Market Matters Blog

During the week ended November 28, 839 grain barges unloaded in New Orleans which was 7.5% lower than the previous week, according to USDA's Dec. 5 weekly Grain Transportation report. However, there were 43 ocean-going grain vessels loaded in the Gulf, up 5% from the same period last year. Within the next 10 days, 78 vessels are expected to load, which is 47% higher than the same time last year. During the week ending November 30, a total of 904,552 tons of grain moved on barges, the highest weekly volume for this year and 3.2% higher than the prior week. As the winter season approaches, volume will more than likely slow as the Twin Cities corridor has closed until spring and the Army Corps of Engineers has scheduled winter lock closures for repairs and river improvements on the Mississippi River.

Most repairs will be in the areas of the Mississippi River that accumulate ice, mainly in the northern portion of the upper Mississippi, with work beginning on December 18 at Lock and Dam 18 in Gladstone, Ill., and not ending until March 4, 2014. As weather permits, the Illinois River will remain open for the winter and the lower locks on the Mississippi River near St. Louis are also scheduled to remain open through the winter. The second phase of the rock removal near Thebes, Ill., is expected to begin in the middle of December. Thebes is located south of St. Louis and north of Cairo near Cape Girardeau, which is a busy area on the river and the rock removal could slow traffic there. Remember that Phase 1 of the rock removal started last December and was completed in February of 2014. Even though rock formations are currently not hazardous to barge navigation, the Corps will complete the project which is expected to last four to five months. The Corps has determined that continuing the project will be beneficial should the water levels drop to dangerous levels in the future and does not expect any major delays to barge traffic.

Barge freight dropped 10% to 40% in some corridors and remained unchanged in others. Values were higher at the beginning of the week due to lower drafts in St. Louis and strong demand for barges in the Ohio River corridor. Farther downriver near Cairo and south, drafts remained at normal levels due to higher water in those areas. The river level at St. Louis was at -0.3 feet as of December 5 with levels not expected to increase in the next week without significant moisture. While water levels typically decrease in December when the Corps decreases the flow of water from the Missouri River until February, the current level in St. Louis is below zero gauge, which can be costly to barge owners. Once the water drops near or below 5 feet, barges need to lighten their load, which increases the cost of moving grain.

For the week ended November 28, average non-shuttle railcar bids/offers for December in the secondary freight market were unchanged from the prior week at $175 above tariff. The average shuttle bids/offers were $662.50 above tariff, $127 higher than last week and $835.50 higher than last year at this time. Some elevators in North Dakota have reported that, while empty cars are showing up, they may sit on the track at the elevator siding for a week to 10 days after being loaded. Other sources have said in some areas of the U.S. and Canada delays of 15 to 25 days have been reported by shippers and end users. The logistics issues continue to drive the spring wheat basis higher as mills scramble for spot supplies while waiting for contracted grain to arrive. Strong basis levels have also been seen in corn and soybean rail bids to the PNW and Gulf. Further complicating rail movement in the Northern Plains is near blizzard conditions this week caused by recent snowfall of up to 11 inches in Grand Forks and Fargo, N.D., and 19 to 23 inches in Superior, Wis., and Duluth, Minn.

(CZ)

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