Diesel's Downtrend Continues

Posted on 02/20/2020 9:42 AM


We advised farm diesel users to wait based on our spread analysis in a post last week (click here if you missed it). This week farm diesel is down 8 cents per gallon regionally with 3 states posting aggressive, double-digit declines. We advise growers to continue to wait on booking diesel for spring fieldwork as that same spread analysis indicates there is room left to the downside. Our regional average farm diesel price has fallen into the top end of our range of expectations. Bear in mind spring fieldwork is already underway in more temperate regions of the nation which injects an element of demand-based price risk.

For the time being, we are willing to wait for retail diesel to bottom before advising any purchases. With no state posting a higher price this week and the spread analysis still pointing the retail market lower, we must classify the current setup as a classic downtrend. Until we see a "V" bottom, in retail farm diesel, we will let the downtrend run its course.farm diesel price chart

Farm Diesel --

  • Our regional average farm diesel price softened 8 cents per gallon on the week.
  • Wisconsin plummeted 55 cents per gallon, Michigan fell 33 cents and Nebraska shucked 12 cents. All other states were unchanged on the week. No state posted a higher farm diesel price this week.
  • Last week we discussed out heating oil futures/farm diesel spread analysis. As the spread narrows, upside risk for diesel grows. The spread has been steadily narrowing for three consecutive weeks, but still indicates at least one more week of lower prices.
  • As of the close of our survey on Friday, front-month heating oil futures settled at $1.69, up a nickel from the previous Friday.
  • According to EIA, national distillate stocks fell 2 million barrels but remain 1 million barrels above the same time last year. Meanwhile, national crude oil stocks firmed 7.5 million barrels but remain 8.4 million barrels below the same week last year, right at the midpoint of the five-year averagepropane price chart supply range.

Propane --

  • Our regional average propane price is unchanged on the week.
  • Michigan fell 19 cents per gallon as Wisconsin slipped 7 cents. Meanwhile, Kansas firmed 23 cents as Nebraska gained 8 cents. Most other states were little changed or steady.
  • According to EIA, in the report week ended February 7, national propane stocks fell 3.2 million barrels, now 19.105 million barrels above the same time last year.

Week-over Change
Current Week
Farm Diesel
-8 cents
Farm Diesel

heating oil farm diesel spread chart


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