Harvest2014_farmweek 8/20/2014 9:53 AM Page 1
Harvest issue Monday, August 25, 2014 FarmWeek
A special FarmWeek issue previewing the upcoming harvest season
Harvest 2014
Brisk propane exports outpace production Photo provided free of charge courtesy of Chad Colby, AgTechTalk.com
As summer vacations come to an end and fall harvest approaches, there are a few things to think about — namely U.S. propane inventories (especially Conway), production versus exports and crop drying demand. The Conway hub is 2 million barrels shy of Dan Pannier where we would like it to be at week 17 of the 26-week build period. To attain the five-year average number of 27.5 million barrels by the end of September, we need to average a build of 570,000 barrels per week, which could be a tall order. If BY DAN PANNIER
the Conway price premium stays intact, then we may see barrels get held up in the Midwest and allow us to reach our 27.5 million goal. Many are asking, “With all the shale production in the U.S. today, how do we not have enough propane?” This country has enough propane, but the price incentive to keep it here is lacking. One of the biggest markets for propane is the export market, and as most of you know, exports continue to increase. Looking at the last five years, the U.S. would typically export 3 to 4 million barrels per month. So far this year, we are averaging around 11 million barrels per month with May of this year being the biggest month on record at just under 14 million. With
the U.S. priced competitively in the global market along with continued export expansion projects, the question is — will exports grow faster than production or vice versa? For now, production is out-
pacing consumer demand, but we face several unknowns over the next few months. One of those is crop drying demand — always a topic for wide-ranging speculation. One thing we know for sure is
there seems to be a lot of corn out there with corn market prices lower than a year ago. As of Aug. 3, silking is at 96 percent in Illinois and at 93 percent in Iowa, which is about 10 percent above average and above last year, according to USDA. With this being said, it is my opinion that the next 30 to 45 days will determine propane demand for this fall. One final thought is that petrochemical demand for propane has fallen off. Although recent interest has picked up, it still remains well under last year and the fiveyear average. Dan Pannier serves as GROWMARK’s propane operations manager. His email address is dpannier@growmark.com.