Propane Inventories Higher Now Than Last Fall

Propane Inventories Higher Now Than Last Fall

Energy Information Administration says propane supplies will continued to be influenced into the fall by crop size, moisture content

With a USDA-estimated record large corn crop expected this fall, the Energy Information Administration says propane supplies are being closely watched as larger crops and higher moisture contents mean more fuel used by grain dryers.

Propane consumption in corn-producing states typically rises in September and October with the corn harvest, followed by a larger rise related to space-heating needs in January, EIA said in a recent propane updated.

Energy Information Administration says propane supplies will continued to be influenced into the fall by crop size, moisture content

Last year, propane demand in the top five corn-producing states increased in October to levels that rivaled the normal peak demand in January, largely due to wet crops. As a result, propane inventories in the Midwest were drawn down by 4.1 million barrels (130,000 bbl/d) in October, 2013, which was the largest October stock draw since 1985, EIA said.

Related: 5 Tips for Efficient Propane Use This Winter

The early draw down meant Midwest inventories of propane started the heating season at relatively low levels and remained at the bottom of the five-year range through December. Logistical problems, including the closure for maintenance of the Cochin Pipeline that transported propane from Canada to the Upper Midwest and disruptions of rail transportation, prevented Midwest inventories from being replenished before winter began.

With prolonged cold weather in January and February, propane inventories dipped well below the five-year range.

Midwest propane inventories now, however, are higher going into this harvest season. As of Sept. 26, inventories were above the five-year average and 3.7 million barrels higher than year-ago levels.

Related: Propane Cost Midwesterners $561 Million More Last Winter

Despite the higher levels, EIA says recent infrastructure changes may affect propane supplied to the Midwest in the coming months, especially under high-demand conditions.

Continue reading after the jump >>

Propane Inventories Higher Now Than Last Fall

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EIA explains the Cochin Pipeline was reversed earlier this year and now moves condensate from the Midwest to Canada. However, at least some of these supplies will be replaced by additional supplies from several existing pipelines that move propane north from Conway, Kansas, to the upper Midwest, as well as by expanded rail and storage capacity in the region.

Prepare now
Farmers should secure propane supplies now, if they haven't already, as high demand and slick winter roads made supply more difficult in the coming weeks and months, advises Wally Tyner, a Purdue agricultural economist specializing in biofuels.

"It's simply better to be prepared," he said.

Klein Ileleji, associate professor of agricultural and biological engineering at Purdue University, notes also that this year, because cooler temperatures and damp air delayed dry-down in the field, some farmers could be bringing in crops with moisture content of 25% or higher.

Related: 6 Stories to Read Right Now: Big Crops, Little Storage

That means drying units could be taxed trying to get 5% to 10% moisture out of the crop.

"Wet corn will not flow smoothly through the machine and could clog the mechanism," Ileleji said. "Because post-harvest drying is a time-consuming process, there is a tendency to try to do too much at once, which simply leads to breakdowns and additional delays."

Despite the additional work and expense associated with an extended drying operation, Ileleji advised farmers who might have a moisture issue not to wait too long for their crop to dry down in the field before harvesting.

"We are already pushing the outside of the weather envelope in late October," Ileleji said. "It is better to bring the crop in wet than to have it freeze."

Source: EIA/Purdue

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