Farm Fuels in Focus: Farm Diesel Levels, LP Falls

April 14, 2014 08:12 AM
 

 

  • LP falls 9 cents to $1.87 on the week.
  • May '14 natural gas opened today at $4.62 -- up 18 cents on the week.
  • Farm Diesel is unchanged at an average of $3.47 per gallon.
  • May '14 WTI crude oil opened the day at $103.56 -- up $2.65 on the week.
  • At the open the WTI/Brent crude oil spread narrowed $1.55 on the week to $4.04 with May '14 Brent opening $1.10 lower on the week at $107.60.

 

Propane -- Picture2

Prices continue to fall and with each week's declines, we draw ever-closer to to last year's price peg. EIA reports another strong week of additions to LP storage, up 1.016 million barrels (mmbbl) to 27.584 mmbbl. That is still 12.441 mmbbl behind year-ago, but supplies have at least rebounded back to within the five-year average.

We continue to wait to book propane as we expect the annual low to arrive in July or so. That low may not last long, however as demand is expected to be high when prices bottom. Natural gas prices will help increase inventories as strength there adds incentive for producers, and along with natural gas comes propane. The more quickly inventories recover, the lower prices will go.

Our continuing recommendation, and that of the propane industry is to pre-book winter and agricultural supplies to help your preferred retailer get a handle on demand when prices hit their low. In addition, experts recommend adding to your on-farm propane storage to guard against shortages and delivery constraints.

The regionwide high is at $2.65 in Missouri and the regionwide low is currently in Nebraska at $1.49.

LP 4/14/14
Three Weeks Ago
Previous Week
Current Week
Change
Iowa
$1.88
$1.81
$1.78
-$0.03
Illinois
$2.09
$1.79
$1.72
-$0.07
Indiana
$2.43
$2.43
$2.14
-$0.29
Wisconsin
$1.85
$1.85
$1.85
Unchanged
Minnesota
$1.89
$1.94
$1.90
-$0.04
South Dakota
$2.09
$1.98
$1.73
-$0.25
North Dakota
$2.07
$1.96
$1.76
-$0.20
Nebraska
$1.60
$1.58
$1.49
-$0.09
Missouri
$2.47
$2.46
$2.65
+$0.19
Kansas
$1.60
$1.60
$1.60
Unchanged
Ohio
$2.69
$1.69
$1.69
Unchanged
Michigan
$2.52
$2.21
$2.21
Unchanged
Midwest Average
$2.09
$1.94
$1.87
-$0.07

 

Farm Diesel --RR041414

Farm diesel is unchanged this week at a regionwide average of $3.47 with 4 of the 12 states in our index unchanged. The biggest upside move was an 18 cent increase in South Dakota to $3.63 with Illinois shucking 19 cents to $3.57. Indiana fell ten cents to $3.71. Other moves trended +/- four cents with the trend pointed sideways.

According to the chart, we are leveling off too soon, and at too-high-a price. Indications have been that crude oil is pointed lower, but this week WTI crude climbs $2.65 on the week. We are on a hair trigger on supplies for spring and summer fieldwork, and our expectation is for lower prices next week. If, however, prices increase we may look to cover a portion, but prices have shown a tendency to fall in the early summer.

We pulled the trigger on 50% of spring needs at the January low and are biding our time to fill the rest for spring and summer.

Distillate inventories reported by EIA last week increased 0.2 million barrels (mmbl) to 113.2 mmbbl. Stocks are currently 0.4 mmbbl above the same time last year.

The regionwide low currently lies at $3.28 in Nebraska and the Midwest high is at $3.71 in Indiana once again this week.

Farm Diesel 4/14/14
Three Weeks Ago
Previous Week
Current Week
Change
Iowa
$3.39
$3.38
$3.38
Unchanged
Illinois
$3.77
$3.76
$3.57
-$0.19
Indiana
$3.81
$3.81
$3.71
-$0.10
Wisconsin
$3.32
$3.32
$3.32
Unchanged
Minnesota
$3.38
$3.45
$3.45
Unchanged
South Dakota
$3.54
$3.45
$3.63
+$0.18
North Dakota
$3.62
$3.58
$3.62
+$0.04
Nebraska
$3.33
$3.27
$3.28
+$0.01
Missouri
$3.41
$3.37
$3.38
+$0.01
Kansas
$3.37
$3.36
$3.36
Unchanged
Ohio
$3.57
$3.57
$3.57
Unchanged
Michigan
$3.43
$3.43
$3.42
-$0.01
Midwest Average
$3.49
$3.47
$3.47
Unchanged

 

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