Buy Diesel If It Makes Sense

August 28, 2015 12:00 PM
Buy Diesel If It Makes Sense

Amid imbalance in the oil market, farmers anticipating input needs for fall and beyond should weigh their decision to buy diesel before pulling the trigger.

“How low can we go? I don’t know,” Peter Meyer, PIRA Energy Group, tells Tyne Morgan on the “AgDay” Agribusiness Update. “Thirty-seven dollars? Thirty-five dollars? It’s hard. I know a lot of [farmers] are out there trying to say, ‘Should I be buying diesel, buying diesel, buying diesel?’ I think you buy diesel if it makes sense. It’s your personal preference. It’s not going anywhere, in my opinion.”

The challenges the industry faces are numerous. On the one hand, oil production remains high, while on the other hand, prices continue to fall.

“We have the Indiana refinery down, Canadian oil down below $40 a barrel just because that’s been backlogged,” Meyer explains. “Gasoline prices spiked in Chicago and in Indiana … . It’s tough. At PIRA, the PIRA line is that we are supportive prices here. But we don’t really see a huge spike. In my personal opinion, and when you talk to the fund managers, they’ve been short crude for a long time, and they’re going to wait to see it below $40 before they start covering those shorts.”

The recently announced Iran nuclear deal could also take demand off the world market by supplying oil to China, Meyer says. CNBC recently published a report explaining the possible influence of Iranian oil on prices.

 Click the play button below to watch the complete interview with Meyer.

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Spell Check

Mark C. Daggy
Humboldt, IA
8/31/2015 05:49 PM

  I agree with PullMyFinger, and with certainty believe 911 was an inside job. As a former Green Beret, trained in demolition, our government master minded 911....without a doubt. If the US oil producers can screw up cheap oil coming from the middle east, they can sell us major fuel consumers their high priced fuel. Also Sadam was placed in power via a CIA lead coupe in about 1975. Guess who was the CIA Director in 1975? A 5% export tax was placed on all oil leaving Iraq and placed in Swiss bank accounts with only 2 names on the account. Do your research and find out what Inslaw software determined as who the account holders were? My friends as me what I am going to do about the sleaze in Wash DC? Well, I certainly do not truss any of them, either party and/or Independent. I want my liberty back....even if means the opportunity for me to fail.

Mark C. Daggy
Humboldt, IA
8/31/2015 06:08 PM

  Remember the last time we experienced $1.40/gallon ruby diesel in the summer of 2008 and by the spring of 2009 I was paying $4.35/gallon to farm. Well, lesson learned, we purchased 4 years worth of ruby diesel at $1.87 and placed algaecide in all tanks. With interest at Farm Credit Services at 3.7%, even paying interest my 2016 fuel will cost $1.93, my 2017 fuel will cost $2.01 and my 2018 fuel will cost $2.07. If a large number of farmers purchased out 3 and 4 years, prices of inputs would collapse.

Chappell, NE
8/28/2015 04:44 PM

  It hasn't made sense since it was .629/gal before W's illegal invasion of Iraq.


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