Tuesday, November 5, 2013
Pre-order your pellets and save
The price of pellets from the mills are almost always cyclical. Late spring/early summer they drop, and continue to rise until the next late spring/early summer. It is all about supply and demand, and if you are able to buy when demand is low you can save serious money. The challenge is that on a warm 85 degree June day the last thing on your mind is dumping hundreds of dollars on pellets for use 4-5 months later. Keep in mind that these pre-buy deals are not so much the dealer giving a big discount, but the mills lowering the prices so they can keep demand strong through the summer.
The thing of it is that it is almost always a winning hedge. The question of prices increasing on pellets after spring is not a question of will they or not, but rather by how much. Say a certain pellet is at $215 in the spring pre-buy season, the only question is will it be at $235 or $295 by December. Either way if you purchased them at $215 you have done well.
Some dealers will even store the pre-buy pellets for you, and allow you to pick them up later. Each dealer will have a little different policy, but I would look for a dealer who will allow you to pre-buy.
Posted by Gary at 1:30 PM