Roller coaster ride in commodities

Jeff Ingalls

Apr 28, 2022

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The commodity markets have been on a roller coaster ride since the beginning of the Russia/Ukraine war started at the end of February.  We have seen some unprecedented market moves in the energy complex since then, with diesel price spiking up more than 50 cents in one trading session only to go down $1 the next day.  This volatility has made deciding when to buy very difficult, especially since the price of diesel has doubled in the past year. 

Along with the war, we have seen demand reach pre Covid levels this spring with the virus becoming less prevalent and things getting back to “normal”.  However, supply is not restarting as quickly as demand is picking up and most of energy inventories are running below our 5 year averages.  Oil companies have been slower to restart or invest in additional supply primarily due to the push to become more green and have been encouraged to invest in renewable energy.  All these items have led to higher prices, hard to believe just 2 years ago crude oil traded below zero and now we have $100 plus crude oil.

What does this all mean for energy prices?  Higher prices are here to stay for a while, at least until supply catches up to demand.  The million dollar question is when will this happen?  We are starting to see more oil supply being pumped but it will take 3-6 months before we actually see this affect the market.  While there is a big push for renewable fuels, we are years away from this having significant impact on the market.  Renewable fuels has made great strides in recent years and will likely become more sustainable in the future, it will take time for the industry to make an impact. 

History tells us that the best time to lock in your diesel needs is between November and January, last year was a good example of this.  We will likely see a similar opportunity again this year, just not sure at what price level.  Unfortunately, we are likely stuck with higher prices for this growing season but with the volatility, there may be opportunities to get a lower price sooner than we expect. 

If you have any questions or would like current pricing, please contact any of our energy offices listed below:

Nebraska: 402-362-8434
Kansas: 785-392-3031
Iowa: 712-546-6382