Fuels in Focus: Farm Diesel Bullish and Bold

December 9, 2013 10:21 AM
 

  •  Farm Diesel firms 3 cents to an average of $3.425 per gallon.
  • Retail Gasoline softened 1/4 cent to a national average of $3.269 per gallon.
  • Highway Diesel fuel falls 1/2 cent to $3.879 per gallon.

 

At the open the WTI/Brent crude oil spread narrowed $3.03 to 14.01 with Jan 14 Brent opening at $111.67 -- up $1.92 on the week -- and WTI at $97.66 -- $4.95 higher than the same time last week. Picture1

Cold weather has taken hold and fuels moved higher week-on-week according to Inputs Monitor data. Demand for home heat will take precedence over fuels demand and we are entering the time of year when citizens crank up the heat. Dryers have been running since the start of harvest season and the robust demand to dry this crop has made an impact on LP pricing.

We expect farm diesel to continue to move higher near-term and if the winter continues on the path it has started, we are in for a cold, snowy, heater fuel-intensive winter. That will hold LP at the top of its range and force farm diesel production to compete with home heating oil. The result will be higher prices ahead. To the good, if there is an extended warm period sometime this winter, it may give distillate and natgas supplies a chance to rebuild slightly and may offer some price relief.

Demand for home heat will drive both LP and farm diesel pricing into spring. The next time we talk about booking diesel or LP may well be around the same time we report mama's spring rhubarb emerging in the garden. That is a long ways off, and we will highlight chances to top off in the coming months as they come around.

Farm Diesel --

Farm diesel moved 3 cents higher this week to a regionwide average of $3.425 with 4 of the 12 states in our Index unchanged. The biggest move was a 10 cent increase in South Dakota to $3.50. Missouri firmed 8 cents to $3.40 and Nebraska firmed 7 cents to $3.35. No declines were reported this week. If you are not filled enough to make it thru March on your current supply, top off today as prices are bullish and bold this week.

Farm Diesel 12/9/13
Three Weeks Ago
Previous Week
Current Week
Change
Iowa
$3.29
$3.31
$3.32
+$0.01
Illinois
$3.50
$3.50
$3.50
Unchanged
Indiana
$3.53
$3.52
$3.52
Unchanged
Wisconsin
$3.26
$3.26
$3.26
Unchanged
Minnesota
$3.33
$3.39
$3.43
+$0.04
South Dakota
$3.40
$3.40
$3.50
+$0.10
North Dakota
$3.54
$3.54
$3.55
+$0.01
Nebraska
$3.21
$3.28
$3.35
+$0.07
Missouri
$3.27
$3.32
$3.40
+$0.08
Kansas
$3.32
$3.37
$3.39
+$0.02
Ohio
$3.37
$3.37
$3.37
Unchanged
Michigan
$3.49
$3.48
$3.51
+$0.03
Midwest Average
$3.375
$3.395
$3.425
+3 cents

 

Gasoline-

The retail price for regular gasoline softened 1/4 cents during the report week to a national average of $3.269 -- now eight cents below year-ago. The East Coast softened 3/4 cent to $3.382; Midwest retail gasoline added a fat penny (that's $0.011) cents this week to $3.132/gallon; Gulf Coast down 2 cents to $3.104; Rocky Mountain region down 3 1/2 cents to $3.077 and the West Coast firmed 2 tenths of a cent to $3.477, according to EIA data.

Highway Diesel --

The national average price of highway diesel fell 1/2 cent to a national average of $3.879 -- 11 1/4 cents below year-ago. East Coast 1/2 cent higher to $3.912/gallon; Midwest one short penny lower (that's $0.009) to $3.870; Gulf Coast highway diesel down 3/4 cent to $3.773; Rocky Mountain region down 3/4 cent at $3.851 and the West Coast falls 5 cents to $3.993/gallon, according to EIA.


Highway fuel data credit: EIA.

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