Farm Fuels in Focus: LP Exports and Risky Spring Diesel

February 11, 2014 05:23 AM
 

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  •  Farm Diesel firms 1/2 cent to an average of $3.47 1/4 per gallon.
  • Distillate stocks are 15.8 million barrels below year-ago at 113.8 Mmbbl and falling quickly -- March heating oil opened at $2.99 this morning -- unchanged from last week's report.
  • LP softens 1 cent in regional averages to $3.81/gallon -- All states but Kansas are unchanged.
  • National propane stocks are 24.02 Mmbbl behind year-ago at 30.84 Mmbbl -- March Natural gas opened at $4.60 this morning -- 15 cents below the previous Farm Fuels Report.

 

LP -- Propane softened a penny in regional averages this week to $3.81, but prices still range from $2.39 in Illinois to $5.10 in Wisconsin. Prices have moved very little, but where prices moved is significant and may point to supply improvements ahead. The State of Kansas marks a 6 cent decline this week, a possible sign that Midwest inventories at Conway are improving. That could start a ripple effect of declining prices moving outward from the center of the country.

But winter's grip is strong this year, and weather related declines in home heat pricing are not likely for another few weeks.prstuss

Propane exports are coming under fire, and state level officials have begun to murmur about curtailing exports as a means of rebuilding national supplies and lowering prices. According to Moneynews.com, Brandon Scholz, managing director of the Wisconsin Propane Gas Association said, "I know some want to characterize the situation as the perfect storm, but we believe that less and less. The high level of exports came at a time when they contributed to a significant fall in propane inventories." (click here for the full moneynews.com article -- it is worth a read)
 

Below, we table propane prices as reported to your Inputs Monitor for the week ended February 7, 2014.

Propane 2/11/14
Previous Week
Current Week
Change
Iowa
$4.73
$4.73
Unchanged
Illinois
$2.39
$2.39
Unchanged
Indiana
$3.51
$3.51
Unchanged
Wisconsin
$5.10
$5.10
Unchanged
Minnesota
$3.73
$3.73
Unchanged
South Dakota
$4.46
$4.42
Unchanged
North Dakota
$4.21
$4.21
Unchanged
Nebraska
$4.22
$4.22
Unchanged
Missouri
$3.28
$3.28
Unchanged
Kansas
$3.16
$3.10
-$0.06
Ohio
$3.89
$3.89
Unchanged
Michigan
$3.21
$3.21
Unchanged
Midwest Average
$3.82
$3.81
- 1 cent

 

Farm Diesel -- disstuss

Farm diesel firmed 1/2 cent this week to a regionwide average of $3.47 1/4 with 8 of the 12 states in our index unchanged. The biggest move was a 6 cent increase in Indiana to $3.55 and Wisconsin firming 2 cents of its own to $3.62.

We generally see farm diesel prices move lower sometime in early spring -- usually in April -- but this year has been hard on heating oil supplies, and, by extension, hard on farm diesel supplies. So far, front month heating oil has moved only slightly higher with deferred contracts also moving higher. March heating oil opened today unchanged from last week's Farm Fuels Report at $2.99 -- currently slightly higher on the day at $3.03. We will watch futures here to indicate a reason to get excited.

Last week we noted the groundhog's prediction of six more weeks of winter threatens to push farm diesel pricing higher as a party to higher priced #2 fuel oil for home heat. The East coast has been hit unexpectedly hard by winter weather this year and demand for #2 heating oil has been nearly as high as demand for propane. Expect continued wintery weather to weigh on stocks and if spring does not come before shortfalls, we could see farm diesel pricing run much higher before spring. We are currently 50% filled for spring/summer farm diesel needs.

If you are not at least half full for spring, capture today's price.

The regionwide low currently lies at $3.27 in Kansas and the Midwest high is at $3.92 in North Dakota.

Farm Diesel 2/11/14
Three Weeks Ago
Previous Week
Current Week
Change
Iowa
$3.35
$3.37
$3.37
Unchanged
Illinois
$3.44
$3.44
$3.44
Unchanged
Indiana
$3.45
$3.49
$3.55
+$0.06
Wisconsin
$3.58
$3.60
$3.62
+$0.02
Minnesota
$3.40
$3.36
$3.36
Unchanged
South Dakota
$3.52
$3.44
$3.44
Unchanged
North Dakota
$3.53
$3.94
$3.92
-$0.02
Nebraska
$3.30
$3.54
$3.56
+$0.02
Missouri
$3.32
$3.32
$3.32
Unchanged
Kansas
$3.34
$3.27
$3.27
Unchanged
Ohio
$3.39
$3.39
$3.39
Unchanged
Michigan
$3.44
$3.45
$3.45
Unchanged
Midwest Average
$3.40
$3.46 3/4
$3.47 1/4
+ 1/2 cent

 


 Supply graphs provided by EIA.

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