Farm Fuels in Focus: Diesel & LP in Opposing Setups

Posted on 03/09/2017 10:25 AM

 

  • March 2017 natural gas opened today at $2.93 -- down 17 cents from our last Fuels in Focus.
  • Farm Diesel is a penny lower on the week at an average of $1.99 per gallon.
  • March 2017 WTI crude oil opened the day at $53.01 -- down 14 cents from our last report.
  • March 2017 Heating oil futures opened the day at $1.63 -- down a penny from our last report.
  • Propane is 3 cents higher at an average of $1.36 per gallon regionally.

Farm Diesel -- No state posted a higher farm diesel price this week. Nine states were unchanged as Missouri fell 6 cents per gallon and North Dakota and Iowa each fell a penny.

inputsmonitor.com"Farm diesel was under pressure from robust distillate stocks which have run counter to the seasonal trend of aggressive weekly stocks draws. Crude oil industry watchers believe OPEC will continue to adhere to the production curtailments they had agreed to in November and then enacted in January 2017. Those same watchers however believe U.S. production increases will limit the impact of OPEC production cuts as rigs continue to come back online. Truthfully, the worst case scenario for OPEC is sideways price action in crude oil as futures prices above $50 per gallon will encourage production increases in the United States.

We are 75% filled in spring farm diesel and since prices are trickling lower, we will wait for the market to signal it is set to firm before we book the remaining 25% of our spring needs. The fact that so many states were unchanged this week and that no state posted a higher price is a bearish setup. State-to-state price action coupled with strong distillate stocks lever for sideways to lower prices ahead.

  • Distillate inventories reported by EIA fell 0.7 million barrels to 170.1 mmbbl. Stocks are currently 7.7 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.92 in Wisconsin and the Midwest high is at $2.06 in Indiana.
Farm Diesel 2/16/17
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.98
$1.96
-1 cent
$1.95
Iowa
Illinois
$2.05
$2.04
Unchanged
$2.04
Illinois
Indiana
$2.14
$2.06
Unchanged
$2.06
Indiana
Ohio
$1.98
$1.96
Unchanged
$1.96
Ohio
Michigan
$2.06
$2.03
Unchanged
$2.03
Michigan
Wisconsin
$1.92
$1.92
Unchanged
$1.92
Wisconsin
Minnesota
$2.04
$2.05
Unchanged
$2.05
Minnesota
North Dakota
$1.91
$2.02
Unchanged
$2.01
North Dakota
South Dakota
$1.98
$1.98
Unchanged
$1.98
South Dakota
Nebraska
$1.97
$1.96
Unchanged
$1.96
Nebraska
Kansas
$1.96
$1.96
Unchanged
$1.96
Kansas
Missouri
$2.07
$2.07
-6 cents
$2.01
Missouri
Midwest Average
$2.01
$2.00
-1 cent
$1.99
Midwest Average

inputsmonitor.com

Propane -- Propane price action was the opposite of diesel with no state posting a lower propane price. Eight states were unchanged as Kansas firmed 15 cents per gallon, Minnesota added 11 cents, Missouri gained 9 cents and North Dakota increased a penny per gallon.

Propane fundamentals are the opposite of farm diesel as well. Stocks are well below the same time last year, and any price movement from state-to-state was either unchanged or higher. That is a bullish setup that favors continued price strength. Our immediate advice is unchanged... propane prices will tumble as the winter heating season unwinds so we advise you top off conservatively for the time being.

  • According to EIA, last week, national propane inventories softened 2.632 million barrels -- now 17.318 million barrels below the same time last year at 53.140 million barrels.
  • The regionwide low is at $1.09 per gallon in South Dakota and the regionwide high is in Michigan at $1.72.
LP 2/16/17
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.11
$1.19
Unchanged
$1.19
Iowa
Illinois
$1.40
$1.39
Unchanged
$1.39
Illinois
Indiana
$1.65
$1.53
Unchanged
$1.53
Indiana
Ohio
$1.10
$1.10
Unchanged
$1.10
Ohio
Michigan
$1.52
$1.72
Unchanged
$1.72
Michigan
Wisconsin
$1.30
$1.35
Unchanged
$1.35
Wisconsin
Minnesota
$1.21
$1.20
11 cents
$1.31
Minnesota
North Dakota
$1.10
$1.24
1 cent
$1.25
North Dakota
South Dakota
$1.09
$1.09
Unchanged
$1.09
South Dakota
Nebraska
$1.12
$1.22
Unchanged
$1.22
Nebraska
Kansas
$1.47
$1.47
15 cents
$1.62
Kansas
Missouri
$1.19
$1.41
9 cents
$1.50
Missouri
Midwest Average
$1.27
$1.33
3 cents
$1.36
Midwest Average

 

inputsmonitor.com

 


 

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