“Yes, it happens every year and could happen this year too.” Pat Macht, Energy Manager at Farmward’s Springfield office was responding to a question of LP gas distribution to their 10 Minnesota locations.
With this crop season delivering a potential huge demand for LP fuel, Macht simply commented, “We got all farm tanks filled this summer/early fall. We don’t anticipate any delivery issues. We’ve great delivery crews at every location. They know their farm customers very well and will do everything needed to keep every farmer from running short this drying season.”
However he added, “When we get into the ‘heat of battle,’ strange things can happen. Can I say with 100 percent guarantee there will be no issues? Absolutely not … too many variables out there to make such a statement. But our LP crews will do their very best; that I can say with certainty.”
Farmward sources its propane supplies at three locations: Vernon Center and Jackson, Minn., plus Sanborn, Iowa. “But we’ll get it where we need to go — even Rosemount in the Twin Cities if necessary,” said Macht.
Scott Walker, General Manager of Farmers Co-op Oil Company in Renville, Minn., is equally confident there will be enough LP available for any and all farm customers. “I don’t think supply is going to be an issue. A bigger question right now is how much corn across the corn belt is going to need artificial drying. If LP demand is everywhere this fall, then logistics of getting the product could be an issue. There’s just nothing encouraging about weather for the next few weeks.”
Like Farmward, Farmers Co-op also sources LP from multiple suppliers. Plus, they contract with some suppliers so they have product ‘locked in’ as needed once the drying season ramps up. Like every corn grower, Walker’s concern is the right dry down weather for the rest of this season. Transportation from the rail or terminal sites to his five local co-ops could be an issue if every LP supplier suddenly needs more LP.
Semi tankers are the vehicles for moving LP from terminals to the local co-ops. Most co-ops have their own truck fleet for this task. But a sudden demand across the corn belt could raise immediate havoc. However, both Macht and Walker don’t see this dilemma happening. Walker, like Macht, said his farm tanks were completely filled earlier. A big help was a ‘special summer fill-up’ package.
Said Walker, “Our farm tanks are plumb full; so too our 60,000-gallon tanks here at the co-op. Most farmers have 1,000-gallon tanks for their dryers. Some will have two or three tanks hooked together. We encourage that system. If one tank — even two — goes empty, we can refill while he continues his dryer on the third tank. My biggest pitch to farmers is have adequate storage for your LP needs.”
Farmers Co-op leases LP tanks. So do many other LP providers. Walker sources LP from various providers. The big refinery in western North Dakota is his major supplier, but he can access LP product from multiple refineries — even across the deep south and southwest.
LP gas exports are ramping up and could be a price factor in LP gas prices right here in Minnesota. “With this new market demand in Europe and elsewhere, it’s only logical these refineries will be searching for higher prices regardless the local. If they can make more money selling off-shore, than that’s a logical thing for them to be doing,” said Walker. “So they fill up some big barges and away they go.”
He doesn’t see this growing export market becoming a potential shortage for the U.S. corn industry. “It can, but I don’t see this as becoming a supply issue for our Minnesota farmers. It’s going to get tighter — especially if lots of semis are pulling in for refills in their own rigs. So keeping these terminals filled up could be a challenge. These big terminal tanks need to have a certain percentage of LP before they can start refilling the semi tankers. So there’s a potential slow down, but we’re okay with the situation so far.”
LP pricing seems to be working in that $1.14 area. Walker doesn’t see price as an issue unless demand is even stronger than anticipated. When was the last year LP demand became an issue? Walker said that was 2009 — the same scenario as this year with a slow, excessively wet season.
Walker is concerned about the financial health of his farm customers, but not so much that he’s concerned about money for their LP gas bills. “We just know our farmers,” he explained, “and if a farmer needs LP at 2 a.m., our guys will even make deliveries at that hour! Confidence in each other is what this farming business is all about. Jeff Dieken is our ‘energy guy’ here at the Co-op, and I couldn’t ask for a better man — dependable, regardless the circumstances.”
Walker is a bit of a veteran himself, having been at Farmer’s Co-op since June 2017. Prior to that, he was in private business for five years in Grand Forks, N.D.; then 12 years of co-op experience; and before that, seven years in private business. He’s a North Dakota product; doesn’t mind sharing some chatter about that incredible North Dakota State University football machine; and the University of North Dakota hockey team. He now admits a little bit of University of Minnesota football interest is rubbing off.
A closing note on the ongoing surge in U.S. propane exports growth: According to an LP newsletter, propane rack prices continue to stay cheap. But prices will gain strength with growing crop-drying potential and cold weather forecasts. A new 175,000 barrel per day export expansion on the Houston Ship Channel by the end of September is giving the United States more export capacity. The United States is now the largest waterborne shipper of propane in the world with 44 percent of shipments!