The drop in diesel prices may not have caught the eye of many motorists, but farmers and ranchers think it couldn’t come at a better time.
Diesel prices are at the lowest they’ve been in more than a decade — they were at $2.04 on Wednesday, which was 20 cents cheaper than a month ago and 75 cents lower than a year ago, according to the AAA National Fuel Gauge.
Jim Sartwelle, a Texas Farm Bureau economist, said that’s good news because farmers and ranchers are getting less for their commodities such as corn, soybeans and cattle.
“The general response to lower fuel prices is ‘Thank goodness!’ because we have seen a drop in commodity prices,” Sartwelle said.
For example, beef cattle prices have dropped significantly. A 500-pound steer in December 2014 got $1.70 a pound while it fetched only $1.25 in December 2015, he said.
For corn, futures on the Chicago Mercantile Exchange reached $4.10 a bushel — that was the October expectation of March prices. But last week the expectation of March prices had dropped to $3.70, a 10 percent drop, he said.
Cash prices for a bushel of feed corn got as high as $7 in the summer of 2008. Now, it’s in the $3 range, Sartwelle said.
Easing the pain, of course, has been the most recent USDA prediction that the agriculture sector will spend $60 billion — or about $1.5 billion less — for cost of production after seeing those prices rise 8 percent annually from 2010 to 2014. Lower fuel prices are part of the reason.
“So it’s good that diesel has come down because commodity prices are down. It’s the best news for farmers’ profit and loss statements in quite a long time,” Sartwelle said.