Farm Fuels in Focus: Diesel Falls as Propane Holds Steady

Posted on 03/09/2017 10:25 AM

 

  • September 2016 natural gas opened today at $2.53 -- down 30 cents from our last Fuels in Focus.
  • Farm Diesel is 3 cents lower on the week at an average of $1.80 per gallon.
  • September 2016 WTI crude oil opened the day at $43.46 -- higher $1.62 from our last report.
  • September 2016 Heating oil futures opened the day at $1.38 -- up 6 cents from our last report.
  • Propane is unchanged on the week at an average of $0.98 per gallon regionally.

Farm Diesel -- Michigan and Iowa led declines, each falling 9 cents per gallon. North Dakota fell a nickel, Indiana and Minnesota each fell 3 cents and Nebraska is down 2 cents on the week. No state posted a higher farm diesel price this week and 6 of the twelve states in our survey were unchanged.

diesel"It was a bullish week for WTI crude oil and heating oil futures which would suggest farm diesel is due for a mild uptick near-term. EIA reported a 2 million barrel draw on national distillate stocks, Midwestern stocks are holding steady. Price support cannot be ruled out, however since Midwestern stocks are 1.7 million barrels below the same time last year. Refiners should be switching over to increased distillate production for agricultural demand in the Midwest if they have not already which will likely keep a weight on retail prices. But as WTI and heating oil futures firm, we are anxious to see next week's farm diesel price action.

If farm diesel wants to firm here, we will advise pulling the trigger on 50% of harvest needs during the week of the 15th. But if diesel wants to soften next week, we will continue to wait for confirmation of a market bottom before acting. That will likely mean we will pull the trigger on more than 50% of harvest needs when the time comes since a confirmation of the price floor ahead of seasonal demand intensity will remain supportive through Christmastime.

  • Distillate inventories reported by EIA fell 2.0 million barrels to 151.2 mmbbl. Stocks are currently 3.4 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.71 in Iowa and the Midwest high is at $1.92 in Wisconsin.
Farm Diesel 8/12/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.80
$1.80
-9 cents
$1.71
Iowa
Illinois
$1.84
$1.84
Unchanged
$1.84
Illinois
Indiana
$1.92
$1.91
-3 cents
$1.88
Indiana
Wisconsin
$1.92
$1.92
Unchanged
$1.92
Wisconsin
Minnesota
$1.92
$1.88
-3 cents
$1.85
Minnesota
South Dakota
$1.77
$1.77
Unchanged
$1.77
South Dakota
North Dakota
$1.84
$1.83
-5 cents
$1.78
North Dakota
Nebraska
$1.78
$1.78
-2 cents
$1.76
Nebraska
Missouri
$1.74
$1.74
Unchanged
$1.74
Missouri
Kansas
$1.78
$1.79
Unchanged
$1.79
Kansas
Ohio
$1.84
$1.84
Unchanged
$1.84
Ohio
Michigan
$1.85
$1.85
-9 cents
$1.76
Michigan
Midwest Average
$1.83
$1.83
-3 cents
$1.80
Midwest Average

 

Propane -- We are unchanged again at 98 cents per gallon. Nebraska and Kansas each firmed 2 cents per gallon as Michigan fell 2 cents. Iowa and Minnesota are each down a penny per gallon on the week. Seven of the twelve states in our survey are unchanged.

LPNational stocks are slightly above the five-year average and climbing, and Midwestern stocks are 2.622 million barrels above the same time last year and our regional average price is 2 cents below the same time last year. We are 42 cents below the three-year average retail price this week, and prices have been within a 3 cent range since the last week of May.

We have advised booking your winter home heating needs at current prices but since prices have been so steady and Midwestern supplies are above last year and building, we do not expect prices to firm significantly until winter heating season is upon us and hand-to-mouth buyers enter the market late.

I do also advise booking at least a portion of your propane needs for grain drying at this time since the dry end to the season does not look like it will play out as many forecasters had predicted. The Midwestern propane market is in something of a bubble thanks to the influence of seasonal agricultural demand, and prices will firm once demand heats up for fall.

  • According to EIA, last week, national propane inventories firmed 2.038 million barrels -- now 0.889 million barrels below the same time last year at 91.903 million barrels.
  • The regionwide low is at $0.86 per gallon in North Dakota and the regionwide high is in Kansas at $1.11.
LP 8/12/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$0.93
$0.93
-1 cent
$0.92
Iowa
Illinois
$0.99
$0.99
Unchanged
$0.99
Illinois
Indiana
$1.13
$1.08
Unchanged
$1.08
Indiana
Wisconsin
$0.99
$0.99
Unchanged
$0.99
Wisconsin
Minnesota
$0.93
$0.93
-1 cent
$0.92
Minnesota
South Dakota
$0.95
$0.95
Unchanged
$0.95
South Dakota
North Dakota
$0.86
$0.86
Unchanged
$0.86
North Dakota
Nebraska
$0.89
$0.89
2 cents
$0.91
Nebraska
Missouri
$1.06
$1.06
Unchanged
$1.06
Missouri
Kansas
$1.08
$1.09
2 cents
$1.11
Kansas
Ohio
$0.85
$0.93
Unchanged
$0.93
Ohio
Michigan
$1.09
$1.07
-2 cents
$1.05
Michigan
Midwest Average
$0.98
$0.98
Unchanged
$0.98
Midwest Average

Indexes


 

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