Grainnet

This Week's Grain Industry News Summary -- Record Wheat Prices; Small Rail Rate Appeals; Ohio Soy Processing Plant; CP to Acquire DM&E

by Ed Zdrojewski, Grain Journal editor

Wheat Futures Continue to Set Record

Soft red winter (SRW) wheat futures on the Chicago Board of Trade continued to set records, with the nearby contract at one point topping $8.10 per bushel on Sept. 4.

Prices later in the week fell as the result of a market correction.

Hard red winter (HRW) wheat prices also set a record on the Kansas City Board of Trade on Aug. 31, with the December 2007 contract trading above $7.50 for the first time in history, before settling at $7.44 per bushel.

Wheat prices usually have little impact on consumer prices at the supermarket, since the cost of wheat makes up only a small fraction of the cost of manufacturing such goods as bread and pastries.

However, some analysts on Sept. 4 commented that this year's runup of wheat prices was so extreme that it will have an impact, particularly on bagged flour for consumers.

STB to Allow Choice on Small Rail Rate Appeals

The federal Surface Transportation Board (STB) on Sept. 5 announced new simplified procedures for small rail rate appeals.

The board will allow captive shippers a choice between two procedures -- a Simplified Stand Alone Cost procedure for a $10,600 filing fee, with a decision rendered in 17 months, or a modified Three Benchmark approach for a $150 filing fee, decision in eight months.

Rate relief over a five-year period is limited to $5 million for the Simplified Stand Alone Cost procedure and to $1 million for the Three-Benchmark approach.

Bunge Opens High-Tech Addition at Ohio Soy Plant

Bunge North America on Sept. 5 unveiled a $5 million addition to its soybean processing plant in Delphos, OH featuring a new truck bay with scales and automated dumping and a new bridge and grading station.

The new computer-operated system will allow for faster soybean unloading, shorter truck lines, and improved dust control.

Bunge purchased the Delphos plant in 2003, which handles an average of 75 trucks per day.

Canadian Pacific to Acquire DM&E Railroad

A longstanding effort by the Dakota, Minnesota & Eastern Railroad (DM&E) to upgrade its main rail line and access Wyoming coal fields has ended with a $2.48 billion agreement with Canadian Pacific Railway (CP Rail) to acquire the regional railroad.

CP Rail announced the agreement Sept. 4, which will expand the Canadian and U.S. railroad's trackage by 2,500 miles and increase its access to grain produced in the Upper Midwest.

The deal includes a $4.18 billion cash payment upon the closing of the deal, $350 million contingency payment if an expansion into the Powder River Basin begins before Dec. 31, 2025, and a $700 million contingency payment for meeting specified volumes of coal movement from the Basin by the same date.