Winter weather forecasts and expected crop drying needs used to be the biggest factors Mike Ende watched to develop propane supply plans for Agfinity Cooperative, based in Eaton, Colo. Now he also tracks global news and U.S. export volumes to craft his propane buying strategies.
“These days, it’s almost as important to know what’s happening across the globe as it is to know what’s happening here locally,” says the co-op’s head of energy risk management. “A day’s headlines can sometimes impact the propane market. With all the market unknowns we face, it’s reassuring to have a trusted propane supply partner like CHS.”
U.S. propane production is now being exported around the world at record volumes and that has changed the supply landscape, Ende says. “We can’t always rely on traditional source points.”
As a result, Agfinity continues to look at all options for propane supply and helps customers hedge their purchases. “Working with CHS and the expertise and resources it offers has helped us more efficiently manage supply so our staff can focus on safe, effective and efficient propane operations that meet and exceed member and customer expectations,” adds Ende.
Broader propane sourcing options
Agfinity had a history of drawing most of its propane from several local production plants.
“However, over the last five to 10 years, the local supply market has changed, so we had to grow our portfolio of how and where we source propane, and CHS has helped with that,” says Ende.
“Five years ago, we started to expand our rail capacity. Over the last several years, Agfinity has continued to increase the number of propane cars we purchase from CHS and bring to our Lucerne, Colo., facility.
“Overall propane supply has always been net short from local sources in this part of Colorado and we have at times had to bring in volume from the Conway, Kan., hub or the CHS Yuma [Colo.] terminal,” says Ende.
“Our increased rail capacity has allowed us to work through CHS to bring in more gallons by rail. Changing market conditions are always front of mind for us. They illustrate the value of having more sourcing options to maintain a stable supply.
“Using the CHS online supply planning and inventory management system, we can track the history of gallons we moved with CHS by year, month and source location. That helps us plan for the next season.”
Having adequate storage, both at cooperative and customer locations, is also an important tool in managing both supply and price risk, says Ende. “It’s a huge advantage when the supply system is stressed, which we’ve seen more often in recent years. We regularly evaluate the amount and location of our storage plants and constantly evaluate delivery routes to make us more efficient.”
Making sure customers have enough storage is important, says Ende. “If a customer has a high-usage 500-gallon tank, it may be more efficient to replace it with a 1,000-gallon tank. We regularly help customers crunch numbers and look for cost savings.”
To ensure customers like the Moss family never run low on propane, Agfinity outfits all tanks with monitoring technology. Pictured from left are Maddi, William and Leland Moss; Rachel, Connie and Russ Moss; and Noah, Sara, Olivia, Parker and Steven Babb.
Full tanks, fixed pricing
For Russ Moss, owner-operator of Rusco Land and Cattle near Ault, Colo., service is still a key factor in choosing an input supplier. He and members of his family-run cattle ranch and feedlots work with Agfinity staff for their agronomy, petroleum and some feed supplement needs.
“The people who work at Agfinity are very good at what they do. When it comes to propane, I can depend on them to keep my tanks full and my costs manageable.”
That wasn’t always the case, he says, recalling an episode 10 years ago when a tank ran out of propane over the Thanksgiving weekend. “I took my business elsewhere for a while, but after changes at the cooperative, they won back our business.”
Moss, his son William and daughter-in-law Maddi, daughter Sara and son-in-law Steven Babb, and several long-time employees rely on propane to heat their homes and two farm shops. As with all Agfinity commercial and ag customers, the tanks are fitted with monitors to ensure they never run dry. Customers can use a smartphone app to track propane levels.
To help manage propane price risk, the Agfinity energy staff encourages customers to use fixed-price contracts. “Nearly all our commercial and ag customers use them and they’ve proven to be a good hedge against price spikes,” says Amanda Weisberg, Agfinity energy sales manager.
Last year, Moss saw the value of such a contract firsthand. “I locked in propane at a fixed price with Agfinity, but at a ranch we operate in Wyoming, we were buying propane as needed without a contract from another supplier and we ended up paying 45 to 65 cents more per gallon than our fixed-price contract with Agfinity.”
Getting valuable advice and dependable service from familiar faces is important to Moss, who has started to hand over many operational responsibilities to family members. “Working with good people is key to our business, especially during challenging times; it’s why we like to work with the cooperative.”
To prepare your operation for your propane needs, talk to your local cooperative energy expert about fixed-price contracts and supply planning.
Check out the full Spring 2025 C magazine with this article and more.
