Will propane prices go down in 2022

Propane spot prices at the Mont Belvieu distribution hub in Texas bottomed below the $1-per-gallon mark, down almost 40% from their March peak amid soaring domestic inventories, while declining crude prices added further pressure on the market. Meanwhile, US propane exports continued to increase due to robust global demand, particularly from Europe, amid a shift in energy supply following Russia’s invasion of Ukraine. Still, the big picture is that the highly seasonal propane market will enjoy some upside momentum when inventories start to draw down to meet winter demand.

Historically, Propane reached an all time high of 1.67 in February of 2014. Propane - data, forecasts, historical chart - was last updated on October of 2022.

Propane is expected to trade at 0.88 USD/GAL by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 0.97 in 12 months time.

Propane

Mont Belvieu Propane is a gas that can be compressed to a liquid. It is listed as a clean fuel on the 1990 Clean Air Act and has numerous applications. The contract size is 42,000 gallons and takes its name from the city of Mont Belvieu,TX due to it's massive gas storage facility.The Propane prices displayed in Trading Economics are based on over-the-counter (OTC) and contract for difference (CFD) financial instruments. Our market prices are intended to provide you with a reference only, rather than as a basis for making trading decisions. Trading Economics does not verify any data and disclaims any obligation to do so.

(Washington, D.C.) -- A big topic for nearly everyone is the price of fuel, especially as diesel hits a record high.

Naturally, that has many farmers wondering about the cost of propane and its availability this fall. Mike Newland, Director of Agriculture Business Development at the Propane Education and Research Council, says there are no indicators of a supply disruption going into the busy season.

“While we've seen crude and natural gas raised to record prices, propane has been very steady during that same period of time. You know, as you look at the farm and how fuel intense our farming industry is, I think it gives growers a great opportunity to lock in their bottom dollar if you will, by taking a look at pricing tools that are available to you at the local propane supplier level. It's an opportunity for you to lock in what the energy that you need for this fall. We'd encourage you to communicate with your local supplier just as fast and early as you can.”

Newland closely watched the Mid-year USDA acreage report, which showed that despite having planted 89 percent of the average corn crop by May 29, only 61 percent of that had emerged, 18 percent lower than in 2021. Newland is tracking corn moisture going forward into the harvest season.

“And we will give it to black layer, it's just a function of how much natural drying occurs in the field versus how much will we have to do with the grain dryers. And that's really what the industry is tracking. We've got an internal model that we've developed over time to where we can track corn moisture in every USDA crop district in the Midwest and compare it back to 22 years worth of history. So, the propane industry does a great job of being proactive and understanding what could happen from a drying perspective. The good news is that we're prepared for it and we're communicating with our entire industry across the Midwest to make sure that they're prepared at the local level.”

If growers are forced to harvest high moisture corn, Newland says propane suppliers are well-equipped to meet increased demand.

“Propane is produced domestically, we've got a lot of supply. We do export over 50 percent of the propane that's available to us in the U.S. So, from a supply standpoint, we track it at the distribution point level. We're within the five-year range of what we typically see our summer inventories being. The one thing I would caution a little bit is if you're in an area where you think you may have higher than normal usage, your corn is wet, or you may think you may struggle to get the black layer, and you know that you're going to use a lot of propane, get those tanks filled early, make sure you're talking with your supplier to let them know how many gallons you think you could use, because communication is the key to making sure that we've got the product in place and available for the folks who need it when they need it.”

Additionally, Newland says propane is a versatile energy source that allows growers to use it in several ways.

“Just outside of the grain drying space, we've got tremendous opportunities. As I mentioned before, we're in a pretty advantageous space from price as we compare to diesel and gasoline. So, anything around the farm, I think would be a great time to explore conversion or move to propane power. We do a lot of irrigating around the country that runs on propane, we heat almost every livestock building, if you're not on a natural gas main, we're heating it with propane. So, we've got some pretty novel things that we can do with our fuel. We would encourage everybody to maybe take a look at propane.com/agriculture to see the offerings that we can power around the farm.”

Newland says farmers should discuss with their supplier in the summer what their propane needs may be and what tools they may offer at the local level. Additionally, you can find resources to help start that conversation online.

“Everything about our organization and the tools that can be found at propane.com. One of the novel things we have created is our grain drying calculator. I’d encourage you to go there, by answering three simple questions, how many acres of corn you have, what's your expected yields going to be, how many points of moisture are you looking to take out of that crop before it goes in the bin? It will give you a very quick estimate on how many gallons of propane you're going to need. And I think that's a great bit of information as you go to that local supplier, and really get that conversation started in the right direction.”

Again, producers can find more information about propane and how it can be a one-fuel solution for their operation at propane.com/agriculture.

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