PRST STD U.S. POSTAGE PAID OMAHA, NE PERMIT NO. 36
Volume VIII, Issue 2
September 2014
Propane supplies greater this year
Dry down season
by Gordon Wolf This year’s wet weather will certainly require some crop drying and put pressure on the supply of propane in Iowa, but propane inventory is greater than it was in 2013, according to Harold Hommes with the Iowa Department of Agriculture and Land Stewardship (IDALS). Last year, propane was not immediately abundant in Iowa, said Hommes, who is a market analyst with the IDALS. The national propane inventory was close to a 10-year low. “The questions for this year are how much of a draw-down the ag sector is going to need and what wild card Mother Nature holds,” he said. “If we have a fall with good drying conditions for crops and less demand on the residential side, we’ll be just fine.” The need for grain drying is anticipated to be significant this year, Hommes said, but he also pointed to the last
report from the U.S. Energy Information Administration (EIA), which said propane supplies have moved slightly above a five-year high. Added to the scenario is the binbusting record crop predicted by the USDA. A September 11 report issued by the USDA National Agricultural Statistic Service (NASS) said Iowa’s corn production is forecast at a record 2.44 billion bushels, 13 percent greater than last year’s production. The September 11 report is based on September 1 conditions. The next report won’t be issued until October 14 and will be based on conditions as of October 1. “As subsequent reports are issued, big crops tend to get bigger,” said Hommes. That means Iowa’s corn production this year could be well above the previous record.
Another factor to add to the pressure on propane is the progress of this year’s crop in Iowa. Hommes said the NASS crop progress report issued on Monday, September 22, showed the crop was ahead of last year. He added that last year’s harvest was late due to spring rains, followed by an earlier-than-normal visit from Mother Nature. Although the NASS report says Iowa crops are ahead of last year’s progress, Hommes pointed out that, according to the USDA, crops are 10 days behind normal, on average. He said Iowa entered last fall with a much lower propane inventory than was needed, and a significant ag demand and an early demand for residential use added to the pressure on the inventory. “It was kind of the perfect storm,” Hommes said.
Fortunately, the propane situation is far different this year. “This year does have some similarities to last year; no one doubts there will be significant propane use from the ag sector this fall, but much better inventories of propane are in place,” Hommes said. He continued the third leg of the supply and demand situation is this winter’s weather: will it be early or late, more severe or less severe than normal? “It’s a wait and see approach, but I’m feeling better where we’re at right now compared to last year,” said Hommes. Hommes conjectured what may have made the difference in the inventory this year is an encouragement from Iowa Secretary of Agriculture Bill Northey to the propane industry and the public to PROPANE, Page 2