LP -- Propane is showing signs that it is time to pull the trigger. Several Leading Edge attendees mentioned their preferred retailer has already set a winter contract price, and most of those bids are good through the first of September. That tells me that propane price volatility will remain subdued between now and fall. Our regional average price per gallon for propane is currently 89 cents and we believe this to be a fair value for consumers.
We see no pressing infrastructure or supply issues which would support a strong price move in either direction. We talked about the chance for a September dip in propane prices if agricultural demand is weak due to a dry end to the growing season. We maintain that home heating needs should be addressed first and are not the place to gamble for a few pennies lower.
One attendee told me that he, along with others he knew, had increased their LP storage capacity on the farm to be able to store 100% of winter home heat needs. He wondered if a great enough number of farmers had done the same, it has moderated propane demand allowing prices to remain flat. I believe it may have, and if propane users have enough left over from last year to limit the amount of gallons they book, we could see some fall pressure on LP as a result.
We have said it before, but be sure to have your propane locked in before the snow flies to guard against demand-based price strength.
Farm Diesel -- Higher WTI crude oil futures are currently buttressing farm diesel prices, but according to our charts, diesel is due to fall slightly between now and October. We recommend a hand-to-mouth approach on diesel for the time being. But if WTI makes a strong move above $60 per barrel or below $30 per barrel, we will book aggressively. We expect WTI crude to find a ten-dollar range and do everything it can to stay within that trading range.
That will likely translate into sideways action for diesel, but our heating oil spread suggests lower diesel prices at some point in the next few weeks. Farm diesel bottomed in February at $1.43 and we do not believe we will see that price point again this year. Our expectation is for diesel to fall a dime between now and harvest, but an increase in crude oil volatility will determine farm diesel's price path.