Barge freight has been moving higher nearly every day this past week as new-crop corn and soybeans head to the Gulf for shipments booked in the new marketing year. Freight costs on the Illinois River were up 35% over tariff ($2.32 per ton) since the beginning of this week, Sept. 16, with freight costs up 20% ($1.06 per ton) in the middle Mississippi, up 50% ($2.66 per ton) in the Ohio corridor and up 100% ($3.14 per ton) in the Cairo to Memphis corridor. Buying has increased as new-crop grain heads downriver to fulfill contracts for export. For the week ended Sept. 12, inspections at the three major ports were up 60% from the previous week and 30% above the 4-week average, according to USDA's latest weekly Grain Transportation Report. Wheat inspections rose 46%, which was the highest increase since August of 2007 as shipments increased to Asia, Africa and Mexico along with continued wheat purchases from Brazil. With the start of a new marketing year for corn and soybeans, corn inspections increased 116% from the prior week with soybeans increasing 30%. Besides the corn heading south, there are still corn barges moving north and, for the second week, more corn barges headed upriver through Lock 27 than corn barges moving south through the same spot. According to USDA, 55,900 metric tons of new-crop corn from the South moved up river versus 29,600 mt of corn moving down river. During the period from August 4 to September 14, 252,100 mt of up-bound corn barges moved through Locks 27 near St. Louis which was 55% higher than one year ago for the same timeframe. With slow harvest progress in the Midwest, end users are beginning to run low on nearby grind supplies and need the southern corn to keep their plants running until harvest begins in their area.
While corn basis ended last week 46 cents lower than the prior week, cash price seems to have stabilized as the lower level has turned producers away from selling. In addition, many are too busy with fall harvest. However, moving corn on the river has become more costly with the rise in barge freight from the prior week. Also adding to the cost is low water levels in St. Louis and south which have caused most barge lines to drop to a maximum 9-foot draft in those areas. For each foot the draft is lowered, shippers have to load 200 tons less product on the barge, adding extra cost to moving grain. Even with higher costs, USDA reported that "grain vessel loading activity in the U.S. Gulf appears to be moving in an upward trend." Through the week ending September 12, 38 vessels had been loaded at the Gulf, with another 65 expected to be loaded in the next 10 days. The last time loadings at the Gulf were this high was during the last week of January, 2013 and the last time this many vessels were expected to be loaded was for the week of September 6, 2013. Much of these increases can be attributed to new-crop sales of corn and beans with the new-crop year beginning September 1. USDA reported that the 4-week average of vessels loaded during the week ending September 12 was 30 versus 26 vessels for the previous 12 weeks. The 4-week average of vessels expecting to be loaded during the next 10 days was 54, versus 42 vessels for the previous 12 weeks.
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