Drying Needs Could Impact Propane Cost

Drying Needs Could Impact Propane Cost

No guarantees price will hold if drying demands are significant.

Chris hurt used $2 per gallon of propane when he calculated possible grain drying costs for corn farmers who elect to harvest corn rather than wait much longer on dry-down in the field. Because of late planting, despite a hot summer, moisture contents will still not be low enough to bin corn without drying in most cases this fall, unlike a year ago.

That $2 per gallon price has stabilized for now, but Paul Hammersmith, product manager of LP gas for Shelby-County Co-op, says what the price does in the near-term may depend partly upon how much demand there is for propane for drying corn. Most on-farm drying systems still rely on propane, with a smaller number having access to natural gas.

"Farmers took advantage of the good days recently to switch to running beans and let corn dry, but we've still got several counties in our area where the corn will still need drying when they get back to it in a couple of weeks," he says. "It's possible that there could be enough demand for propane for drying corn to affect the price, and cause it to rise some."

Part of the issue is supply and demand, Hammersmith says. That's because U.S. stocks of propane are at the lowest level in five years, he notes. It's why propane prices didn't dip last spring as they normally do after the winter heating season, he notes. Instead, they continued rising until recently, when they leveled off at about $2 per gallon.

Part of the reason for the tilt in supply and demand is that foreign countries are buying U.S propane, he notes. Exports of propane gas are up. It all ties into the lower value of the dollar against other currencies around the world. As a result the American propane market has been very attractive for those needing propane in other countries, driving demand up. Demand has risen faster than supply, creating the situation where any big drawl on propane domestically could cause another price rise, he concludes.
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