New York | Reuters — Diesel prices in the U.S. Midwest have sunk to a three-year seasonal low as farmers in the region face adverse weather conditions, further complicating an already delayed harvest season, traders and farmers said.
Diesel demand typically rises during harvest season because farming equipment and trucks transporting product use the fuel. Average distillate product supplied, which includes diesel, in the United States for the past four weeks was down seven per cent, according to U.S. Energy Department data.
After wet conditions postponed planting this spring, farmers in states such as Illinois and Iowa were expecting delays to harvesting crops this fall. And if recent rains persist, that may also hamper field work that farmers typically take on before winter to prepare for next year.
“The sentiment right now is that we just want to get this year over with,” said Rodney Weinzierl, a corn and soybean farmer in Illinois. “A lot of farmers haven’t even started (harvest) and won’t until next week, and we’re getting a cold snap and rain coming in.”
Fall harvest season in the region usually runs from late September through early November. Because of storms and flooding this spring, the harvest this year is delayed by about a month, said Rich Nelson, chief strategist for broker Allendale in Illinois.
This is weighing on spot diesel prices in the region. Ultra-low sulfur diesel prices in both Chicago and Tulsa are at their lowest for October since 2016, Refinitiv Eikon data shows. Currently, heating oil futures are trading at $1.9208 a gallon, and Chicago diesel prices are at 8.25 cents per gallon below futures (all figures US$).
In Illinois, 13 per cent of corn was harvested in the week to Oct. 6, versus 61 per cent during the same time last year, according to a U.S. Department of Agriculture crop progress report on Monday. In Iowa, three per cent had been harvested, compared with 14 per cent last year.
Dan Henebry, a corn and soybean farmer in Illinois, said he typically harvests corn in October. But this year, the crop may not be ready until November.
“This could stretch into December,” he said. “You may not get your tillage work done that you need to do.”
If field work shifts to next spring, Weinzierl said, it could have a knock-on effect on diesel demand then. “It may be that there would be more fuel used next spring in late March and April,” he said.
— Stephanie Kelly reports on the U.S. energy sector for Reuters from New York City.