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LP Demand for Corn, Soybean Grain Drying Causes Supply Shortages

Pipeline company admits temporary inventory outages.

DES MOINES, Iowa --As Midwest farmers work 24 hours a day trying to get their wet crops out of the field to dry them in on-farm storage, liquid propane (LP) suppliers in Iowa faced a stoppage this week of the heating product.

This fall, the demand for grain drying is compounded, due to widespread wet corn conditions and widespread cold temperatures.
 
Some farmers are reporting corn moisture content levels of 18% to 24%, sharply above the buyers’ preferred moisture. Even soybean crops are coming out of the fields wetter than normal.

The bottom line is that propane gas usage increases with 20°F. to 40°F. air temperatures vs. 40°F. to 60°F.

LP Supply Stoppage

As of Friday, LP gas was supposed to be returning through the ONEOK (Tulsa, Oklahoma-based company) pipeline into Des Moines, Iowa, company officials told Agriculture.com.

This week, some farmers reported three- to four-day delays in their efforts to get fresh LP supplies.

The upper Midwest is supplied with propane by pipelines (Mid-American and ONEOK) flowing north from Conway, Kansas, (home to 7% of the nation’s propane storage), the Cochin Pipeline coming south from Canada, and from rail deliveries. The Cochin Pipeline delivers ethane and propane from Canada to the upper Midwest.

Brad Borror, manager - communications for ONEOK, told Agriculture.com that while the executive order is not directed at ONEOK, “the company continues to meet commitments to shippers and is working diligently to timely deliver propane to the region.”
 
“Due to unexpectedly high demand, two terminals in Iowa on ONEOK’s North System recently experienced temporary inventory outages lasting less than 24 hours. However, the pipeline system continues to move propane to resupply terminals per shippers’ requests,” Borror stated in an email Friday.

Strong demand surges and supply challenges have led Iowa’s governor to implement emergency measures to provide propane to heating customers, including suspensions of limitations on hours of service for propane-delivery truck drivers.

“The proclamation is effective November 1, 2019, and will expire at midnight on November 30, 2019,” the governor’s office stated in a press release.

Long-Term Solution

While the governor’s proclamation will help the industry temporarily, the long-term solution is not being addressed, according to industry experts.

Terry Davis, Country Propane owner in Warren County, Iowa, says that the stoppage highlights the need for reform to the industry’s infrastructure.

“Our state and local officials need to change zoning codes to allow marketers to build more storage at the local level,” Davis says. “For the past year and a half, I’ve served on the governor’s task force to alleviate these supply stoppages.”

Davis says communication between the state and local officials is lacking.

“If marketers could construct a local facility to store larger amounts of propane, it would lighten the pressures put on supply coming from the pipeline companies.”

As a temporary solution, Davis has switched his bigger customers over to larger propane tanks.

“We have some customers that if we fill them up in the fall, that supply will last them until April. But that’s tertiary storage. Marketers need larger storage tanks, located outside of city limits, to keep local supplies at a level that will carry their customers,” says Davis.

In 2014, some retailers installed extra onsite storage to be less dependent on Iowa’s three propane pipelines and delivery system, according to the Iowa Propane and Gas Association (IPGA).

Deb Grooms, IPGA executive director, says that high demand for propane has triggered this week’s delay.

“In a normal year, there is a more gradual harvest moving from south to north, but according to reports, multiple states are harvesting at the same time and more drying is needed for the crop.”  

It’s interesting to note, a family’s residential annual use of propane averages 1,000 to 1,500 gallons, while farmers drying grain can use that same amount in two days, Davis says.

Despite this week’s stoppage of propane to Iowa, U.S. and regional supplies remain at plentiful levels.

In this week’s Energy Information Agency’s report, Midwest propane supplies totaled 26.5 million barrels, slightly higher than a year ago. That amount of propane equates to a 90-day supply.

Farmer Talk

On Agriculture.com, farmers are posting comments about LP shortages in their areas. 

Scassellfarms3,  a Wisconsin farmer, noted that he is concerned about LP shortages.
"Here in south central Wisconsin, we have barely started harvesting corn. We are already running short. We sit on the end of the pipeline. So, if they are short south of us, we are in trouble," the Agriculture.com Talk Forum visitor stated.
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