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Pulse Price Report: When to Lock In Propane Prices

It might be sad to think about filling up your propane tank for a long and cold winter, but now is the time to look at propane prices and speak to your producer about options for pricing through the winter. During particularly brutal winters, propane prices can increase up to 300 percent. Locked-in prices are one way to save yourself from such steep and sudden hikes.

Propane is a volatile commodity. While it tends to trend along with gas prices, propane prices are particularly susceptible to weather, making the future forever uncertain.

Propane is readily produced all year, but primarily consumed in the winter months, leaving a surplus during the summer when prices tend to decrease. It is not easily shipped, so in the event of a cold weather snap, prices can hike as companies wait for excess propane around the country to be shipped to their tanks.

During the particularly brutal winter of 2014, some prices in Michigan rose to more than $8 per gallon, triggering a price-gouging investigation by the state’s Attorney General’s Office against Ferrellgas. Prices in Wisconsin rose from $1.85 in December of 2013 to $3.94 two months later.

The concept of locking in a price can help the consumer avoid these unexpected hikes. Typically, the locked-in price is slightly higher than the current price of propane, but that premium serves as insurance should the price suddenly increase.

Different companies handle price-locking in different ways. Some restrict the amount of time that you can have a price locked while others like to look at your past propane consumption to come up with a rate that is tailored to your propane use. Contact your propane provider to talk about their price-locking policy.

The time to call is during the summer, when prices tend to be lower. If you’re not looking to enter into a price-lock contract with a propane provider, at least have your tank filled to the top in the fall or early winter to make sure you keep warm before colder temperatures and higher propane prices kick in.

 

Crop prices (Aug. 30)

Rio Creek Feed Mill – Algoma

Commodity Price (per bushel) Basis
Corn $2.66 -0.46
Soybeans $8.89 -0.94
Wheat (SRW) $3.07 -0.64
New-Crop Wheat (SRW) $3.65 -0.80

 

Fox River Valley Ethanol – Green Bay

Corn $2.73/bushel -0.39
New-Crop Corn $2.76/bushel -0.45

 

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

 

Gas Price Averages

United States: $2.22

United States one year ago: $2.48

Wisconsin: $2.26

Wisconsin one year ago: $2.64

Northern Door: $2.35

Sturgeon Bay: $2.30

 

Other Commodities

Gold: $1,320.60/troy ounce

Silver: $18.60/troy ounce

Oil: $46.47/barrel

 

Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money, Generation X Finance, Corn and Soybean Digest

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