Morning Energy Update 9-27-2022 PROPANE RECOMMENDATION

***NEW RECOMMENDATIONS TODAY***

Contract 10 percent of your Fall/Winter 2023/2024 propane needs.

Fall/Winter 23/24 propane prices are hovering near their lowest point of the calendar year. Increased production and robust inventory builds paired with interest rate hikes and recessionary fears have presented a great opportunity to layer in some propane contracting. Increased demand from crop drying could potentially move prices higher in the short-term, while global geopolitical risk could move prices sharply higher at any time. We’re hoping for additional downside price movement in the coming months, but we believe the market has presented a great contracting opportunity at this time.

Reasons for propane recommendation:

Increasing U.S propane inventories have helped open an advantageous pricing window. Stocks have jumped 13 million barrels, or close to 20 percent over the past six weeks. However, harvest is ramping up in the Midwest and this has the potential to limit builds in stocks going forward. (Chart #1)
Typically we see a strong correlation between crude oil prices and propane prices. In mid-June, crude put in a top at $124 and has since lost approximately $44 of value, and this has contributed to the weakening of propane prices. We are at the point of "rewarding" the market for the setback.(Chart #2)
Likely one of the most compelling reasons for laying in the first purchase for 2023/2024 is that Conway prices are at the lowest level they have been for all of 2022. (Chart #3)
In addition, export demand for U.S. propane has been strong and does not appear to be showing signs of slowing down. 4-week average propane exports have been above the key 1 million barrels per day level for seven consecutive months, with the potential for increased demand from Europe and Asia in the coming months. (Chart #4)

PROPANE CHARTS

CHART #1

CHART #2

CHART #3

CHART #4

RECOMMENDATIONS:

9/27/2022: Contract 10% of your Fall/Winter 23/24 propane.

The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by MID-CO COMMODITIES, INC. or GROWMARK, Inc. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.

We require all contracts, futures, and/or option orders be called into our office.

Bridget Chinowth/Melissa Grant/Brian Keith/Eugene McGillian

Jeff O’Brian/Jacqueline Witte/Scott Wilson

Energy Risk Management MID-CO COMMODITIES, INC