Tuesday, November 5, 2013

Pre-order your pellets and save

My advice is to pre-order as soon as you are able, and let me tell you why.

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.

4 comments:

  1. I live near Fredericton, NB, Canada, which has closer to a continental climate than a maritime climate. So the summers are hot and humid. I would worry that if I bought my pellets too soon, and had them sitting in the humidity all summer long, that they would absorb a lot of moisture and be significantly less effective come heating season.

    Is this fear justified?

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  2. Wood pellet store well if kept stored indoors. I have burned 6 year old pellet no problem.

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  3. Gary indoors as in garage good enough for storage?

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  4. I store mine in my garage, off the floor (on a piece of plywood). There is never a problem.

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