Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of Steve Byrne with Merrill Lynch. Please proceed.
Steve Wilson
Hi. Good morning, Steve.
Steve Bryne - Merrill Lynch
Good morning. A couple of few questions about your forward purchasing program. When we has this -- on your last call you had enough tons booked forward at that time in early February to clearly cover shipments for the first quarter and what look like probably half of the second. When you book a sale forward like this, why is there a weather impact on that?
Steve Wilson
Steve, I just want to back up to the answer to your question. You said forward purchasing program, I assume you meant forward pricing program, is that correct?
Steve Bryne - Merrill Lynch
Yes it.
Steve Wilson
Okay. Well, we book our shipments with in an intended ship month from our customers. The ability of customers to take product is a function of what the product is and what the conditions are on the receiving end. In the case of ammonia, the ammonia sits in our tanks. It is ready to be picked up by dealer and it goes directly from our tank to the dealer to the farm. There is no intermediate storage. So that product will be delivered coincident with the demand in the field for application as is being done right now.
Steve Bryne - Merrill Lynch
And what happens if weather precludes those deliveries, does the order just slip into the next month?
Steve Wilson
Yes, in affect and there are provisions in our forward pricing program that will translate into some storage charges paid to us, if the shipments are delinquent by a certain amount into the future.
Steve Bryne - Merrill Lynch
Okay. That helps. And on the phosphate side, do you have product priced in the second quarter that occurred prior to the run up in sulfur prices?
Steve Wilson
We spoke to this particular subject, I think at the end of the first quarter about our phosphate forward purchasing appetite, if you will. And when we realized that we're going to be experiencing rapid escalation in raw material prices and at the time, we're seeing higher ammonia cost and higher sulfur cost, we reflected that in the way that we augment our offering into the marketplace.
Our appetite changed accordingly and that can be interpreted in two ways. A bit of a reluctance to do forward pricing and substantially more -- substantially higher expectations in terms of the compensation we would get for taking the raw materials, so all those things have been factored into our forward offerings with respect to phosphate.
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