Written by Jonathan Eisenthal
A recent downward price trend in the commodity propane market presents an opportunity for farmers who are currently drying grain.
“Residential heating and agricultural end users, and also the providers that retail to them, will want to make sure to replenish your supply now,” said Dennis St. Aubin, director of sales, marketing and energy equipment for CHS, Inc. “Demand tends to lull around the holiday here. Before the added winter weather demand moves prices higher, it may be a good opportunity to fill tanks now.”
Twin Cities-based CHS is one of the largest propane wholesalers in the country, and boasts a large market share in Minnesota.
The good news for growers with grain to dry is that the supply is plentiful, which is not a given this time of year, according to St. Aubin.
Many farmers will recall the “Polar Vortex” winter of 2013-14, when a very wet fall followed by low temperatures impacted the Upper Midwest, leading to very high demand propane. Contributing to supply issues, the propane industry was undergoing a change in its delivery infrastructure at the time. Propane delivery was switching to rail in central and northern Minnesota as part of a deliberate, phased investment in rail terminal infrastructure by the propane industry to increase storage capacity.
The latest propane consumption figures for Minnesota are estimated between 450-500 million gallons per year. The number includes commercial, residential and agricultural uses. Agriculture is a very small usage of overall propane, according to St. Aubin, who estimated that it represents close to five percent of total propane use, nationally.