Fuels Report | Propane Advice Updated

Posted on 08/13/2020 4:12 PM

 

We noted a decline in propane prices last week and mentioned LP's seasonal tendency to post a flat spot on the price charts before taking one last run to the downside for the season. This week, we are up 4 cents per gallon. Still a nickel below the same week last year, but in the spirit of a disciplined approach, we advise you book 100% of your expected harvest and winter propane needs at current prices.

In a few years, we have seen some back-and-forth price action where one week we will firm and then soften the next week before running higher. This year, of all years does not feel like the year to be taking chances so we are ready to pull the trigger on propane. As I acknowledged last week, you have likely had a summer refill price quote in hand from your local retailer for awhile now. Since propane has fallen mildly through the summer months,

It would not be out of line for you to ask your preferred retailer to shave a few cents off of that quote. But even if there is no wiggle room in your summer fill price, we advise to book anticipated needs for harvest and winter 2020-21 this week.

As far as supply goes, we also advise you fill all available on-site storage to the brim before combines roll, and certainly once again before snowflakes fall. I hate to bring it up, but if another round of stay-at-home orders are enacted in your state, it would be wise to have planned ahead and have your tanks full when those orders might take effect. Having said that, I would also point out that agricultural transport was considered essential during the spring lock-downs, and I have no doubt the same would be true of propane, especially with the added element of winter home heating.

As we round out the summer months, the time has come to begin laying away for harvest and winter. Book 100% of your anticipated harvest and winter propane needs this week, and fill all on-site storage while the sun shines.

Diesel is up again this week, and according to reports, fuel tax collection was solid in July suggesting drivers got back on the road and consumed more gasoline and highway diesel than they did in June. That demand is likely partly to blame for the higher farm diesel prices we have observed over the past few weeks, but distillate supplies remain very strong nationally, and we believe that will at least limit the upside.

We booked our harvest diesel a few weeks ago at the retail market low according to Inputs Monitor data, so we will wait out current price farm diesel price chartstrength and look for better opportunities to top off and book spring supplies closer to the first of the year.

Farm Diesel --

  • Our regional average farm diesel price firmed 5 cents this week.
  • No state posted a lower price as Michigan gained 29 cents, and Iowa, Nebraska and Kansas all gained 13 cents per gallon.
  • September heating oil futures closed Thursday August 13 at $1.24, up 3 cents on the week.
  • September WTI crude oil futures closed at $42.36 on Thursday, up $1.14 on the week.
  • According to EIA, national distillate stocks softened 2.3 million barrels, still 42.1 million barrels above the same time last year.
  • Our heating oil futures/farm diesel spread suggests mild downside potential, but diesel demand is on the rise.

Propane --propane price chart

  • Our regional average propane price firmed 4 cents per gallon. Ohio led gains firming 12 cents as Nebraska added 4 and three other states gained 2 cents each. Kansas fell 7 cents. All other states are unchanged on the week.
  • According to EIA, national propane stocks gained 2.623 million barrels on the week, now 6.713 million barrels above the same week last year.
  • Book 100% of expected harvest and winter propane needs.

Fuel
7/27/20
8/3/20
Week-over Change
Current Week
Fuel
Farm Diesel
$1.62
$1.67
+5 cents
$1.72
Farm Diesel
LP
$1.09
$1.06
+4 cents
$1.10
LP

farm diesel heating oil futures spread

 

Add new comment