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Will Grain Shipping Be All Wet?

TAGS: Soybeans Corn
Will Grain Shipping Be All Wet?


Farmers are used to breaking records, but watching helplessly as a raging river tops new levels is one to forget. What can growers expect of flooding’s impact on marketing their crop later this year? What is the best and worst news of present floods on river shipping and transportation?

“The Army Corp of Engineers is pretty good at managing this beast,” says John Williams, president, Zen-Noh Grain Corp., Convent, LA. The grain-shipping facility typically loads 10-11 million tons of grain a year, about half of it headed for Japanese shareholders, he says.

“River traffic is moving today; parts of the Ohio are having larger issues at the moment.  Today we have barges in the Gulf moving product. If this had to happen, it’s good to be happening now as we enter the slower part of the shipping season,” Williams says. “Parts of the Ohio River are having larger issues.

“The Mississippi is expected to crest in the Gulf May 23 or 24 at what will be record levels: 36 ft. Even at those levels we do not expect operational problems. At 27 ft. (double normal), the river current will still be treacherous,” Williams says. Recent years’ flooding has raised the river to near 33 ft., he says, compared to a normal level of perhaps 12-15 ft. on average. 

Richard Brock, president of Brock Associates, is primarily concerned about the flood’s effect on the grain markets over the next three weeks. “Once the rains eventually stop, river operations will eventually return to normal. I’m not so much worried about the longer term, but I’m worried about the old-crop bottleneck and real tight basis levels,” Brock says.

“Once the rivers open up, this will benefit farmers farther south in Louisiana and Mississippi. The Louisiana ports must be a real mess. They were backed up anyway with so much fertilizer coming in, and we had a lot of coal going out. Coal was taking over the grain barges, so once the river opens up it will be a bottleneck with everyone trying to get on.”

Fortunately, “grain supplies on hand in New Orleans were adequate to continue exports when this surge hit,” says Chad Hart, Iowa State University ag economist and grain market specialist. For exports to Asia, “we do have several alternatives to the Mississippi. Increasingly you see more corn and soybeans moving by rail to the Pacific Northwest and to Asia.

“Grain is a big part of the Mississippi River traffic, but coal and energy are the primary users of rail and barge traffic. Coal represented 45% of rail traffic compared to grain at just 8% of rail traffic in 2010, and barge use is tilted even more in that direction,” Hart says. “If things are tight the biggest market moves first.”

Although moving grain through the Pacific Northwest continues to grow, the direction of world freight movement is through the Gulf, says University of Minnesota Extension Specialist in Transportation, Marketing and Logistics Jerry Fruin.

“And, like many issues these days, the U.S. budget could determine how successfully the river channel recovers from today’s floods. It’s way too early to draw a lot of conclusions because the shipping season is nine months long and the flood is just now happening,” he says. “But I am somewhat concerned whether the Army Corps has the budget to address silted-up channels. Yet, this is an emergency and we’ve all seen things change with FEMA funding before.”

At the Port of New Orleans, Spokesman Matt Gresham is not overly worried about the shipping season later this year. “Historically, we’ve had river stages like this in 2002, 2005, 2008 and 2009. We are expecting 17 ft. here (river level), which is not an unprecedented river level for new Orleans.”

That’s true, "But the water level right now pretty high at our dock," says Linda Prudhomme, director of business development for the Port of South Louisiana. That's the largest U.S. tonnage port, with seven grain elevators spanning 54 miles.

“This flood is not like any other; it’s truly historic,” says Chris Gardner, U.S. Army Corps of Engineer spokesperson. “A lot of records are being broken like we’ve never seen before.”

The Bonnet Carre Spillway in St. Charles Parish may be opened as early as Monday to divert river water into Lake Pontchartrain, announced Louisiana Gov. Bobby Jindal. That structure was last opened in 2008, but only 46% of its bays. The intent now is to open all 350 bays on the spillway for more than a month because of record river levels, says Chris Brantley, spillway project manager. The trigger for opening the diversion spillway is a river flow of 1.25 million cu. ft./sec. Right now the flow is 1 million cu. ft./sec. Flood stage on the river in New Orleans is 17 ft., he says.

No decision on opening the Morganza Spillway has been made; it's not been opened since 1973. Located near Baton Rouge, the spillway would divert water into the Atchafalaya Delta. 

As the Mississippi River reaches a record 61.72 feet high in Cairo, IL, residents along the 400 miles of river channel south of there, in Missouri, Kentucky, Arkansas, Tennessee, Mississippi and Louisiana, may be reaching for the panic button. The previous Cairo, IL, river height record was 59.5 ft. in 1937, says U.S. Coast Guard spokesperson Lionel Boyant. This is 54% higher than its 40-ft. flood benchmark, he adds.

“Still, the grain-shipping season could conceivably go normally, depending upon summer weather and whether we have many tropical storms,” Boyant says.

The importance of summer weather is echoed in University of Illinois Extension Marketing Specialist Darrel Good's outlook on the corn crop: “The first issue will be the wet spring's potential effect on production this year,” he says. “In most years perhaps we would not be too concerned production-wise; but our inventories are so tight already, and we have some late planting even in non-flooded areas. So the net effect right now is that particularly corn production will fall a little short of its potential because of lost acreage and reduced yields.

“We learned in 2009 that a really good summer can offset some planting problems. But the kind of summer we had in 2009 is awfully rare,” Good says.


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