Propane Hits the Mark | Advice Issued

Posted on 08/08/2019 12:28 PM

 

We have been waiting for propane to soften to a regional average of $1.15 and with this week's price action, we have hit that mark. Given we have hit our designated purchase price in a downtrend, we advise growers book 70% of harvest and winter heating propane needs at current prices. We will wait for confirmation of a price bottom before filling remaining needs.

I would remind readers demand for grain drying is expected to be very high at harvest. There is the possibility that lower yields will mitigate some of that demand, but propane has proven itself to respond higher in a tight supply environment and we prefer to manage risk rather than gamble on bushels lost to planting delays, prevent plant and foul weather.

Book 70% of total grain drying, home heat, confinement needs and any other propane needs for your operation at current prices, and be ready to fill remaining needs very soon.

Farm Diesel --farm diesel price chart

  • Our regional average farm diesel price was unchanged on the week at $2.42 per gallon.
  • Eight of the twelve states in our weekly survey were unchanged as Kansas added 7 cents and Nebraska firmed 6. Those gains were offset by a 3 cent decline in South Dakota and a 2 cent pullback in Minnesota.
  • According to EIA, national distillate supplies firmed 1.5 million barrels in the week ended August 2, now 12.0 million barrels above the same week last year and right at the mid-point of the five-year average range.
  • EIA also reported that, while national stocks firmed, stocks in the Midwest fell 600,000 from the previous week and are just slightly behind the same time last year.

We are 50% filled on Farm Diesel for harvest and advise you be prepared to book remaining needs within the next few weeks.

Propane --propane price chart

  • Our regional average propane price fell 2 cents right into our sweet spot, and we advised booking 70% of your harvest and winter heating needs at your current local price. Chances are, since you will be buying a fair amount of LP, you will be privy to a much lower price than our regional average "whiteboard" price, but our studies show it is time to get started on booking LP.
  • Nine of the twelve states in our weekly survey were unchanged with Minnesota off 9 cents, Nebraska softening 8 cents, and Iowa off a penny per gallon on the week. No state posted a higher LP price.
  • According to EIA, national propane supplies firmed 2.852 million barrels in the week ended August 2, now 16.923 million barrels above the same week last year and nearing the top end of the five-year average supply range.
  • EIA reported Midwestern propane supplies slightly above last week's and 1.787 million barrels above the same week last year.
  • Our advice remains consistent in that we suggest you calculate your total needs for grain drying, home heat, and other uses, and fill to that amount, rather than relying on semi-frequent fillups throughout the winter.

Fuel
7/22/19
7/29/19
Week-over Change
Current Week
Fuel
Farm Diesel
$2.41
$2.42
Unchanged
$2.42
Farm Diesel
LP
$1.18
$1.17
-2 cents
$1.15
LP

 

 

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