Red diesel price volatility hits autumn fieldwork

Farmers heading into autumn fieldwork are facing renewed uncertainty over red diesel costs, as volatile wholesale markets drive sharp price swings and make purchasing decisions increasingly difficult.

UK farmers are now paying an average of 118p/litre for red diesel, according to Farmers Weekly’s latest supplier survey, up from about 98p/litre at the end of July.

See also: Spike in red diesel prices as Middle East conflict continues

The AHDB’s latest monthly benchmark put the August average at 108.47p/litre, up 19.6% in a month and 43.3% year-on-year.

The rise comes amid disruption to global diesel markets caused by tensions in the Middle East and reduced Russian refinery output.

US president Donald Trump has also threatened to restrict diesel exports, although the White House has denied reports that a 90-day ban is being prepared.

Any cut in US supplies could leave UK and European buyers competing for alternative cargoes, with the UK sourcing around 30% of its diesel from the US.

For farmers, the timing is particularly bad.

Higher fuel costs feed directly into autumn cultivations, drilling and livestock operations, while contractors face pressure to increase charges or introduce fuel surcharges.

Price fluctuation

Stuart Goodinson is general manager of the Oxfordshire-based Orion Farming Group, which buys fuels including red diesel from multiple local and national suppliers on behalf of its 300 members.

He said: “We have seen a 5% increase in red diesel prices between 9 to 16 September, and prices continue to fluctuate.

“A fortnight ago, there was a lot of red diesel stocking up ahead of autumn drilling and cultivations. It has slightly diminished now as farmers are out there busy working.”

He added that while there have been some small reductions in local markets, the overall trend remains upward.

“If Trump follows through on his threat to ban diesel exports from the US, that could add further pressure to red diesel prices in the UK in the coming weeks. The only certainty now is uncertainty.”

But Helen Needham, a director of red diesel supplier Callow Oils, based in Stourport, Worcestershire, said she was “bemused” after red diesel prices fell this week.

“Since last Friday, prices have dropped by 4-5p/litre. We’re back to 111-112p/litre. The highest we’ve been is 115p/litre,” she told Farmers Weekly.

Farmers left guessing

For farmers, the immediate problem is deciding when to buy.

“The market is just so volatile at the moment. It’s difficult for everyone; for us to manage supply and for farmers to know when is best to buy. There are shortages in some regions,” said Ms Needham.

Wiltshire mixed farmer David Butler warned that high fuel prices could increase the incentive for theft. “If we can’t physically get fuel, where will that leave us?” he asked.

Meanwhile, UK forecourt (white) diesel has already reached a record 199.18p/litre, according to the RAC.

The International Energy Agency (IEA) says global diesel markets are likely to remain under pressure for months unless refining activity recovers in Russia or the Middle East, or demand weakens rapidly.