bought the physical, they sold the paper, they had their physical right there. They knew it was around. They didn't worry about the price falling off the face of the earth. Yep. [00:40:57] Speaker A: Yep, exactly. Okay, Josh, that's great. Any. Anything else? Anything that we're missing? [00:41:03] Speaker B: Any. [00:41:03] Speaker A: Anything we haven't touched on yet in today's recording? [00:41:07] Speaker B: I mean, we could go for hours, right. With all the things that are going on, unfortunately, volatility is going to be the only constant that we have. Right. And we could look at volatility and say, well, that's terrible. I hate it. I don't like change. If you look at it the right way, it does breed opportunity. There has been some chances out there to lock in some decent numbers. Buying the fertilizer, selling the grains. You got to keep watch. I think that's the best thing unemotional. We're not letting emotion dictate what we're doing. You see an opportunity to lock in some money, lock in some profits. I don't think there's anything wrong with doing a layer. You don't have to buy. You don't sell your grain at one time. You don't have to buy all your fertilizer at one time. Take the little wins. And nobody ever went broke making money. [00:41:51] Speaker A: Fair enough. Fair enough, Josh. All right, well, just to give the listeners a bit of final context here, the price that we were able to lock in for some fall delivery urea was around the $800 level. Other quotes in the same neighborhood, same delivery time, same payment terms were closer to $900 a day ton. And so I reached out to Josh and said, I don't know, like, what do you think? This seems like a, a no brainer or a good opportunity? And yeah, and Josh said, nothing's a no brainer these days, but this may be a good opportunity. [00:42:26] Speaker B: So I always gotta leave myself a political hour. I can always go back and say, well, I told you, but yeah, yeah. [00:42:33] Speaker A: All right, Josh, I appreciate you joining the what the futures podcast this week, man. And enjoy Friday's golf, enjoy some time off here in a couple weeks, and just keep, keep us in mind when something crazy changes in this market. [00:42:47] Speaker B: All right, we'll do it. We'll talk soon. [00:42:49] Speaker A: Take care. Oh, man. I always enjoy my conversations with Josh and you know, at times we're kind of talking about similar things from a few months ago and stuff like that, but, you know, it's. It's our largest cost, our largest, you know, decision. It's. It's a commodity that's traded globally with lots of influences. There's always a lot on the line when you talk fertilizer or when you're making that decision. And yeah, Josh is always so it's got a great setup there. People buzzing around in the background. Just awesome, awesome setup. So good, dude, and great to have him on the show here again for episode 140. All right. I said I'd talk some crop marketing price stuff. I just want to highlight. There's wheat basis improvement happening out there for fall delivery in many locations. There's canola basis improvement happening in many locations as well. We did get the fear text this week from a few crushers. Hey, we're widening out our October basis. I believe coverage for October is quite comfortable. September. October is quite comfortable for a lot of the crushers out there. But There is some basis improvement happening. I even had a conversation with a farm and the line company price and the crush price. You know, the crusher was leading forever by, by a mile for all of last year, but it's actually starting to narrow in here a little bit. So the game is changing, futures are climbing, basis is improving. That's a pretty big signal for you guys. That's a good thing. Basis has a lot more work to do. It's far from over, so just wanted you to take note of that. Also, two last things in this space. Just do a little price discovery. Don't just pick up phone the first elevator, check the first website. Do a little bit of price discovery. Saw a spread of $0.50, $0.60, $0.70 for the same delivery month, same specs, same everything this week for hardwood, spring wheat, neighboring elevators, no freight disadvantage, nothing like that, but big spreads. So different positions at those elevators just, you know, make sure that you don't fall into one of those traps. And then lastly, there is a little bit of wheeling and dealing that can happen right now. And what I, what I'm kind of referencing here is if, if, if you like, if you're a crusher across the prairies right now and you're a farmer that has a bit of volume and you want to, you know, have a bigger conversation, it doesn't have to be about delivery for September, October, like you can have a conversation about delivery for February, March, May, July of 2027. There's actually an appetite out there from the, from the merchants to, you know, do something better, significantly better than what is on their websites. And so I, I'm gonna see here how this transpires over the next couple weeks. But obviously there is a supply there that everyone's trying to get their hands on that we think, you know, will be very, very tight, in short supply next summer. You know, maybe it's, it doesn't make sense to go and have that conversation quite yet. You know, maybe you're going to give up a little bit too much. But go and think about when there was no canola left. Go and think about what basis did for some of those months and use that as a reference point. And remember, margin is much better than it was back then. So don't be shy when you, when you go and ask. But if your area for May, you know, you remember seeing a plus 20 or plus 30 basis, you know, go in and have that conversation. The worst thing that's going to happen is they're going to say no. But I believe, well, I Don't believe I see an appetite out there for this. I see an appetite for some wheeling and dealing right now on a few different commodities. Again, we're turning a bit more bullish, so be cautious. But I think there's a space here to get something for some of you to get a little bit done. And like, you know, you could take a plus 30 basis off next May. You know, you're, you're not far off 20 canola, right. So it's just some of you guys out there, I think this could fit in your crop marketing plans. Again, worst thing, worst case scenario, they're going to say no. I've been negotiating on a truck here all, all the last couple weeks and anyways they call it. What do they call it? I heard it earlier this week. Set. Setting the post. I think it's called setting the post. I'm just going to just Google this in negotiation terms, see if, if it pops me. Sales frame. I think it was called setting the post. And maybe someone has that coined or something like that. But basically going and setting the low side. So like, you know, I'm looking at. Well, true. What's a truck these days? My truck. I'm looking for a cheap truck, you know, call it like 75 grand, you know, so I'm going flirting in the 60s, right. I'm going to set the post in the 60s and see what, what happens. You know, the worst thing they're going to say is no, and I move on. But you can go and set the post there and see what comes back. But this is a good time to negotiate. It's a little bit quiet out there. The merchants, you know, they're kind of twiddling their thumbs, they're wondering what to do, you know, just to get through the day. And you could be the farm that's out there wheeling and dealing. And you know, if you are part of a group, you know, I like the lunchbox crew, you know, there may be an opportunity to, to put some farmers together and, and make some interesting deals as well. Maybe you got a couple buddies that you guys kind of, you know, think very similar in your crop marketing. That could be a fit. And you know, maybe you guys can pull something together because volume does, it does play in this space. The more volume, that's part of it. The, the merchants. Yeah, that's what they want. So anyway, okay, I think that was it for crop marketing, price stuff. Yeah. So let's wrap up here eating your veggies and then we'll, you know, let you go and enjoy the rest of your day and weekend. First one, I forgot about this one. It's amazing when you're. When you know things pop in your head and you're like, oh, man, I didn't talk about that yet. But very, very important here. Super important. You need to. Many of us will get grades from a few elevators, our local elevators on wheat and Durham and some of our crops. But don't forget about third party grading that's out there, like in SGS or. I can't remember who they all are, but a third party, you know, grader that is not being influenced by anything but the grading table. I guess. Don't forget about that. You don't have to send a thousand samples to them and get those grades. But there's a couple different things. Like you could. I've seen it before where, again, it's a visual thing, a visual process. But a grader at a certain. At an elevator will just kind of get caught in this, you know, seeing this. They're really looking for, oh, some like an issue in that area. They're really looking for it and then they just, they just zone in on it and they zone in on it and they're like, there it is, there it is, there it is. Oh, is that it? Maybe, yeah, let's put it as a bad one. And they really just get kind of get after it a little too much. They get a little bit too excited and then they. And then they, they become a bit harsh on the grade. Then you take that same sample and you go a little bit outside of that area where the issue is not as big. And all of a sudden you're like, whoa, that's way different. So I have two examples. So when I was a grain buyer, I was a grain buyer six hours away from the farm, and in a year, Fusarium. You know, our wheat there at the farm, at the elevators was dig the hole, put it in the hole, and you know, this is garbage. We took the wheat to an area without Fusarium and they're like, you know what? Yeah, we can make this work. This will grade here and, you know, it'll be fine. Like, that was a very drastic change in price for us that year. Another one that happened is we had an event that caused, you know, high green count in, In Canola in Alberta. And so we were getting, I remember getting 30, 40, 50% greens, 80 greens locally. And then we'd ship that load all the way down to southern Manitoba to wonderful Altona. And we would. Yeah, we would get a Fraction of the greens. And in fact, you could take that load of canola, throw it on a truck, ship it all that way and be dollars and dollars and dollars a bushel ahead. In fact, that was the year where we had one company that came out with a very aggressive discount program. Crazy, crazy aggressive discount program. We bought back those contracts, wrote a check to get out of them, shipped them to Manitoba and made tons more money. Like I think it was like 4 bucks a bushel more, 5 bucks a bushel more. Like it was crazy, crazy even after the buyout. So third party grading, the other thing, one of the best practices I have with one of my clients that I consult for one on one is we send anything where we're dealing with a broker not to be thought to pick on the brokers. We send all that away for third party grading before we ship any loads out. The biggest thing we're watching there is dockage. We get a lot of weird stuff that happens in dockage on some of these specialty crops. So we, dockage is the big one and then just any factors that may come out that, that could be something we want to keep an eye on. So again, lots of great people in the industry, lots of trustworthy folks, but we just, for some reason we just find ourselves in these weird situations and just having the information in front of you, having a baseline, having something that you can negotiate with, yeah, it's just really, really important. So third party grading, I'm a big fan of it. Back in the day, I would open up accounts at all the different SGS locations. I would ship samples all across the prairies and make sure that all my customers had a sheet with all their grade results so that they could use that as peace of mind and negotiation. Again, when all the grain is the same quality, it doesn't matter as much. But when you start to see a spread, you know, the Durham guys out there, they're seeing it right now. When you start to see this get, get that third party grade done, you're going to spend a couple hundred bucks to get some peace of mind on what you have on the farm. All right? And the best part is it is yours to keep, to shred, to burn, whatever, to present, it's yours. So if a buyer comes to you and says, hey, you know, this is how we see it, this is how we're going to buy it and it's better than your sheet, great. You know, they have a plan for it. You can get rid of your craving sheet if it's going to be at A disadvantage for you. All right. Yeah. Second thing here. Just check the carry in these, in these markets, like, take a look at what you're going to get paid to store this to January, to March, to, to spring. Be sharp on your cash flow, you know, and in your space. Do you have to deliver it? Do you need to generate more cash? Are you covered? And if you are, can you get paid a decent amount to store this? Just take a look at that over the next few weeks. And then my last one here, again, I don't think, I don't think we're all gonna. Very few of us will have the luck of buying, you know, fertilizer at the June prices here, but it's a soft time for the, for the, the retail side. And so just like last year, in those soft times, we just encourage you to, to get some price quotes, do a little bit of negotiation, you know, kind of doing it when nobody else wants to or has the time to. And it, it did pay dividends in 2025. So I, I'm, I'm just thinking to go and have those conversations, keep it top of mind and maybe you'll surprise yourself with. Reasonable is not the right word, but maybe a fertilizer price that you can kind of fertilizer program you can live with for 2027. All right. And as Dave Norris said the other day, if you're going to buy something, you might want to sell something too, because you're buying something expensive. So hopefully you get a chance to sell it at a big price as well. So keep an eye on that. All right, folks, for the what the Futures podcast, my name is Ryan. Strategy, subject to change. Prices, subject to change. Reach out to the professionals out there. Yeah, thanks for hanging out this week. Have a good week. And I'm out of here.