Farm Fuels in Focus: Farm Diesel Firms

May 20, 2016 10:51 AM
  • LP is unchanged on the week at $1.01 per gallon.
  • June 2016 natural gas opened today at $2.03 -- down a dime from our last Fuels in Focus.
  • Farm Diesel is 4 cents higher on the week at an average of $1.73 per gallon.
  • July 2016 WTI crude oil opened the day at $46.41 -- up $2.31 from our last report.
  • June 2016 Heating oil futures opened the day at $1.47 -- 8 cents higher than our last report.

dieselFarm Diesel -- Crude oil price forecasts continue to gain bullish momentum, and the market has been quick to follow. Supply disruptions in Canada, Libya and Nigeria and declining production in the United States alongside disastrous results of declining crude export revenues in Venezuela all have traders fleeing to the long side of the market.

Farm diesel demand continues to support prices. Summer prices may fall on increased exports of distillates out of China. Chinese petroleum demand is shifting away from industrial fuels toward gasoline and jet fuel. Surplus distillate supplies may pressure U.S. prices once agricultural demand eases seasonally, but firm global crude oil prices will limit downside potential.

Also limiting price pressure is a sharp decline in U.S. stocks which is a seasonal occurance, but falling stocks generally favor the upside. According to five-year average supply data disstussfrom EIA, stocks will continue to fall into June and recover through summer. We expect the rebound in U.S. distillate stocks to peak just ahead of harvest and we will seek opportunities late in the summer to book neds for haarvest.

  • Distillate inventories reported by EIA fell 3.2 million barrels to 152.2 mmbbl. Stocks are currently 24.4 mmbbl above the same time last year.
  • The regionwide low currently lies at $1.54 in Missouri and the Midwest high is at $1.92 in Wisconsin.
Farm Diesel 5/20/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$1.54
$1.56
18 cents
$1.74
Iowa
Illinois
$1.80
$1.79
Unchanged
$1.79
Illinois
Indiana
$1.95
$1.90
Unchanged
$1.90
Indiana
Wisconsin
$1.60
$1.92
Unchanged
$1.92
Wisconsin
Minnesota
$1.70
$1.72
4 cents
$1.76
Minnesota
South Dakota
$1.59
$1.85
Unchanged
$1.85
South Dakota
North Dakota
$1.48
$1.51
11 cents
$1.62
North Dakota
Nebraska
$1.51
$1.55
5 cents
$1.60
Nebraska
Missouri
$1.59
$1.54
Unchanged
$1.54
Missouri
Kansas
$1.53
$1.58
Unchanged
$1.58
Kansas
Ohio
$1.68
$1.68
Unchanged
$1.68
Ohio
Michigan
$1.69
$1.68
11 cents
$1.79
Michigan
Midwest Average
$1.64
$1.69
4 cents
$1.73
Midwest Average

 

Propane -- With home heating season over, there isn't much to say about propane. As far as we can tell, infrastructure is still in solid shape and production continues at a pretty good clip. Supplies at present are ample seasonally which should keep prices in line with our expectations through the offseason and into winter 2016-17. We will be watching for the midsummer low to book for winter.

  • According to EIA, last week, national propane inventories firmed 1.040 million barrels -- now 3.174 million barrels above the same time last year at 74.216 million barrels.
  • The regionwide low is at $0.85 per gallon in Ohio and the regionwide high is in Indiana at $1.17.
LP 5/20/16
Three Weeks Ago
Previous Week
Change
Current Week
 
Iowa
$0.92
$0.93
-4 cents
$0.89
Iowa
Illinois
$1.18
$1.16
Unchanged
$1.16
Illinois
Indiana
$1.26
$1.17
Unchanged
$1.17
Indiana
Wisconsin
$1.10
$1.10
Unchanged
$1.10
Wisconsin
Minnesota
$0.95
$0.95
2 cents
$0.97
Minnesota
South Dakota
$0.89
$0.89
Unchanged
$0.89
South Dakota
North Dakota
$0.93
$0.89
Unchanged
$0.89
North Dakota
Nebraska
$0.87
$0.88
1 cent
$0.89
Nebraska
Missouri
$1.12
$1.12
Unchanged
$1.12
Missouri
Kansas
$1.08
$1.08
2 cents
$1.10
Kansas
Ohio
$0.85
$0.85
Unchanged
$0.85
Ohio
Michigan
$1.13
$1.13
Unchanged
$1.13
Michigan
Midwest Average
$1.02
$1.01
Unchanged
$1.01
Midwest Average

 

Spreads