Propane demand squeezing US ammonia truck supply

  • : Fertilizers, LPG
  • 19/11/13

Ammonia distribution to US Midwest growers this fall faces mounting restrictions as heightened propane demand has strained logistics in the region.

Prolonged crop-drying propane demand has overlapped with seasonal home heating consumption, requiring more LPG tanker trucks and reducing the number of available drivers to transport ammonia.

Crop-drying typically starts in September and wraps up in November. But this year's delayed corn harvest has extended the drying period to overlap with the start of fall ammonia injections in isolated areas of the Corn Belt.

One distributor said a single truck can discharge nearly a dozen loads within a three-day period during a typical season, but the current pace is closer to one load every 72 hours. Waiting times have swelled to 10-12 hours to pick up cargo, furthering the delay to the retailer and farmer.

The bottleneck highlights a growing problem for the US trucking industry, which has faced growing shortages of drivers in recent years. The American Trucking Associations said the driver shortage reached 45,000 in 2015 and was anticipated to surpass 50,000 by the end of 2017. Industry forecasts last year estimated the driver deficit to hover around 50,000 by the end of this year.

Several states in key growing areas have issued exemptions to truckers shipping heating fuel, including propane, this month to enable drivers to meet heightened demand. Ammonia distributors recently said the squeeze on available trucks has not restricted shipments to farmers yet, but there is growing concern a logistical bottleneck will impact fall applications.

Restrained asset utilization could eventually diminish total ammonia consumption this fall, further compounding two lackluster consumption periods stretching back to fall 2018. Peak application demand in the Midwest is still weeks away as farmers complete the harvest, and ammonia distributors will likely face further competition to meet heating demand.

Spot ammonia terminal values in the Corn Belt have not reacted to the logistical constraint but could face downward pressure into the first quarter if inventories build because of delayed truck shipments during the fourth quarter. Terminal prices in the Corn Belt typically climb from the fourth quarter into the first quarter to meet post-harvest and pre-plant application demand.

By Connor Hyde


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