Seasonality of Diesel Fuel Prices

Diesel fuel is a major expense for most farmers. Diesel fuel prices do exhibit some seasonality so farmers can try to lower their fuel expenses by buying their fuel in months when prices are lower. However, purchasing fuel before it is needed results in a carrying charge to the farmer. This paper examines the optimal purchase month for diesel fuel for both spring planting and fall harvest. Both risk neutral and risk-averse farmers are considered. Higher interest rates discourage advance purchasing, but in many cases farmers would be better served by purchasing diesel in advance of use.


Subject(s):
Issue Date:
2012-06
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/161609
Published in:
Journal of the ASFMRA (American Society of Farm Managers and Rural Appraisers), 2012
Page range:
8-19
Total Pages:
12




 Record created 2017-04-01, last modified 2017-08-29

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