Farm Fuels In Focus | Propane Stalls March Higher

Posted on 10/11/2018 4:08 PM

 

  • November 2018 natural gas opened today at $3.27, up 9 cents since our last report.
  • Farm Diesel is 2 cents higher on the week at an average of $2.58 per gallon.
  • November 2018 WTI crude oil opened the day at $72.68, softer $1.99 from our last report.
  • November 2018 Heating oil futures opened the day at $2.38, off 2 cents from our last report.
  • Propane is unchanged on the week at $1.37 per gallon regionally.

Farm Diesel -- Farm diesel was 2 cents higher led by Michigan which firmed 9 cents per gallon as Nebraska firmed 7 cents. Seven states were unchanged and no state posted a lower diesel price on the week.

WTI is doing what WTI does... find a range and stick to it. Concerns about curbed exports out offarm diesel chart Iran have been eclipsed by climbing OPEC production numbers, and that has limited the upside for WTI this week. while there was an amount of chatter surrounding the possibility crude would climb to $100, that chatter is easing.

Heating oil futures have moved counter-seasonally, and are lower on the week. But our farm diesel/heating oil spread indicates lingering upside price risk, especially given the time of year. In fact, the western Corn Belt may not yet have fully expressed its upside potential since harvest has been difficult to get off the ground.

If OPEC continues on a consistent production output path and farm diesel stays true to form, we will, once again be looking that that week between Christmas and New Years to lock in farm diesel for spring fieldwork.


  • Distillate inventories reported by EIA fell 2.7 million barrels to 133.5 mmbbl. Stocks are currently 0.5 mmbbl below the same time last year.
  • The regionwide low currently lies at $2.19 in Wisconsin. The Midwest high is at $2.77 in Indiana.
Farm Diesel 10/11/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$2.63
$2.68
+2 cents
$2.70
Iowa
Illinois
$2.31
$2.31
Unchanged
$2.31
Illinois
Indiana
$2.69
$2.77
Unchanged
$2.77
Indiana
Ohio
$2.29
$2.39
Unchanged
$2.39
Ohio
Michigan
$2.47
$2.51
+9 cents
$2.60
Michigan
Wisconsin
$2.19
$2.19
Unchanged
$2.19
Wisconsin
Minnesota
$2.63
$2.64
+1 cent
$2.65
Minnesota
North Dakota
$2.63
$2.75
Unchanged
$2.75
North Dakota
South Dakota
$2.58
 
$2.58
 
Unchanged
 
$2.58
 
South Dakota
Nebraska
$2.63
$2.65
+7 cents
$2.72
Nebraska
Kansas
$2.57
$2.59
+1 cent
$2.60
Kansas
Missouri
$2.52
$2.64
Unchanged
$2.64
Missouri
Midwest Average
$2.51
$2.56
+2 cents
$2.58
Midwest Average

Propane -- Our regional average propane price is unchanged this week with Nebraska up 3 cents and Minnesota adding 2 cents per gallon. No other state posted a price change this week.propane price chart

AS with diesel fuel, propane's full upside risk may not yet be priced in to our regional average price since only about half of the Corn Belt is able to run crops through the dryer. That could change at the drop of a hat -- most likely, the drop of a free, promotional seed cap. Our advice remains consistent. Get a solid handle on your needs for home heat, grain drying, confinement operations and whatever else you might need to use propane for, and fill that amount in your on farm storage.

The mercury is set to dive which always props up propane prices, and if the forecasts for an El Nino winter are realized, you are not going to want to run out of LP this winter. We look for propane to top out below $1.45 regionally, but that can change in a hurry, and the last thing you want to do is pay extra for propane mid-season because you have run out.


  • According to EIA, national propane inventories firmed 1.539 million barrels -- now 1.333 million barrels above the same time last year at 80.261 million barrels.
  • The regionwide low is at $1.05 per gallon in North Dakota, and the regionwide high is in Indiana at $1.66.
LP 10/11/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.23
$1.30
Unchanged
$1.30
Iowa
Illinois
$1.39
$1.35
Unchanged
$1.35
Illinois
Indiana
$1.63
$1.66
Unchanged
$1.66
Indiana
Ohio
$1.35
$1.35
Unchanged
$1.35
Ohio
Michigan
$1.39
$1.48
Unchanged
$1.48
Michigan
Wisconsin
$1.20
$1.20
Unchanged
$1.20
Wisconsin
Minnesota
$1.36
$1.35
+2 cents
$1.37
Minnesota
North Dakota
$1.05
$1.05
Unchanged
$1.05
North Dakota
South Dakota
$1.47
 
$1.47
 
Unchanged
 
$1.47
 
South Dakota
Nebraska
$1.16
$1.21
+3 cents
$1.24
Nebraska
Kansas
$1.18
$1.36
Unchanged
 
$1.36
Kansas
Missouri
$1.43
$1.46
Unchanged
 
$1.46
Missouri
Midwest Average
$1.32
$1.37
Unchanged
$1.37
Midwest Average

farm diesel heating oil futures spread chart

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