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Propane Supply Up and Prices are Stabilizing

Matt Kumm

 

propane 3This winter’s propane shortage was a major concern for Indiana agriculture. Limited supply plus a bitter cold winter left farmers scrambling for ways to conserve their tanks and keep their livestock warm. Propane Marketing Manager for CHS, Matt Kumm, says things are starting to look up.

 “Actually supply has stabilized over the last five or six weeks so we’ve seen prices actually stabilize and actually move down compared to where we were at its high.”

Kumm says propane challenges have diminished for farmers in the meantime. With spring weather around the corner, it’s a great time for farmers to work proactively with their distributors.

 “Let’s think about evaluating storage on-site, take a look at summer fill programs, take advantage of those propane prices when they’re at their seasonal lows and contracts for the upcoming demand season in order to avoid those spot price spikes that may occur.”

The damage was done this winter as drastic measures were taken to assist with limited supplies. Kumm describes it as a domino effect starting back to last winter, which went into May.

 “What typically happens in the propane industry is that April to September time frame is when you build inventory for the upcoming demand season. With that shortened time span available, we went into this fall with lower inventories than normal.

Then of course we had that crop drying while we also experienced one of the coldest winters on record. In other words, the crop drying was already going on and thermostats were being turned up. That went back to simple economics of supply and demand. High supply and eventually the infrastructure had a difficult time meeting all that increased demand and played catch up all season long.”

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