PA Farm Bureau – Agriculture Energy Update – September 2024
From sizzling heat to cool September mornings, the U.S. diesel market experienced a notable shift, characterized by increased demand and a decrease in overall prices. The last few months have brought fluctuations in the market as well as some relief both at the pump and delivered to customers. Let’s take a quick glance at what occurred in the market that, in part, impacted the commercial and agricultural sectors.
- Demand: The summer months saw a significant rise in diesel demand, driven primarily by robust economic activity and heightened transportation needs. The summer travel season and freight and logistics sectors contributed to this surge in demand. Additionally, the agricultural sector’s peak season added to the pressure on diesel supplies.
- Price Trends: Despite the increased demand, diesel prices declined over the summer. This decrease can be attributed to several factors. A reduction in crude oil prices, easing supply chain disruptions, and improved refinery output all contributed to the downward trend.
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Forecast for Diesel and Propane Pricing in Agriculture
As we move into the final months of the year, agricultural producers should be prepared for potential fluctuations in diesel and propane pricing, crucial for operational planning.
- Diesel Pricing: Diesel prices are expected to fluctuate over the remainder of the year. Agriculture and farming that rely heavily on diesel for machinery and transportation, may face higher operational costs. Farmers should prepare for potential price increases and consider locking in prices or exploring bulk purchasing options to mitigate impact.
- Propane Pricing: Propane prices are forecasted to rise gradually as the colder months approach. Anticipation of increased heating demand during winter, coupled with steady production levels, will likely drive-up prices. For agricultural operations that use propane for heating greenhouses or drying crops, this could mean higher costs. To manage expenses, early procurement and storage of propane can be a prudent strategy.
Both diesel and propane prices are predicted to rise as we head into the colder months in the Northeast, impacting agricultural operations. Producers should plan accordingly to manage these anticipated cost increases effectively.
Hot take: Natural gas and Electricity
Natural gas and electricity markets have been relatively quiet over the last few weeks. The natural gas market moved nominally, and we saw limited increases on the power side, leaving the buying window open for both commodities. Some things to watch out for:
- Cooler weather in our region – hopefully this holds power and gas prices low.
- No serious tropical activity in the next 6-10 days (written Sept 4th), although there are some concerns about activity after that.
- Gas storage levels that, while now below 5-year highs, are still extremely bearish.
Talk with Shipley Energy to discuss supply options for your farm and commercial operations to be well situated for the colder months ahead.
[REMINDER] Discounts for PFB members: Farm Bureau members receive a discount of $0.02 per gallon on fuel for commercial/agricultural use and $0.10 per gallon on fuel for residential use, an exclusive deal through the Pennsylvania Farm Bureau and Shipley Energy.
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