Farm Fuels in Focus: LP and Farm Diesel Slightly Lower

February 18, 2014 08:04 AM
 

 disstuss

  • Farm Diesel softens 3/4 cent to an average of $3.46 1/2 per gallon.
  • Distillate stocks are 12.8 million barrels below year-ago at 113.1 Mmbbl and falling quickly -- March heating oil opened at $3.07 this morning -- eight cents higher than last week's report.
  • LP softens 2 cents in regional averages to $3.79/gallon.
  • National propane stocks are 24.51 Mmbbl behind year-ago at 27.91 Mmbbl -- March Natural gas opened at $5.38 1/4 this morning -- 78 1/4 cents above last week's Farm Fuels Report. prstuss

 

LP -- Propane softened 2 cents in regional averages this week to $3.79, but prices still range from $2.39 in Illinois to $5.10 in Wisconsin. Each of those states is unchanged, but prices in other states vary wildly from last week's report. We observe a $1.19 decline in North Dakota, but increases in Minnesota at 69 cents and Missouri 25 cents higher.

Supply gaps continue but relief is on the way. Propane deliveries by pipeline have been prioritized and supplies at Cushing were reversed back to Conway, Kansas in efforts to answer continued demand. But another Midwestern snowstorm hit this week and despite a February thaw in some places, demand isn't likely to slow anytime soon.Picture2

Meanwhile, the national export pace continues in the neighborhood of 400,000 barrels per day. We take a second look at the question of propane exports in Friday's blog Propane Exports Under Fire.

As we look ahead to summer LP pricing -- which has run around $1.25 or so in July -- the outlook is very uncertain. Most troubling is the notion that propane exports may be in 'winter mode' right now and if exporters look to increase sendouts on the basis of slow summertime demand, stocks will have little chance to catch their breath. It is too early to call and we have a lot of research to do yet, but I and others have a hard time seeing propane below $2.00 this summer.
 

 

Below, we table propane and farm diesel prices as reported to your Inputs Monitor for the week ended February 14, 2014.

Propane 2/14/14
Previous Week
Current Week
Change
Iowa
$4.73
$4.74
+$0.01
Illinois
$2.39
$2.39
Unchanged
Indiana
$3.51
$3.57
+$0.06
Wisconsin
$5.10
$5.10
Unchanged
Minnesota
$3.73
$4.42
+$0.69
South Dakota
$4.42
$4.30
-$0.12
North Dakota
$4.21
$3.02
-$1.19
Nebraska
$4.22
$4.22
Unchanged
Missouri
$3.28
$3.53
+$0.25
Kansas
$3.10
$3.16
+$0.06
Ohio
$3.89
$3.89
Unchanged
Michigan
$3.21
$3.21
Unchanged
Midwest Average
$3.81
$3.79
-2 cents

 

Farm Diesel -- Picture1

Farm diesel softened 3/4 cent this week to a regionwide average of $3.46 1/2 with 3 of the 12 states in our index unchanged. The biggest move was a 39 cent drop in North Dakota to $3.53 and a 17 cent increase in Indiana to $3.72.

We put this week's front month heating oil price in bold above because increases there will mean increases in farm diesel. Distillate stocks are desperately low, and export demand is high here as well. Meanwhile, snow and cold amid $5.00+ natural gas on the East Coast will force power generation and home heat to switch from reliance on natural gas to heating oil.

That will influence farm diesel pricing higher and some farmers I have talked to in the last few days share my concern for farm diesel pricing. We are at 50% filled for spring and that feels light. However, we don't need to get into panic mode just yet. If you are not at least half full for spring, capture today's price.

Check your appetite for risk and consult your preferred farm diesel supplier, but more than one farmer asked if it was time to pull the trigger at this week's Peoria Profit Briefing and I had no problem looking them in the eye and advising to go ahead at current prices. You may want to leave some room for price declines ahead, but if farm diesel takes cues from propane and natural gas -- which are both in a similar supply situation as distillate -- prices will struggle to find downward avenues before spring.

The regionwide low currently lies at $3.26 in Missouri and the Midwest high is at $3.72 in Indiana.

Farm Diesel 2/14/14
Three Weeks Ago
Previous Week
Current Week
Change
Iowa
$3.37
$3.37
$3.35
-$0.02
Illinois
$3.44
$3.44
$3.44
Unchanged
Indiana
$3.49
$3.55
$3.72
+$0.17
Wisconsin
$3.60
$3.62
$3.66
+$0.04
Minnesota
$3.36
$3.36
$3.39
+$0.03
South Dakota
$3.44
$3.44
$3.49
+$0.05
North Dakota
$3.94
$3.92
$3.53
-$0.39
Nebraska
$3.54
$3.56
$3.62
+$0.06
Missouri
$3.32
$3.32
$3.26
-$0.06
Kansas
$3.27
$3.27
$3.27
Unchanged
Ohio
$3.39
$3.39
$3.39
Unchanged
Michigan
$3.45
$3.45
$3.48
+$0.03
Midwest Average
$3.46 3/4
$3.47 1/4
$3.46 1/2
-3/4 cent

 

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