Farm Fuels in Focus: Transparency Thwarts Headline Rally

Posted on 03/09/2017 10:25 AM

 

  • November 2016 natural gas opened today at $3.34 -- up 31 cents from our last Fuels in Focus.
  • Farm Diesel is unchanged on the week at an average of $1.87 per gallon.
  • November 2016 WTI crude oil opened the day at $50.58 -- down a penny from our last report.
  • November 2016 Heating oil futures opened the day at $1.58 -- down one cent from our last report.
  • Propane is up a penny on the week at an average of $1.02 per gallon regionally.

diesel"Farm Diesel -- Not a lot of movement in farm diesel this week. Nine of the twelve states in our survey were unchanged as Missouri firmed 2 cents per gallon and Nebraska added a penny. Minnesota was our only decliner, falling 2 cents.

Hats off to the EIA for maintaining transparency in the crude oil market. This week the Administration changed its reporting policies which led to an overall decline of 31 million barrels which will no longer be considered "stocks in U.S. storage". We had feared the news would take the market by surprise and support a sharp "headline rally". (Read more) Since EIA did its due diligence in warning the market the numbers would appear to have made a huge decline in this week's dataset, crude oil futures are actually down on the week by a full penny.

Crude oil prices will continue to have a great influence over farm dielse prices and if cold weather grips the Northeast region of the nation early or unexpectedly, heating oil futures are likely to firm and take farm diesel with them. We still maintain our forecast for lower farm diesel prices around Christmas once harvest demand is fully satisfied, but a dramatic crude oil or heating oil futures rally could kaibosh the downside potential.

  • Distillate inventories reported by EIA fell 3.7 million barrels to 157.0 mmbbl. Stocks are currently 9.3 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.69 in Illinois and the Midwest high is at $2.02 in Indiana.
Farm Diesel 10/14/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.87
$1.86
-1 cent
$1.86
Iowa
Illinois
$1.69
$1.69
Unchanged
$1.69
Illinois
Indiana
$2.05
$2.02
-3 cents
$2.02
Indiana
Wisconsin
$1.92
$1.92
Unchanged
$1.92
Wisconsin
Minnesota
$1.95
$1.94
-1 cent
$1.92
Minnesota
South Dakota
$1.82
$1.82
Unchanged
$1.82
South Dakota
North Dakota
$1.95
$1.99
4 cents
$1.99
North Dakota
Nebraska
$1.81
$1.80
-1 cent
$1.81
Nebraska
Missouri
$1.72
$1.72
Unchanged
$1.74
Missouri
Kansas
$1.85
$1.86
1 cent
$1.86
Kansas
Ohio
$1.83
$1.83
Unchanged
$1.83
Ohio
Michigan
$1.87
$1.93
6 cents
$1.93
Michigan
Midwest Average
$1.86
$1.87
Unchanged
$1.87
Midwest Average

LP

Propane -- Seven of the twelve states in our survey were unchanged this week. Minnesota led to the upside firming a nickel as Nebraska added four cents and Iowa and North Dakota each firmed a penny. Michigan posts our only declines, softening 2 cents on the week.

No change to our propane price forecast. If forecasts for a cold, snowy winter are realized, propane demand will outstrip last year's which will leave some needing late season deliveries. Make sure you have at least as much propane on hand as you used last year and consider adding another 5-10% to ensure you don't run out when demand is at its peak later this winter.

  • According to EIA, last week, national propane inventories fell 0.072 million barrels -- now 1.764 million barrels above the same time last year at 103.928 million barrels.
  • The regionwide low is at $0.90 per gallon in Nebraska and the regionwide high is in Ohio at $1.20.
LP 10/14/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$0.91
$0.91
1 cent
$0.92
Iowa
Illinois
$1.16
$1.16
Unchanged
$1.16
Illinois
Indiana
$1.14
$1.16
Unchanged
$1.16
Indiana
Wisconsin
$0.99
$0.99
Unchanged
$0.99
Wisconsin
Minnesota
$0.91
$0.91
5 cents
$0.96
Minnesota
South Dakota
$0.95
$0.95
Unchanged
$0.95
South Dakota
North Dakota
$1.01
$0.92
-1 cent
$0.93
North Dakota
Nebraska
$0.85
$0.86
4 cents
$0.90
Nebraska
Missouri
$1.00
$1.00
Unchanged
$1.00
Missouri
Kansas
$0.94
$0.98
Unchanged
$0.98
Kansas
Ohio
$1.20
$1.20
Unchanged
$1.20
Ohio
Michigan
$1.09
$1.09
-2 cents
$1.07
Michigan
Midwest Average
$1.01
$1.01
1 cent
$1.02
Midwest Average

 

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