Wolf Packs and the Ammonia Oligopoly – Lesson 2 from the Animal Kingdom

Wolf pack structure demonstrates how an oligopoly is actually worse for the producer than a monopoly.

In the animal world a lone wolf, has a monopoly. The animal will monopolize his territory with hunting skill and strong physical health. A lone wolf is a monopolist hunter of sheep as an example. The monopoly feeder of mountain sheep and domestic livestock is a Lone Wolf.

Nevertheless, this apex predator has a biological death warrant in the woodlands. The canine will last a few years. It is limited by its own strength, and endurance, as measured on its weakest day. The lone wolf dies off. Now, the hunted have a chance.

A wolf pack doesn’t offer the producer such a reprieve.

A wolf pack can take down a 2,200-pound Wood Bison in Alberta.

The wolf pack, mom, dad, kids, uncles, cousins, and aunts work in unison as a team to wear down the healthy Wood bison in heavy snow. Even a healthy Wood bison can be taken down by the Apex killers. This kill is never achieved by a lone wolf up against a strong 2,200-pound wood bison.

This is how a loose pack of three oligarchs work in unison, like a wolf pack, to rip profits from the farmer—worse than any could have done on their own! The group of oligarchs are not competing with each other in geographic marketing regions, allowing the price to be manipulated.

· The oligarchs get together (indirectly of course) with the marketing department to improve profits and promote the dumb decision to switch from ammonia at 82-0-0 to UAN at 28-0-0 or URAN at 32-0-0. Oligarchs want to build a high-priced material and take away the cheaper ammonia to be directly applied.

· They must have longer lead times to build 32-0-0 and fill up the product with carbon. The long pipeline of 28-0-0 nitrate-based fertilizer appears to be very long in Europe

· The Oligarchs must have more margin but the risk of 32-0-0 and 28-0-0 is much higher. If the risk to build 32-0-0 is higher, why is low-risk NH3 priced so closely with 32-0-0 (March 17, 2022 $1,500 per ton in Nebraska)?

· Along the Gulf Coast and up into the Great Plains—phase of the moon—100 men and women executives at the 44 ammonia plants in the US worked in unison and, by some mysterious manner, raised the price of ammonia 8 times to protect the risk of 32-0-0 manufacture.

· Instead of 18 cent per pound of N as NH3, the oligarchs want 90 cents per pound of N as NH3.

· The price is never competitive. There are no multi-year contracts

· The grey ammonia futures market is unlikely to be representative of the price of ammonia since there are so few plays. There are so few players and trades, so the market is vulnerable to manipulation. Effectively there is no futures market in fossil grey ammonia,

· The oligarch’s use transportation to hide the nitrogen supply. “You cannot get ammonia in time!” is the deceptive cry, and yet the ammonia  always seems to show up at an elevated price.

Ammonia has always been priced at cost plus a given margin up until 2003. After the fall of Farmland of Kansas City and purchase by Koch Brothers the price of ammonia is adjusted to the price of corn.

The enterprise profits of farmers cannot go back into the land or improve machinery. The farmer’s struggle to stay profitable with the oligarchs taking an additional 12% margin is self-evident. It is a terrible site on the agricultural scene to watch our farms decline and farm kids leaving the land for the city.

The Oligarchs get away with the sting because they can….because they are not competitors at the very top. Each Oligarch is a part of the wolf pack. But ammonia can still be a good play for producers who are able to get away from the wolf pack.

Ammonia futures is a good play when the producer has storage. Green Play Ammonia is even better since it is zero carbon with tremendous benefits for the environment. The best way to play in the futures market for ammonia is to store ammonia on your farm and fill up in July for your farm. Storage at the farm is key. Ammonia is the only fertilizer product you store for any length of time…Sometimes ammonia is stored and not used for three years in Kansas farm storage. Lack of storage is what allows fear marketing by the oligarch.

Is it time to build a new empire without fossil fuel? Zero Carbon, Green Hydrogen and Green Ammonia is here.

The Biggest chance to improve the climate for humans and animals comes from agriculture and stopping the expansion of fossil fuels.

No-tillage farming and total reset of commercial fertilizer, manufacture, use and application must be taken seriously.

Make sure you ask for Zero Carbon Green Play Ammonia and get the advantage of Green Hydrogen Credits.

Price manipulation hurts land values and young farmers that are caught going year to year. They are not able to buy land….for sure, young farmers cannot get ahead. Retiring farmers cannot sell out to a young farmer. For sure, across the US and Canada, only directly applied ammonia drives land values at much high values when it is priced to the cost of production plus a small 10% margin.

You can build ammonia locally in 2024. Green ammonia. We are preparing seven-year contracts for $100 to $300 per ton. Contact us to sign a letter of interest. You can to learn when these long term contracts will be available to you. There is a new business plan that will work across the Great Plains.
Go to www.greenplayammonia.com

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