Farm Fuels In Focus | Updated Weather Forecast Injects LP Price Risk

Posted on 08/31/2018 1:41 PM

 

  • October 2018 natural gas opened today at $2.88, off 2 cents since our last report.
  • Farm Diesel is a penny higher on the week at an average of $2.51 per gallon.
  • October 2018 WTI crude oil opened the day at $70.06, up $4.59 from our last report.
  • September 2018 Heating oil futures opened the day at $2.24, up 15 cents from our last report.
  • Propane fell 2 cents on the week to $1.31 per gallon regionally.farm diesel price chart

Farm Diesel -- Farm diesel was led higher by Kansas which added 8 cents as Minnesota firmed a penny. Eight states were unchanged as Ohio and Michigan each dropped a penny per gallon.

Distillate supplies have reversed their advance upward within the five-year average supply range. Production was firing on all cylinders there for awhile, but harvest demand will soon prop prices up. We are up a penny per gallon this week which has us eying an ALERT, but we will wait and see what next week delivers. Be prepared to book harvest diesel -- if you have not already -- and be watching for an ALERT from your Inputs Monitor.


  • Distillate inventories reported by EIA softened 0.8 million barrels to 130.0 mmbbl. Stocks are currently 19.2 mmbbl below the same time last year.
  • The regionwide low currently lies at $2.19 in Wisconsin. The Midwest high is at $2.81 in Indiana.
Farm Diesel 8/31/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$2.57
$2.57
Unchanged
$2.57
Iowa
Illinois
$2.31
$2.31
Unchanged
$2.31
Illinois
Indiana
$2.81
$2.81
Unchanged
$2.81
Indiana
Ohio
$2.30
$2.30
-1 cent
$2.29
Ohio
Michigan
$2.45
$2.46
-1 cent
$2.45
Michigan
Wisconsin
$2.19
$2.19
Unchanged
$2.19
Wisconsin
Minnesota
$2.61
$2.59
+1 cent
$2.60
Minnesota
North Dakota
$2.61
$2.61
Unchanged
$2.61
North Dakota
South Dakota
$2.61
 
$2.54
 
Unchanged
 
$2.54
 
South Dakota
Nebraska
$2.60
$2.60
Unchanged
$2.60
Nebraska
Kansas
$2.55
$2.55
+8 cents
$2.63
Kansas
Missouri
$2.52
$2.52
Unchanged
$2.52
Missouri
Midwest Average
$2.51
$2.50
+1 cent
$2.51
Midwest Average

Propane -- We noted very little movement in most states this week with 10 of 12 statespropane price chart unchanged. Minnesota dropped a nickel and Kansas plunged 22 cents per gallon lower on the week. No state posted a price increase.

As harvest approaches the National Weather Service is predicting above normal rainfall for the eastern 2/3's of the continental United States. That could easily increase propane demand for grain drying. I will grant that national propane stocks are well below year-ago and near the bottom end of the five-year average supply range, which will limit the downside for LP prices. But production has had a late season uptick and we believe there is enough propane around to give the market one more push to the downside.

We don't want to get hung out to dry here, and we will likely issue an ALERT to book harvest and winter propane very soon -- if you have not already. While we do not foresee shortages, we still advise growers keep tanks filled to capacity. After the propane price spike from a few winters ago, we noted several growers installing extra on-farm propane storage and we continue to view keeping those storehouses full as prudent.

Export demand remains high with exports through the second quarter easily out-pacing the same time last year. This will not be the year to let your propane tanks run dry, so be prepared ahead of time.


  • According to EIA, national propane inventories firmed 2.559 million barrels -- now 2.153 million barrels below the same time last year at 71.400 million barrels.
  • The regionwide low is at $1.05 per gallon in North Dakota, and the regionwide high is in Indiana at $1.63.
LP 8/30/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.22
$1.17
Unchanged
$1.17
Iowa
Illinois
$1.43
$1.43
Unchanged
$1.43
Illinois
Indiana
$1.63
$1.63
Unchanged
$1.63
Indiana
Ohio
$1.35
$1.35
Unchanged
$1.35
Ohio
Michigan
$1.40
$1.40
Unchanged
$1.40
Michigan
Wisconsin
$1.20
$1.20
Unchanged
$1.20
Wisconsin
Minnesota
$1.33
$1.33
-5 cents
$1.28
Minnesota
North Dakota
$1.05
$1.05
Unchanged
$1.05
North Dakota
South Dakota
$1.47
 
$1.47
 
Unchanged
 
$1.47
 
South Dakota
Nebraska
$1.14
$1.15
Unchanged
$1.14
Nebraska
Kansas
$1.40
$1.38
-22 cents
 
$1.16
Kansas
Missouri
$1.45
$1.45
Unchanged
 
$1.45
Missouri
Midwest Average
$1.34
$1.33
-2 cents
$1.31
Midwest Average

spread chart

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