Market Matters Blog

Grain inspected for export increased in all major regions during the week ended August 29 with corn leading the way, up 57% from the prior week, and wheat up 17%, according to USDA's Grain Transportation report. The total of all grains inspected was 17% higher than the 4-week average and the highest level since March. Much of the increase was seen at Pacific Northwest ports where inspections increased 56% from the prior week and were the highest since April. Tensions over labor contracts still hang over two of the main PNW exporters, but this has so far not created any stoppage of vessel loadings. However, last week, Washington State grain inspectors were turned away at the main entry to the Port of Vancouver. Inspectors had felt threatened by ILWU members when they were entering a gate on the east side of the port that was designated for them and others going to United Grain Corporation. According to news reports, port authorities could not allow access to the main gate, fearing the protest by union workers could escalate there and possibly shut down the entire port. As harvest progresses and more grain moves to the PNW export market, this issue will need to be resolved concerning the grain inspectors' safe entry to the elevator in Vancouver.

With spring wheat harvest moving through North Dakota and Montana and corn harvest picking up in the south, prices on the primary and secondary rail markets have begun to move higher. With higher-than-expected spring wheat yields in the north and anticipation of a record corn crop, rail cars may become scarce in the next few months. According USDA: "Not since the July--September period of 2010 have bids in the primary market topped $200 per car as they have for September 2013 contracts. Similarly, not since the July-August period of 2011 have non-shuttle bids approached $300 per car as they have for October contracts." The average non-shuttle secondary rail bids/offers during the week ended August 29 were $171.00 over tariff, up $115.00 from the prior week and $152.50 higher than last year. The average shuttle bids/offers were $147.50 higher than the prior week at $191.50 over tariff and were $588.50 higher than last year. Remember that last year at this time a severe drought was impacting corn and soybean yields and the freight market suffered because of it.

Barge grain movements down river during the week ended August 31 totaled 134,294 tons, which was 45% lower than the previous week. A total of 89 grain barges moved down river which was 44% lower than the previous week, but barges unloading in New Orleans (NOLA) totaled 391, which was up 3.7% from the prior week. Barge movement through the Mississippi River Locks 27-Granite City during that same week was 50.5% lower than last year and 82% lower than the 3-year average. Barge traffic was stalled during that week due to low water on the Illinois River, with dredging operations closing the locks at mile marker 77 and 266.9 and mile marker 516 on the Upper Mississippi River. While all locks were reopened by August 29, traffic had to move slower through the narrow channels. While no other closings have yet to surface due to low water, levels continue to drop in St. Louis without any recent rain to replenish the river. As of late afternoon on September 5, the Mississippi River at St. Louis is at 0.15 feet over gauge zero. The U.S. Army Corps of Engineers explains the zero level as such: "A site-specific measurement of river-level referenced as the height in feet above a designated zero reference point, called the gauge zero, at the site. The zero reference point is sometimes, but not always, chosen as the elevation of the river bottom. Normally, stage values are always positive. Drought conditions could cause the river level to fall below gauge zero, and the stage reading at that time would be negative."