Farmers feel the squeeze

Thanks for having me, Greg.

Let's start with that number that just jumps out.

What are North Dakota farmers paying for diesel right now and how unusual are these prices?

Yeah, so I talked with one farmer out at the Big Iron Farm Show in West Fargo who drove from Velva and he saw prices anywhere from $5.86 a gallon to $6.53 as he was driving on Tuesday and they may have crept up since then.

So I stopped in Castleton the other night and it was 609 there.

Record highs for diesel prices.

We are kind of in uncharted territory on that front.

We've certainly heard of all of the production costs that are impacting farmers.

What does an increase like this mean for a farmer's bottom line?

yeah i mean the tractors combines you know they burn through a lot of diesel in a day and then there's hauling the uh the crop to market or into storage after that so a huge expense for farmers could you know potentially erase any any profits that they they may have had but uh you know as you said they're they're stuck i mean they're uh they have to buy it if they if they don't already have some on hand

jeff talk to me about the tradition i guess that farmers oftentimes lock prices of diesel in in advance was it the case this year that they were able to do that to perhaps save or were they waiting for prices to fall And they just didn't.

Yeah.

So I think, you know, in the spring, prices shot up after the war with Iran started.

But a lot of farmers had had that spring supply locked in, you know, in December or January or February.

So this spring, that price spike didn't sting quite so much.

But after farmers burned through that spring supply, they would might try to lock in a price over the summer.

But the prices remained high.

They were hoping that the war would wind down, the Strait of Hormuz would open, things would get a little bit back to normal, and prices could be lower by the time they started to harvest.

But that war kind of has continued to drag on and then elevated this week with a strike on a Saudi Arabian pipeline that really kind of rocked the markets and shot that price up even higher.

You had a chance to sit in on a panel at Big Iron with the market analyst, and she described fuel as a headline-driven trade.

What does that mean?

You know, I think it means that there's just a lot of volatility in the market and there's The markets are reacting to the news, not necessarily looking at what people refer to as the fundamentals of supply and demand and maybe being a little more speculative about where prices are going.

So the headlines from Saudi Arabia, from the Strait of Hormuz, from the Russia-Ukraine war where they are attacking each other's energy infrastructure.

Those things are what are putting these shocks into the price system.

You noted that Russia is also a major supplier of diesel.