The secondary rail freight market continues to rise to historical levels as rail logistics continue to be problematic for shippers and end users, especially in the Northern Plains. According to exporters on the PNW, shuttle runtimes have decreased, making only two turns each month; the norm is three turns. Cold weather and track maintenance have caused trains to travel with lower speed limits and the oil shipments out of North Dakota have caused traffic jams on the railroads. Spot spring wheat basis levels continue to rise as mills and exporters buy loaded cars ready to move as they wait for contracted to shipments to be loaded. Once cars are loaded, they still face time constraints waiting to move to destination. USDA's Grain Transportation report stated that for the week ended December 19, average January shuttle bids/offers were $1,700 per car above tariff, $925 higher than the prior week and $1,662 higher than the average one year ago at this time. The bid/offers for January non-shuttle secondary railcars were $650 per car above tariff, up $225 from one week ago and $637.50 higher than last year at this time. USDA said, "Rail service disruptions, coupled with the ongoing high demand for empty grain cars, led to record high prices for available grain cars in October and December in the secondary railcar market as rail capacity became strained."
More Recommended for You
Cooler weather and more rain returned to Brent and Lisa Judisch's area of east-central Iowa this...
Yields from the first day of the tour averaged 38.8 bushels per acre, down from 42.9 bpa last...
Barge Shipments Slow Due To Adverse River Conditions
USDA reported that due to cold weather causing icing in the Upper Mississippi River and Illinois River, and lack of precipitation causing low water levels, the volume of barge shipments has decreased on the Mississippi and Illinois rivers. Barge movements for the first three weeks of December averaged 745,000 tons a week, compared to the 881,000 ton average for the last 3 weeks of November. The water level at St. Louis was at -0.3 feet below zero gauge on December 27 and without much needed moisture in the next few weeks, levels are predicted to drop to as low as -4.0 feet by January 9. Traffic down river from St. Louis is being restricted by continued dredging because of the low water conditions and draft restrictions are in place, which means barges haul less grain for the same cost of a full barge. The rock removal at Thebes, Ill., is also slowing traffic as crews continue to work during the daylight hours on Phase 2 of the project that started last year during the drought. The Corps is making permanent improvements to the navigation channel there by removing additional rock formations not extracted during Phase 1. The Corps is working with the Coast Guard to help minimize interruptions to traffic while the work is done during the day and has placed no-wake restrictions on vessels and a 15 barge maximum on tows moving through that area.
In their year-end river transportation summary, USDA said, "While the year began with low-water conditions on the Mississippi River, water levels began to increase significantly in March and reached flood levels in certain areas by mid-year. Even with the extreme fluctuations in water levels, barge freight rates were generally below average for the first eight months of the year. However, with the active corn and soybean harvest and a return to low-water conditions, barge rates began to increase to above-average levels in September and peaked by mid-November. Since then, barge rates have decreased, but are still above average as barge operators must light-load barges in the reduced water levels."
It appears that rail and barge transportation will begin the New Year in turmoil. The record soybean, corn and wheat harvest in the U.S. and the record canola and wheat harvest in Canada will continue to put a strain on grain movement. While spring wheat basis in the U.S. has benefitted from the lack of car availability and slow movement, canola prices in Canada have suffered. ICE Canada canola futures have been driven to new contract lows due to the abundant canola crop and the inability of farmers and shippers to move it to market. Some believe the logistic issues in Canada may take until springtime to be resolved, leaving a larger-than-expected carryover of canola heading into spring planting.
© Copyright 2013 DTN/The Progressive Farmer. All rights reserved.