Farm Fuels in Focus: Book Harvest Diesel and Propane

Posted on 03/09/2017 10:25 AM

 

  • October 2016 natural gas opened today at $2.68 -- down 12 cents from our last Fuels in Focus.
  • Farm Diesel is 4 cents higher on the week at an average of $1.82 per gallon.
  • October 2016 WTI crude oil opened the day at $46.12 -- higher $2.57 from our last report.
  • October 2016 Heating oil futures opened the day at $1.43 -- up 4 cents from our last report.
  • Propane is up 4 cents on the week at an average of $1.00 per gallon regionally.

FarmDiesel"Farm Diesel -- No state posted a lower price in this week's diesel price survey. Gains were led by Indiana, up 16 cents and North Dakota, up 14 cents per gallon. Other states were less than a dime higher with six of the twelve states we survey unchanged.

We advised farmers book farm diesel this week on the basis of pending harvest diesel demand and projected high demand for winter heating oil in wake of forecasts calling for a cold winter. WTI crude oil has had its influence over diesel and traders are taking the bullish bait from reports that Russia and Saudi Arabia will collaborate on the global crude supply/demand balance.

Meanwhile, crude oil and distillate market fundamentals are improving. EIA reported in this month's Short-term Energy Outlook crude oil production projections have been raised as has distillate production. Our greatest concern, aside from our own numbers strongly suggesting the short-term downside has been exhausted, are seasonal tendencies for farm diesel to firm ahead of harvest as demand spikes annually for harvest fuel.

EIA also projected gasoline to drop back below 2 bucks per gallon between now and December. From year-to-year, farm diesel tends to firm at this time but fall again to bottom some time around Christmas. For that reason, we advise farmers only book enough diesel to get the crop in the bin and wait to book spring 2017 supplies until after seasonal strength has run its course.

  • Distillate inventories reported by EIA firmed 1.5 million barrels to 154.8 mmbbl. Stocks are currently 4.8 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.60 in Missouri and the Midwest high is at $2.08 in Indiana.
Farm Diesel 9/8/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.70
$1.69
10 cents
$1.79
Iowa
Illinois
$1.76
$1.76
Unchanged
$1.76
Illinois
Indiana
$1.88
$1.92
16 cents
$2.08
Indiana
Wisconsin
$1.92
$1.92
Unchanged
$1.92
Wisconsin
Minnesota
$1.91
$1.92
2 cents
$1.94
Minnesota
South Dakota
$1.79
$1.79
Unchanged
$1.79
South Dakota
North Dakota
$1.78
$1.79
14 cents
$1.93
North Dakota
Nebraska
$1.70
$1.70
1 cent
$1.71
Nebraska
Missouri
$1.60
$1.60
Unchanged
$1.60
Missouri
Kansas
$1.69
$1.75
Unchanged
$1.75
Kansas
Ohio
$1.75
$1.75
Unchanged
$1.75
Ohio
Michigan
$1.77
$1.77
7 cents
$1.84
Michigan
Midwest Average
$1.77
$1.78
4 cents
$1.82
Midwest Average

propane

Propane -- LP posts similar price action as farm diesel this week with no states posting a lower price. Gains were fairly mild, but the seasonal price patterns are now in play and if the projected bumper crop comes in wet, as the near-term weather forecast now implies, demand for LP for grain drying will support higher harvest prices.

We also advised to fill remaining winter needs for confinement operations and other uses around the farm.

  • According to EIA, last week, national propane inventories firmed 2.375 million barrels -- now 2.166 million barrels above the same time last year at 98.510 million barrels.
  • The regionwide low is at $0.81 per gallon in Nebraska and the regionwide high is in Ohio at $1.20.
LP 9/8/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$0.91
$0.91
Unchanged
$0.93 Iowa
Illinois
$1.04
$1.05
1 cent
$1.05 Illinois
Indiana
$1.08
$1.14
6 cents
$1.15 Indiana
Wisconsin
$0.99
$0.99
Unchanged
$0.99 Wisconsin
Minnesota
$0.92
$0.92
Unchanged
$0.94 Minnesota
South Dakota
$0.95
$0.95
Unchanged
$0.95 South Dakota
North Dakota
$0.80
$0.80
Unchanged
$0.89 North Dakota
Nebraska
$0.79
$0.79
2 cents
$0.81 Nebraska
Missouri
$1.02
$1.02
Unchanged
$1.02 Missouri
Kansas
$1.08
$0.94
-14 cents
$0.96 Kansas
Ohio
$0.93
$0.93
Unchanged
$1.20 Ohio
Michigan
$1.06
$1.08
2 cents
$1.10 Michigan
Midwest Average
$0.96
$0.96
4 cents
$1.00 Midwest Average

 

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