As I sit down to write this, we may be looking at the coldest temperatures so far this winter in central Illinois. This reminds us that winter may not be quite over yet.

Up to this point, we have seen mild temperatures for what most of us are accustomed to in the Midwest and very little snow. Let’s look at some supply and market indicators for propane to see what may be forecast the rest of winter on the supply and price side.

One of the biggest things to look at right now is the inventories. Remember that propane is a global market now, which leads us to look at exports and see what they have been doing for the last couple of months.

Inventories in the U.S. for Week 2 showed a draw of 6.230 million barrels. This number almost doubled the average and industry expectations for Week 2. The draw left Midwest inventories at 16.718 million barrels – almost 10% behind last year and a little more than 15% behind the five-year average. Gulf Coast inventories are reported at 31.924 million barrels remaining after Week 2 report, which is almost 40% behind last year and nearly 25% behind the five-year average. I know what you are thinking … How can this be, you started out talking about how we have had a mild winter so far? Exports!

Exports continue off the chart, showing up more than 20% from just one year ago at 1.48 million barrels per day being exported. Saudi Arabia’s move to cut crude production, a colder winter in Asia and increased Asian petrochemical feedstock demand has driven current Far East pricing to a significant premium over U.S. values. This would lead one to believe that exports will remain strong at least for the near future. With current export demand so high in the past few weeks and inventory levels below average, we have seen propane values soar in both Conway and Belvieu.

From early January to the middle of January, we watched Belvieu prices move up almost 20 cents per gallon and Conway prices move up almost 30 cents. Since these highs, we have seen the market now retreat some, with Belvieu off about 10 cents for the highs and Conway off almost 20 cents.

With being only about a third of the way through the official winter season, lower inventories and higher export demand, we need to remember, even with mild temperatures, to keep our tanks full. Contact your FS professional for more information.

Dan Pannier serves as GROWMARK Propane Operations