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Propane price spiking above $4

Jordan Anderson 01/23/2014 @ 11:31am Digital Content Editor for Successful Farming magazine and Agriculture.com

Hog confinements, poultry barns, shops, and homes are about to see a spike in propane bills. Extreme cold weather the past few weeks caused propane to make an insane price jump to $4.00+ this week.

The U.S. Energy Information Administration (EIA) addressed the propane scarcity in their Today in Energy.

“With the onset of severely cold weather seen over the past weeks, propane supplies in the Midwest are extremely tight. The Midwest spot price of propane at Conway, Kansas, has spiked far above the Gulf Coast spot price at Mont Belvieu, Texas. The high propane prices in the Midwest are the result of both increased demand for crop drying in November and increased demand for space heating in the current cold weather.”

With an unusually wet harvest season, many farmers needed more propane than previous years to dry out their corn. This sparked many states to lift rules on semi drivers transporting propane.

Agriculture.com user booked is chatting up the issue in Marketing Talk. He shared his email saying, ”We are writing to inform you that the propane gas market is rising at an extreme rate…The continued extreme cold in the Midwest and in the Eastern States has produced huge propane demand. This demand is quickly depleting already low supply reserves. Bidding for the remaining open market propane has been intense, jumping 90 cents yesterday alone.” 

Booked says that his coop started today at $2.52 and has since jumped to a mid day price of $3.17/gallon. “Further heavy increases to $4.00 or beyond appear likely.”

Now, to my understanding, a “normal” price for propane is in the $1.30-1.60 range. Propane prices shooting up to $4.00 (we've heard as high as $4.42) are not necessarily helpful with $4.00 corn looming. 

With the extreme shortage, what are companies and states doing to mediate the issue? 

Hobbyfarmer: Many places in Ohio and surrounding areas are on a 150 gal limit at any price.

BF2012: ADM has stopped taking any corn here over 15% moisture as they are out of gas is what I've heard.

Wind: At Heartland we are at $4.20 on 1st of Jan. The LP stocks in the Midwest were at the same amount that they normally are in the middle of April, and there’s a lot of winter left. Corn would have to be $19.00 to be equal to LP BTU wise, but it will probably go up even more if the cold persists. 

Looking ahead

The weather forecast isn't too terribly promising. Temperatures are expected to be around average across the Midwest and below average in northern parts of the country when looking at the 30-day seasonal outlook

Luckily, some farmers are still fully stocked with propane or locked in prices under $2.00. Unfortunately, if the weather doesn’t start showing some warmth in between bouts of sub-zero temperatures, those supplies may not make it until spring. 

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