Diesel Prices Squeeze Harvest Margins Amid Energy Spike
A surge in energy prices due to Middle East supply threats is adding pressure on row crop producers just as harvest gets underway, according to Jacob Burks, partner at AgMarket.Net. Diesel prices have topped $6 a gallon in some areas and farm diesel above $5, leaving farmers with limited options to manage fuel costs.
Burks discussed the market's reaction to Friday's WASDE report on Market Talk, saying that the USDA's September WASDE report delivered a modest surprise by trimming corn yield by 2.2 bushels per acre while increasing harvested acres. This mixed signal left the market digesting, with some expecting a yield cut on beans that never materialized.
The August soybean crush at 205.456 million bushels was below the average trade estimate of 211.6 million and down more than 11 million bushels from July, marking an 11-month low. Burks said this added support to an already-strengthening bean meal market, with bean oil's share of crush value dropping below 50% for the first time.
Crude oil prices have jumped to four-month highs, with both WTI and Brent above $100 a barrel, further exacerbating the situation. Burks advised producers to stay cautious about assuming current price levels will hold, given how quickly energy markets can reverse on geopolitical developments.