A Whirlwind Of A Year
Sep 04, 2020
Energy Division Manager
This year is certainly a year to forget but one that we won’t. It is a struggle picking out what the strangest parts about 2020 are due to there being so many: crop prices, COVID-19, weather, energy markets, etc., but let’s give it a shot.
After record bushels at harvest locally last year and trade wars with big end users of our products (mainly China), it looks as if we may have an even bigger crop coming at us this year. Traveling around Nebraska and northeast Kansas, I have not found any place where the crops don’t look fantastic. I am sure there may be a few isolated spots; however, they are few and far between. Barring a weather event that harms the potential yield, it appears records may be broken again this year. With the current agricultural commodity prices where they are now, it will take a great number of bushels along with some outside help to make the farmer whole.
Where do we even start with this one? While there is so much information/misinformation regarding the virus, what we are certain of is there is a fear most of us have never dealt with and probably won’t ever again. The outlook for the near future is as clouded as it has ever been, and it appears now things may not approach anywhere close to normal anytime soon.
What a whirlwind the energy markets have been! This year, contracting season was an absolute mess. Last fall, the market for seasonal 2020 diesel usage started out strong but fell off 30 cents or so in late December/early January. While many of us thought that created a great opportunity, COVID-19 hit and demand fell to nothing as the economy came to a halt. Prices fell, and fell, and fell some more – so much for that 30-cent drop being an opportunity!
They continued to fall as the number of COVID-19 cases grew, until finally crude oil set a new record low of almost -$40.00 per barrel. Yes, that’s a minus sign in front of that number, basically meaning the market would pay you $40.00 per barrel to take it. In my almost 42 years in the industry, I remember seeing some low crude prices, such as $10.00 in 1999, but nothing like what we saw this year. While it did not stay as low as it was, let’s hope we get to enjoy some lower prices for the energies going forward to accompany the low crop prices!
A warm winter, nice spring, and wet summer translates to lower than normal propane sales in the winter and dismal summer diesel sales, with a great spring season wedged between the two. Have I mentioned that I have been doing this for a long time? I have to go back to the mid 80’s to remember a year with this little irrigation across our whole trade territory. While the past two summers were wetter than normal, there were still dry pockets within our geography.
That was not the case this year, as plenty of moisture was spread throughout our area. While this wasn’t great for fuel sales, it resulted in much less money in the crop than normal. Tied with a possible record harvest, it will certainly benefit the producer even with the low commodity prices. Here’s to hoping for dry weather this fall to allow for a great harvest and lots of fuel burned picking your crops and hauling it to Farmers Cooperative!
We hope you have a safe harvest season!