Farm Fuels Bulletin | Starting to Think Propane

Posted on 06/06/2019 4:30 PM

farm diesel chart

Farm Diesel

  • Our regional average farm diesel price fell a nickel on the week to $2.53.
  • The decline was led by Missouri and Iowa, both posting double-digit declines on the week.
  • Crude oil futures have come under recent price pressure, with the June contract stalling the downside run this week at $52.59.
  • Heating oil futures were lower as well. June futures closed Thursday June 6 at $1.78.
  • Both futures market moves should pressure farm diesel in the coming weeks, and our farm diesel/heating oil futures spread analysis reflects that possibility.

 

Propane

  • Propane was lower as well with no state posting a price increase in this week's price survey.
  • North Dakota led declines with Indiana off 15 cents per gallon.
  • According to EIA, national propane stocks firmed 2.520 million barrels in the week ended 5/31, now 21.159 million barrels above the same week last year.propane price chart

It is time we talked propane. It is still early to get too crazy -- we don't expect to advise growers to book harvest and winter supplies until prices have had more time to soften seasonally. But the wet start to the season leading to widespread planting delays suggests harvested bushels may need some extra time in the dryer. Indeed there has been a lot of talk about corn acres that won't be planted, but the demand to dry what does make it to harvest may prove greater than that of a normal year. We will talk about more specific targets and strategies in the weeks to come, but to begin, we are looking at booking a portion of our propane needs on a fall below $1.25 per gallon. Prices will vary locally. This week our regional average is at $1.32 per gallon.

For now, we advise you get in touch with your preferred propane retailer and start talking price and availability. Compare their price to our regional average to get an idea of how the two compare. That will make it easier for you to know when to pull the trigger in your local area. I would also remind that profarmer.com has a handy map of the 12-state area the Inputs Monitor covers, and you can find average propane prices for your crop district there.

Propane demand is expected to be very high this year. Stay tuned to your Inputs Monitor as we work to anticipate price moves, and advise growers to respond accordingly.


Fuel
5/20/19
5/28/19
Week-over Change
Current Week
Fuel
Farm Diesel
$2.58
$2.58
-5 cents
$2.53
Farm Diesel
LP
$1.45
$1.36
-4 cents
$1.32
LP

Our farm diesel/heating oil futures spread compares the weekly average retail farm diesel price with front-month heating oil futures as of the close on the previous Friday. A move below the "line in the sand" indicates pending upside risk. A move above our "line in the sand" indicates downside potential.

This week, our spread analysis indicates downside potential for retail farm diesel.


farm diesel heating oil spread chart

 

Add new comment