Upside Risk Revived in Fuels

Posted on 10/24/2019 3:57 PM

 

Farm Diesel --farm diesel price chart

  • Our regional average farm diesel price firmed 3 cents per gallon on the week.
  • Illinois and Ohio each gained 15 cents as Missouri firmed 12 cents per gallon. Two states were unchanged as Wisconsin diesel slipped 6 cents and Michigan fell 2 cents.
  • According to EIA, national distillate stocks fell through the bottom end of the five-year average range, down 2.7 million barrels on the week to a level 9.6 million barrels below the same week last year.
  • Front month heating oil futures are four cents higher from the same day last week and approaching key $2.00. While we are not issuing purchase advice this week, heating oil's rise along with a higher retail farm diesel price have our attention.

 

We are 50% filled on Farm Diesel for harvest , but are content proceeding hand-to-mouth. If prices rise again next week, we will likely advise growers top off some harvest diesel needs. Part of the rise in declining distillate stocks is due to a 5% increase in distillate exports during the first half of the year compared to 2018.Leading export destinations include Mexico, Brazil and Chile with "the rest of the world" accounting for 48% of the remaining exports. But propane exports rose 16% over the same period. If diesel is on the rise due to increased export activity, it might follow that propane would rise as well -- and it has this week.EIA.gov doistillate stocks chart

But both increases are more likely due to seasonal and event-driven demand. North Dakota's 16 cent bump in propane prices statewide could be attributed to increased home heating demand. What we are looking at is not necessarily this week's price increase, but, rather upside risk in farm fuels. Since we have already filled our harvest and winter propane needs in full, that conversation should be of no consequence. Farm diesel is officially on our radar however. That's thanks to very low stocks compared to the five-year average and a gradual increase in heating oil futures.

as I mentioned above, we will continue to watch heating oil futures and distillate stocks. How much upside remains in farm diesel with heating oil futures still below $2.00 is yet to be seen. Make ready to top off harvest diesel if prices increase once again next week. But crude and heating oil futures have been reluctant to sustain rallies which may allow us to squeak by hand-to-mouth for the remainder of harvest.propane price chart

Propane --

  • Our regional average propane price also firmed 3 cents per gallon on the week.
  • Ohio led propane higher firming 24 cents per gallon as North Dakota added 16 cents. Meanwhile, Nebraska and Kansas each fell 14 cents per gallon this week.
  • According to EIA, national propane stocks fell 460,000 barrels on the week. unlike distillates, stocks are at the very top end of the five-year average range.

Fuel
10/7/19
10/14/19
Week-over Change
Current Week
Fuel
Farm Diesel
$2.37
$2.36
+3 cents
$2.39
Farm Diesel
LP
$1.16
$1.15
+3 cents
$1.18
LP

 

 

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