This article has been reprinted from the Dec. 7 USDA Grain Transportation Report.
During the third quarter of 2018, transportation costs for shipping wheat to Japan through the Pacific Northwest (PNW) and U.S. Gulf were mixed.
Although transportation costs to ship from Kansas increased slightly from quarter to quarter, the costs to ship from North Dakota were mixed (See Tables1 and 2).
Rail and ocean rates increased from the previous quarter.
Farm values in Kansas were up as well, but North Dakota farm values declined, helping to pull down total landed costs.
Transportation costs for shipping wheat from Kansas to Japan through the PNW increased 2 percent from quarter-to-quarter, but the costs to ship from North Dakota to Japan through the PNW remained unchanged (See Table 1).
The cost to ship from Kansas through the PNW to Japan increased 7 percent from last year.
North Dakota transportation costs increased 3 percent for the same period. Transportation costs for shipping wheat from Kansas and North Dakota to Japan through the U.S. Gulf increased 1 percent from the previous quarter (See Table 2).
Year-to-year transportation costs for shipping wheat through the U.S. Gulf from Kansas and North Dakota increased 5 and 4 percent, due to higher ocean and rail rates.
Third quarter wheat transportation costs represented 33 to 38 percent of the landed costs (farm value plus transportation costs), which is above the second quarter 2018 but mixed compared to the third quarter last year.
The total landed cost for shipping wheat to Japan ranged from $282 to $305 per metric ton (mt), below the previous quarter but above last year for each route (See Tables 1 and 2).
Quarter-to-quarter total landed costs increased from Kansas for each route due to increased overall transportation costs and higher farm values, but North Dakota landed costs for each route decreased due to falling farm values.
Year-to-year landed costs were also up for shipping wheat from Kansas, but down for North Dakota.
Quarter-to-quarter total landed costs increased 4 percent for shipping wheat through the PNW from Kansas but decreased 5 percent from North Dakota.
Year-to-year landed costs for shipping wheat through the PNW increased 19 percent from Kansas but decreased 8 percent from North Dakota.
Quarter-to-quarter landed costs to ship through the U.S. Gulf increased 4 percent for Kansas but dropped 5 percent for North Dakota.
Year-to-year landed costs for shipping wheat through the U.S. Gulf increased 18 percent for Kansas but decreased 7 percent for North Dakota (see table 2).
Third quarter farm values for wheat produced in Kansas represented 65 percent of the landed cost for shipping through the PNW and the Gulf, above the second quarter 2018 and the third quarter 2017 (See Tables and Figure).
Third quarter North Dakota wheat farm values accounted for 67 percent of landed cost through the PNW and 62 percent of the total landed cost through the Gulf, below the second quarter of 2018 and the third quarter of last year for each route (see tables).
Ocean rates for shipping wheat from the PNW and Gulf to Japan increased 2 and 4 percent from the second quarter.
Ocean rates in the PNW and Gulf increased 21 and 15 percent from year to year due to increasing demand for iron ore and coal (see Grain Transportation Report dated 10/25/18).
Quarter-to-quarter rail rates for shipping wheat from Kansas to the PNW increased over 4 percent. North Dakota rail rates increased over 1 percent.
Year-to-year rail rates to ship wheat from Kansas and North Dakota through the PNW increased 7 and 1 percent.
Quarter-to-quarter rail rates for shipping wheat from Kansas to the Gulf increased 2 percent, but North Dakota through the Gulf increased 1 percent.
Year-to-year rail rates for shipping wheat to the Gulf increased 3 percent from Kansas and 2 percent for North Dakota (see table 2).
The cost of moving wheat from each State by truck to a rail-served grain elevator dropped 13 percent from quarter to quarter and 19 percent from year to year, due to primarily to less demand for shipping grain by truck.
Third quarter total inspections of wheat destined for export to Japan reached .770 million metric tons (mmt), which is down 19 percent from the same time last year and represents 14 percent of total third quarter U.S. wheat exports, according to the Grain Inspection Packers and Stockyards Administration.
For the same period, total U.S. wheat exports reached 5.4 mmt, down 28 percent from last year.
For the 2018/19 marketing year, year-to-date cumulative (shipped) export sales of all wheat are down 20 percent from the past year (see GTR, Table 12).