This article has been reprinted from the March 14 USDA Grain Transportation Report.
The landed costs of shipping soybeans and wheat to Mexico decreased during the fourth quarter of 2018, compared to the previous quarter (see table below).
The decrease in landed costs was caused by a decline in farm values for both soybeans and wheat.
On the other hand, corn landed costs were pushed up by an increase in farm values.
Changes in the total transportation costs were mixed during the quarter.
Total transportation costs for waterborne corn and soybeans decreased in the fourth quarter, compared to the previous quarter, while the cost of shipping wheat increased.
Despite the decrease in total transportation costs of shipping waterborne corn to Mexico, the increase in the farm value was large enough to push up the landed costs.
Total transportation costs of shipping all the grains through the land route to Mexico increased during the fourth quarter.
However, the decline in the farm values for soybeans and wheat more than offset the increase in total transportation costs, pushing down the landed costs for both commodities.
Ocean freight rates for shipping bulk grains increased during the quarter due to strong global dry bulk trades for commodities such as iron ore, coal and other minor bulks (see February 14, 2019 Grain Transportation Report).
Truck rates also increased during the quarter, partly due to increased demand for trucking services.
Tariff rail rates increased during the quarter as well. However, barge rates declined during the quarter as the decline in soybean movement was not offset by the increase in the corn movement.
As a result, the demand for barge services was reduced.
Year-to-year farm values increased for both corn and wheat across all routes, while there was a decline in value for soybeans.
Changes in the year-to-year landed costs followed the same pattern as the farm values for all the commodities.
The landed costs ranged from $187 to $372 per metric ton (mt) (see table and figure 1) for the water route, and $232 to $400 per mt for the land route (see table and figure 2).
The transportation share of the landed costs ranged from 13 to 27 percent for the water route, and 25 to 42 percent for the land route (see table).
According to USDA’s grain inspection data, more corn, soybeans and wheat were inspected for export to Mexico during the fourth quarter of 2018, as compared to 2017.
In 2018, 3.60 million metric tons (mmt) of corn, 1.18 mmt of soybeans, and 0.65 mmt of wheat were inspected for export to Mexico.
This compares to 2.75 mmt, 0.91 mmt and 0.48 mmt, respectively, in 2017.
Total corn and soybean exports to Mexico were also greater than in the calendar year 2017.
Corn exports were 14.24 mmt in 2018, compared to 13.63 mmt in 2017.
Soybean exports were 4.46 in 2018 and 3.62 mmt last year. In comparison, less wheat was inspected for export to Mexico.
Wheat exports totaled 2.59 mmt in 2018, compared to 3.32 mmt during the previous year.
In addition to proximity, lower farm values and transportation costs enhanced the competitiveness of U.S. grain exports to Mexico.