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Got grain-drying LP worries? Supply is there, it just may cost you more

Jeff Caldwell 07/08/2010 @ 11:00pm Multimedia Editor for Agriculture.com and Successful Farming magazine.

Combines are running full-bore around the Midwest in an effort to make up for one of the slowest fall harvest seasons in history.

But, that doesn't mean all the rough water's behind farmers. The corn and soybeans are being put away into storage on the wet side, putting a premium on a good grain drying system and the fuel needed to power it.

The latter ingredient could become an issue for farmers as the dryers run this fall. Already, supplies of propane -- the primary grain dryer fuel in the Midwest -- are starting to come into skyrocketing demand. According to the U.S. Energy Information Administration (EIA), the nation's midsection is the epicenter of the run of propane demand, accounting for the largest portion of the 1.4-million-barrel decline in the last week, EIA numbers show (current national stocks total just under 70 million barrels nationwide).

"The largest regional decline of 0.9 million barrels occurred in the Midwest, reflecting crop-drying demand," according to an EIA report this week. See more of EIA's latest propane price and supply update.

But, it's not a shortage, says Mark Britten, energy department manager for Heart of Iowa Cooperative at Roland, Iowa. The supplies are there -- it's just that demand is spiking seemingly all at once in the Corn Belt, making it tough to get adequate LP "shoved through the pipeline.

"Terminals can only hold so much. With the timing of the harvest and all the grain dryer demand being so huge, it's coming all at one time, so some suppliers are going on allocation where they're only allotted so many loads per day," Britten adds. "But, as the industry sits, we're not talking about any shortages whatsoever."

Because of the run of demand in the LP market for grain drying and the limited capacity for transport, suppliers are faced with two basic options for meeting demand. First, they can seek out other more geographically distant LP sources or face delays in securing local sources, Britten says. For example, Britten says suppliers in Iowa are looking as far away as Kansas to meet local demand.

Or, in his specific case, Britten says trucks face huge wait times to get a 9,000-gallon transport load filled at a Des Moines, Iowa, terminal. "On Monday, the time it was taking to get 1 transport in Ogden [Iowa] was roughly 11 hours," Britten told Agriculture Online on Friday.

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