Early Corn Harvest May Lower Crop Drying Demand

An early harvest could result in lower crop drying demand for propane this year, market sources tell S&P Global Platts, since this year’s U.S. corn crop appears to be ahead of schedule. “In our draw area [south of the U.S. Corn Belt], corn is ahead of last year and will be harvested earlier than normal,” an agriculture market source said.

“Dryers will not use much gas this year as the corn should dry down on its own.” Propane is used as a drying fuel during the fall harvest season, which has typically been the start of the propane demand season. The consultancy notes that the corn crop tends to lose 2% of its moisture content per day in September and 1% per day in October due to shorter and cooler days, meaning an earlier harvest would allow crops to dry on their own to an optimal level for post-harvest storage.

“There is a chance that [the early harvest] will reduce propane needs, but it will depend a lot on how the crop finishes in the northern areas,” said Matthew Wiegand, a commodity broker at Futures One. “They generally spend more time drying because of the tighter harvest window, and while generally ahead of normal, they aren’t finished yet either.” He added, “The better progress will probably reduce drying needs from Interstate 80 south, which should limit needs a bit. Harvest weather will also be a factor when we get there, too.”

S&P Global Platts reports that some of the larger producers in the northern U.S. Corn Belt will harvest their corn wet as they have a tight schedule. “They will use some propane, but probably less than normal,” one source says.

In general, the crop is earlier this year as 85% of U.S. corn has reached the dough stage compared with the five-year average of 72% and the year-ago pace of 74%, the U.S. Department of Agriculture said earlier this month in its Crop Progress Report. The dough stage is when the kernel’s milky inner fluid begins changing to a doughy consistency as starch accumulation continues in the endosperm, the tissue produced inside the seeds of most flowering plants following fertilization.

One source observes that crop drying demand for propane tends to average 2 MMbbl to 5 MMbbl per harvest season, which compares with the 26 MMbbl a month averaged over the past two years for U.S. propane exports, according to Energy Information Administration data. “It matters, but it’s not going to shift things again like it did in 2013,” an NGL trader says. He refers to the 2013-2014 polar vortex winter that followed a booming, high-propane-demand fall crop drying season that eventually led to a record propane price spike amid dangerously low Midwest inventories and nationwide logistical threats.

(SOURCE: The Weekly Propane Newsletter, August 27, 2018. Click Subscriptions tab above to subscribe.)