One important reason for pellet high costs.

I would expect a price drop in the spring when people don't buy up the inventory because they bought oil instead.

Additionally

BBS retailers and perhaps to a lessor degree small mom n pops ramped up early purchases as can clearly be seen in various storage yards.

I think any immediate price drop[s will come out of retailers not producers due to this fact. However most pellet producers have debt so their cash flow is contingent upon the retailers getting rid of inventory on hand and replacing it. It is unlikely retailers will pay the pricing they paid in the spring summer due to oil cost and its effect on fuel useage.

Without doubt prices will drop, HD has already began the process with two decreases in the past month. Others are sure to follow suit.

Good ole greed at its best!

I guess the question is how much does it cost the mill to produce a ton of pellets and ship to the store?

Then, what kind of mark-up does the store put on a ton.

If the margins aren't high...then prices can only fall so much.

Fuel prices are down, so it doesn't cost near as much to ship to stores as it did years ago when fuel was expensive, and pellets were only 2.00 a bag. Hmmmm

kappel15 said:

Fuel prices are down, so it doesn't cost near as much to ship to stores as it did years ago when fuel was expensive, and pellets were only 2.00 a bag. Hmmmm

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You think that, but more often than not when shipping costs go up they don't come back down when the price of gas does

kappel15 said:

Fuel prices are down, so it doesn't cost near as much to ship to stores as it did years ago when fuel was expensive, and pellets were only 2.00 a bag. Hmmmm

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aproximately what would you think diesel factors in to the price you pay for a ton of pellets?

Don't know, but it don't cost near as much as their price hikes in pellets.

So they set a high price, realized they outpriced themself out... and now, adjusting their price down seem to be out of the question! That's great responsive management there!

Menards had Indeck pellets priced over 5.00 last spring and continued into fall sales. I had stopped in and said phooey I'll burn corn way cheaper. Last week the price dropped to 4.39 plus you could get the 11% rebate so it ended up 3.90 something. Corn is 3.25 for 56 lbs.

Menards up here had three brands I've never seen for 4.89 before the rebate.

Pete Zahria said:

aproximately what would you think diesel factors in to the price you pay for a ton of pellets?

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Apparently, according to shippers, a lot! Because when gas prices go up they use that as an excuse to raise shipping cost! its funny how the same methodology isn't used when gas prices go down.

Personally, I don't think gas price is factored into shipping cost that much. But they use that as a built an excuse to raise prices when there's a gas hike! Corporate greed. That's all it is. Its like the crap the gas stations used to feed us. When oil prices drop, the reason the gas prices don't come down immediately it's because they bought what's in their tanks at a higher rate. But when oil prices go up they raise the price of the existing gas in their tanks immediately.

We can learn something from the Onion Futures Act in the 1950s that made it illegal to Trade in Onion Futures.

Basically Vincent Kosuga literally cornered the onion Market and made made millions before the Onion Futures Act was passed.

Listen to this story here. It will help understand what drives market prices.
http://www.npr.org/2015/10/22/450769853/the-great-onion-corner-and-the-futures-market

Wouldn't you know it. Just announced in June 2015
Euronext to launch wood pellet futures contract

Crude oil prices are at a record low, but look at the price of a gallon of gas still.

Article Monday about the refiners are getting a higher margin. More than a 25% more profit over last years same quarter. Saying they can get more now because everybody is happy they are paying so much less at the pump. I know markup over NYMEX here was 60 cents per gallon and now its about a buck.

kappel15 said:

Crude oil prices are at a record low, but look at the price of a gallon of gas still.

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While the cost of the raw material for refining oil has plummeted, the cost of the raw material to produce pellets has increased.

And the raw material is a waste product. Just saying.

Maybe I'm mistaken, but I thought pellets availability followed the construction trends? More construction, more sawing in the mills, more sawdust, more pellets.

kappel15 said:

Good ole greed at its best!

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Wow. Victim mentality at its best.

You are entitled to your opinion

Maybe its time for a market correction regarding wood pellets.

Kent/Irving are selling Canawick hardwood pellets in Newfoundland for $8.09 for a 40lb bag....now that is crazy pricing.

I can go to Kent or Canadian Tire and buy the same Canawick for 5.99/40lb bag....that's a lot of extra fuel to go from Nova Scotia to Newfoundland....especially considering the truck spend half it's time on a boat lol.