Diesel Costs Squeeze Farm Margins as Harvest Delays Bite

The diesel to corn ratio has reached its worst level in about 20 years, squeezing Midwest farm margins at harvest.

According to StoneX Senior Commodities Economist Mike Castle, farmers have almost no room to respond to the high fuel costs because diesel demand at harvest is highly inelastic. 'You're not just going to leave the crop in the field and let it rot because diesel's too expensive', he said.

The ratio has deteriorated due to tight U.S. distillate stocks, which are the tightest on record for this point in the season, combined with a loss of momentum in corn prices. 'A lot of people had held off on buying diesel because everybody thought prices are going to go lower', said Alex Hodes, StoneX Director Energy Market Strategy.

The delayed harvest across the Midwest means much of the season's diesel demand is still to come, putting pressure on the ratio. Refineries are running hard and several are undergoing maintenance, leaving little cushion in case of price spikes.