Farm Fuels In Focus | Farm Diesel Presents Opportunity

Posted on 02/23/2018 1:40 PM

 

  • March 2018 natural gas opened today at $2.61, steady with our last report.
  • Farm Diesel is unchanged on the week at an average of $2.38 per gallon.
  • April 2018 WTI crude oil opened the day at $62.60, up $2.17 from our last report.
  • March 2018 Heating oil futures opened the day at $1.94, up 4 cents from our last report.
  • Propane is 4 cents higher at $1.44 per gallon regionally.

Farm Diesel -- Diesel prices were again fairly widely mixed with some states making sizable corrective moves. Missouri led gains firming 28 cents as Iowa added 17 cents and North Dakota gained a nickel per gallon. Four states were unchanged as Indiana fell 23 cents and Michigan slipped 16 cents.diesel chart

Last week we opined fuels prices may have placed a short term top. This week, crude and heating oil have each forged decent recoveries. with WTI and heating oil resuming their uptrends and retail farm diesel unchanged from last week, we pulled the trigger on half of our spring farm diesel needs. (Click here to view our advice.)

Given the amount of uncertainty and volatility in crude oil prices, we suspect there may be another opportunity to book diesel before the majority of spring fieldwork is underway. That prompted us to book only half of the diesel we expect to need for spring. It is important that I point out, however, there is an equal measure of upside risk at this point. Maintenance season at refineries will present the possibility of a short-term uptick in prices, but supplies will likely rebuild quickly, which is when we believe a second opportunity will arrive.

So get current to 50% filled on spring diesel before production fundamentals and this week's higher WTI price manifests in retail diesel.


  • Distillate inventories reported by EIA fell 2.4 million barrels to 138.9 mmbbl. Stocks are currently 26.2 mmbbl below the same time last year.
  • The regionwide low currently lies at $2.19 in Wisconsin. The Midwest high is at $2.59 in Indiana.
Farm Diesel 2/23/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$2.29
$2.29
+17 cents
$2.46
Iowa
Illinois
$2.31
$2.31
Unchanged
$2.31
Illinois
Indiana
$2.82
$2.82
-23 cents
$2.59
Indiana
Ohio
$2.24
$2.24
-1 cent
$2.23
Ohio
Michigan
$2.51
$2.51
-16 cents
$2.35
Michigan
Wisconsin
$2.19
$2.19
Unchanged
$2.19
Wisconsin
Minnesota
$2.43
$2.43
-4 cents
$2.39
Minnesota
North Dakota
$2.45
$2.45
+5 cents
$2.50
North Dakota
South Dakota
$2.40
 
$2.40
 
Unchanged
 
$2.40
 
South Dakota
Nebraska
$2.35
$2.35
Unchanged
$2.35
Nebraska
Kansas
$2.34
$2.34
+2 cents
$2.36
Kansas
Missouri
$2.71
$2.19
+28 cents
$2.47
Missouri
Midwest Average
$2.42
$2.38
Unchanged
$2.38
Midwest Average

Propane -- LP prices gained 4 cents this week led by a 60 cent rise in Indiana. Eight states were unchanged as no other state posted a higher propane price. Minnesota led declines, falling 13 cents. Iowa dropped a nickel and Missouri fell a penny per gallon.propane price chart

Once again the sharply lower price in northern state Minnesota this week fuels hopes the worst may be behind us. Indiana's sharply higher price may be related to transport difficulties related to extreme flooding, but we would expect Ohio to exhibit a similar response if that were the case.

National supplies continue to hover near the midpoint of the five-year average supply range which will keep a floor under prices although we do believe propane will stay below $1.50 for the remainder of heating season.

Moving forward, timing will be key in taking advantage of the best possible offseason deal. Contracts will begin to be set up in June and July, but the market does have a tendency to soften into early August.

As a reminder, keep an eye on your on-farm supplies as some are predicting a near-term rise in Midwestern temperatures which can lead to complacency regarding propane. Expect prices to remain elevated relative to the previous year, but an offseason price slump this summer is likely.


  • According to EIA, national propane inventories fell 2.548 million barrels -- now 6.750 million barrels below the same time last year at 43.093 million barrels.
  • The regionwide low is at $1.20 per gallon in Wisconsin, and the regionwide high is in Indiana at $2.09.
LP 2/23/18
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.44
$1.44
-5 cents
$1.39
Iowa
Illinois
$1.43
$1.43
Unchanged
$1.43
Illinois
Indiana
$1.49
$1.49
+60 cents
$2.09
Indiana
Ohio
$1.35
$1.35
Unchanged
$1.35
Ohio
Michigan
$1.27
$1.27
-29 cents
$1.27
Michigan
Wisconsin
$1.20
$1.20
Unchanged
$1.20
Wisconsin
Minnesota
$1.71
$1.71
-13 cents
$1.58
Minnesota
North Dakota
$1.34
$1.47
Unchanged
$1.47
North Dakota
South Dakota
Not Reported
 
Not Reported
 
Unchanged
 
Not Reported
 
South Dakota
Nebraska
$1.35
$1.30
Unchanged
$1.30
Nebraska
Kansas
$1.32
$1.32
Unchanged
 
$1.32
Kansas
Missouri
$1.54
$1.40
-1 cent
 
$1.39
Missouri
Midwest Average
$1.41
$1.40
+4 cents
$1.44
Midwest Average

spread chart

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