It's not breaking news that the 2019 corn and soybean crop is behind schedule and wetter than usual. Farmers are often finding their daily harvest capacity limited by their dryers. Commercials are in a similar position, drying around the clock and still unable to keep up. In a typical year very few beans are sent through a drying system whereas, this year that is not the case. Producers are faced with the decision of leaving the beans in the field which are further susceptible to weather, or harvesting them at higher moisture levels.
Up until the harvest season of 2019, propane prices had plummeted while inventories continuously grew, which isn't uncommon. In a typical year, inventories build between the months of April and October and then drawdown as harvest kicks off and into the winter season. Currently, the United States sits just under 100 million barrels of propane, 16.8 million above last year and just beneath the 5 year range as shown in the graph above. The last time the United States had 100 million barrels of propane was November of 2016. It's worthy to note that supplies are more prevalent in certain regions than others. When analyzing the infrastructure of propane in the United States, it is important to recognize where your propane comes from. Our clientele at CRMG is primarily Midwest focused. Conway, Kansas, which holds roughly 7% of the propane supply in the United States, the Cochin Pipeline in Canada, and rail supplies the vast majority of our needs.
When digging deeper into propane stocks, one will notice that the Midwest region is sitting beneath it's 5 year range. As shown in the graph above, inventories as of the latest United States Energy Information Administration (EIA) report came in at 26.5 million barrels, 900,000 less than a year ago. While the data in the report doesn't point to a huge inventory shortage, the lateness and wetness of this corn/soybean crop has most producers in need of supply simultaneously and across a much larger territory than normal. Propane inventory breakdowns by state can be viewed below.
Undoubtedly the 2019 crop season has been full of challenges. If you have not yet locked in a price on the balance of your expected propane needs, work with your local service provider to do so. Expect delays in receipt of your propane needs and communicate with your provider to manage your demand with their current supplies. We are all looking forward to having the challenges of 2019 behind us, finish strong. Remember that many of your service providers are working tirelessly to bring forward your product in a timely manner. Often times they have no more control over the situation than the end user.