U.S. Grain Shipments Improve as Mississippi River Navigation Threat Dissipates
Date Posted: February 7, 2013
This article is reprinted from the USDA's Feb. 7 Grain Transportation Report.
U.S. grain and soybean shipments are showing signs of recovery as the Mississippi River water levels improve.
The pace of U.S. grain and soybean exports this year has been mixed. The significant drop in corn exports is juxtaposed with soybean export sales and shipments that are ahead of the 3-year average.
Soybean export shipments continued their strong pace even between the second half of December and early January, when low water levels on the Mississippi River had slowed grain barge movements. Currently, water levels have recovered and navigation conditions have improved significantly.
Analysis of shipment patterns and USDA’s January World Agricultural Supply and Demand Estimates (WASDE) points to the need for increased shipments of corn and wheat over the coming months in order to meet the projected export forecast.
The soybean export pace, however, may decrease, especially as South America’s bumper crop enters world trade this spring.
Changes in bids (basis) at the Gulf could be the key indicators for changes in export demand and therefore demand for grain transportation.
The Mississippi River levels continue to improve.
The St. Louis, MO, gage at 6:00 am on February 4 reached +3.0 gage feet, higher than –4.06 feet a week ago.
The gage at Thebes, IL, reached +14.08 gage feet, almost double from last week’s level of +7.7 feet.
Without additional rain, forecasts of river hydrographs by the U.S. Army Corps of Engineers indicate the gage level at Thebes will not likely drop below 3.0 feet through March 4, a level industry sources have frequently referenced as the threshold where the combination of underwater rock formations and low water levels could halt navigation.
However, the Thebes rock removal is 98 percent complete.
With the rock removal and higher river levels, the rock pinnacles are not expected to be the significant impediment to navigation they were several weeks ago.
In Cairo, IL, the gage reached +35 feet, and is expected to rise to +39.5 feet by February 10, nearing the flood stage of +40 feet.
During the period of extreme low water conditions, the export pace and barge movements decreased by 25 and 29 percent, respectively, from the weekly pace since the beginning of the corn and soybean harvest this fall.
Rail-to-port deliveries however, increased by 5 percent during the period.
The average weekly pace of exports during the period of extreme low water conditions dropped by 15 percent for soybeans, 49 percent for corn, and 29 percent for wheat relative to the weekly average pace this fall prior to the week ending December 13.
In the 2 weeks ending January 24, the pace increased for corn and wheat, but decreased slightly for soybeans.
Barge movements also decreased for soybeans and corn.
Wheat barge shipments are usually fairly low.
The average pace of grain rail-to-port deliveries was 5 percent higher than during the preceding weeks, and continued to be relatively strong in the subsequent 2 weeks.
The fast pace of soybean export sales and shipments is contrasted with a much slower pace of corn and wheat exports. The pace of corn and wheat export shipments will need to increase to reach the January USDA forecast.
For the week ending January 24, export sales and shipments continue to be mixed.
With 34 weeks left in the marketing year, soybean export sales and shipments continue to be above average: total comittments of 33.4 million metric tons are at 91 percent of the forecast and shipments of 25.8 mmt are at 70.5 percent of the forecast.
Corn export sales and shipments continue to lag: total comittments are at 13.5 mmt, 13 percent lower than the pace needed to meet USDA projections, and shipments are at 7.9 mmt, 18 percent lower than needed.
Wheat exports sales are on track to meet forecast export levels. The pace of shipments, however, is 20 percent lower than that needed to meet the projections.
Since December (as of January 16), the average basis for corn and soybeans has increased in the interior but decreased in the Gulf, indicating that domestic demand may be stronger than export demand at this time.
Soybean basis in Iowa increased by 6 cents per bushel but decreased by 2.5 cents per bushel at the Gulf.
Corn basis in Illinois increased by 13.7 cents per bushel but decreased by 1.6 cents per bushel at the Gulf.1
The increase in basis may also indicate that farmer selling has been slow and higher prices are needed to fulfill the domestic and export commitments.
For more information, call Surajudeen (Deen) Olowolayemo, USDA, at 202-694-3050.