Takeaway

The presenter highlights that diesel prices have surged to new record highs, nearing $6/gallon, driven by record-low inventories and strong exports. This is eroding farm profitability during harvest and has led to a significant drop in new equipment sales. Concurrently, the USDA has launched a modernization plan to improve the accuracy of its data and reports.

What the presenter said

• Diesel prices are surging to new record highs, inching towards $6 a gallon. [02:44]
• The national average for diesel is $5.85, topping the June 2022 record, according to AAA. [02:51]
• EIA data shows diesel inventories are at a record low, while exports are strong and refiners are posting record profits. [02:57]
• The USDA has rolled out a modernization plan to improve data collection accuracy, aiming to restore its reports to "gold standard" status. [00:56]
• The biofuels industry had a mixed reaction to the EPA's decision to grant or partially grant 29 of 34 small refinery exemption (SRE) requests, equaling about 1.76 billion RIN credits. [02:01]
• Rising diesel prices have contributed to a 13.1% year-to-date drop in tractor sales, per the July Ag Equipment Manufacturers Flash Report. [03:22]
• The US House passed a stopgap funding bill to keep the USDA and other departments running until December 11th, preventing interruptions to farm programs. [01:37]
• A new "Ranchers First" initiative was announced to help rebuild the U.S. cattle herd by expanding insurance, allowing CRP repairs, and growing regional processing. [03:32]

Trade ideas

• None stated. The presenter's market view is that surging diesel prices and a looming fertilizer shortage are creating a significant input crisis for farmers, pressuring profits.

Levels and data cited

• Diesel Price (National Avg): $5.85 a Gallon (Source: AAA)
• Diesel Price (Thursday): $5.82 a Gallon
• Diesel Price (Approaching): $6 a gallon
• Diesel Inventories: Record low (Source: EIA)
• Tractor Sales (July YTD): Down 13.1% (Source: Ag Equipment Manufacturers Flash Report)
• EPA SREs: 29 of 34 waiver requests granted/partially granted, equaling 1.76 billion RIN credits.

Risks and what would invalidate this

• The presenter flags a looming farm input crisis, driven by diesel prices and fertilizer shortages, which could evolve into a food crisis.
• The recent spike in diesel prices is expected to take another bite out of farm profits as harvest is underway.
• The speaker warns of a bigger farm input crisis brewing that could impact farmers this fall and into next spring.