Natural gas has broken through the $4.00 mark and is in the low $3.90's. This is a strong level of support, and we have advised $3.91 as a good place to book 50% of fall needs. The front month natural gas contract has shown a tendency to leave narrow windows and move higher quickly. While natgas is currently below $4.00, we strongly recommend covering half of your fall natgas needs.
We expect strong demand in the fall for natural gas and LP for grain dryers. Pro Farmer's Chip Flory says, "We hope things aren't as bad this fall as they were in 2009, but fueling these dryers could get expensive if we don't so something right now."
The July 13 natural gas contract opened today at $3.99 and struck $4 before moving lower -- currently at $3.92. This week EIA reports better than expected injections to storage so prices may linger in this range, but this contract will add a dime or more without thinking twice.
LP stocks are high and production continues to outrun demand. Currently, the Inputs Monitor Index price of LP is at $1.44, but LP didn't hit the bottom last summer until mid-July. We expect the same to be true of this year. Hold on LP and look for regional averages to drop below $1.40 before booking LP.
Natural gas demand for grain dryers will likely be high this fall and with the July contract currently priced below $4.00 the time to book for fall is now.