It’s Difficult To Know When Diesel Prices May Drop, AFBF Notes

Crude oil prices have shown signs of easing, but diesel prices are not following suit, putting even more pressure on the farm economy.  American Farm Bureau Federation economist Faith Parum noted crude oil and diesel prices don’t typically follow the same track.

“The biggest reason we haven't seen those prices come down is because we're seeing a structural supply issue in the economy," Parum said.  "Meaning, we're just seeing a lower supply across the world. Obviously, Russia has limited refining capacity due to the war in Ukraine. The Middle East has stopped refining capacities due to the war in Iran, and then there is additional troubles in the Red Sea-that's all continuing to bring that supply down worldwide.”

She said the spike occurring during harvest has squeezed margins even further.  And Parum added it’s hard to predict when, or if, prices will lower.

“You know, if everything calmed down tomorrow, we would see some of those fuel prices come back down," Parum said.  "But of course, there's a whole lot that is out of control of farmers and ranchers right now. So, continuing to watch the market, see what happens into the next year. We could see some signs of easing, but again, because this is all a global conflict issue, there's a lot that we just don't know right now.”

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