This article has been reprinted from the May 17 USDA Grain Transportation Report.
During the first quarter of 2018, transportation costs for shipping wheat from Kansas and North Dakota to Japan were down from the previous quarter.
Shipping rates were mostly down from the fourth quarter of 2017, except for slight increases in rail rates from Kansas to the Pacific Northwest (PNW) and ocean freight rates through the Gulf.
Rail rates were mostly unchanged from quarter to quarter.
Year-to-year transportation costs for shipping wheat—from each state through the PNW and Gulf—increased primarily due to higher trucking and ocean rates (see tables 1 and 2).
Higher farm values in Kansas and North Dakota resulted in higher year-to-year landed costs for shipping wheat.
First quarter exports of wheat to Japan increased year to year, despite lower total exports of wheat to other destinations.
Quarter-to-quarter transportation costs for shipping wheat—through the PNW to Japan from Kansas—were unchanged, but North Dakota costs decreased 1 percent.
From quarter to quarter, transportation costs to ship through the Gulf were unchanged for Kansas and North Dakota.
Year-to-year transportation costs for shipping wheat to Japan, through the PNW, were up 13 percent from Kansas and 9 percent from North Dakota.
For the same period, transportation costs for shipping wheat through the Gulf increased 13 percent from Kansas and 10 percent from North Dakota (see tables 1 and 2).
Quarter-to-quarter ocean freight rates for shipping wheat to Japan decreased 1 percent in the PNW, but increased 2 percent in the Gulf for the same period (see tables 1, 2).
Quarter-to-quarter ocean rates in the Gulf continued to increase, boosted by increased demand for grain and other bulk products (see April 19, 2018 GTR).
Compared to last year, ocean rates for shipping wheat to Japan increased 28 percent through the PNW, and 22 percent through the Gulf.
Truck rates were down 4 percent from quarter to quarter, but year-to-year trucking rates increased 25 percent due to increased trucking activity.
Quarter-to-quarter rail tariff rates for shipping wheat through the PNW to Japan were up slightly from Kansas, but unchanged from North Dakota (see table 1).
Year-to-year rail rates for shipping wheat from the PNW were up 5 percent from Kansas, and unchanged for North Dakota.
Quarter-to-quarter rail rates for shipping wheat from each state to the Gulf were unchanged (see table 2).
Year-to-year rail rates to the Gulf were up 2 percent from Kansas, but remained unchanged from North Dakota.
First quarter total landed costs in 2018 for shipping wheat from Kansas to Japan were up from the previous quarter and the same period last year.
Higher farm values caused landed costs to increase quarter to quarter for shipping wheat from Kansas; higher transportation costs and farm values caused year-to-year landed costs to increase.
Total landed costs, for shipping from North Dakota, remained the same for each route from quarter to quarter.
However, costs increased 14 percent from year to year (tables 1 and 2).
Increasing trucking and ocean rates, pushed year-to-year landed costs higher for shipping wheat from North Dakota.
The total landed costs, for shipping wheat, ranged from $254 to $326 per metric ton (mt (tables 1 and 2), continuing above $300 per mt for North Dakota
routes (see figure).
First quarter transportation costs represented 39 and 31 percent of the total landed costs, through the PNW.
Landed costs from Kansas, via the PNW, were down from the previous quarter
and last year.
North Dakota landed costs, however, were unchanged from the previous quarter, but slightly below last year.
Transportation costs represented 39 and 36 percent of the total landed costs, for shipping wheat through the Gulf, below the previous quarter and last year for Kansas.
North Dakota transportation costs, as a percent of the landed costs for shipping wheat through the Gulf, were unchanged from the previous quarter but below last year.
According to the Grain Inspection, Packers and Stockyards Administration (GIPSA), first quarter 2018 inspections of wheat, for export to Japan, totaled 0.682 million metric tons (mmt); up 14 percent from last year, and 7 percent above the fourth quarter of 2017.
First quarter shipments of wheat to Japan increased, despite a drop in total wheat exports; Japanese imports of wheat increased partly due to increasing demand for food wheat.
First quarter wheat exports to Japan accounted for 13 percent of total U.S. wheat exports, which reached 5.3 mmt.
Total U.S. first quarter wheat exports decreased 17 percent from last year, due primarily to increasing export competition (see April 12, 2018 GTR).
According to USDA’s May WASDE forecast, 2017/18 U.S. wheat exports are projected to reach 24.8 mmt, down 14 percent from last year and down 2 percent from the April estimate.