This article has been reprinted from the March 21 USDA Grain Transportation Report.
Compared to the third quarter, the landed costs for shipping soybeans from the United States to Hamburg, Germany and Shanghai, China, fell during the fourth quarter of 2018.
However, changes in the landed costs of shipping soybeans from Brazil, to the same foreign markets, were mixed during the fourth quarter. Soybean landed costs from Minneapolis, MN and Davenport, IA to Hamburg, Germany both fell by 2 percent, due to reduced transportation costs and farm values.
The landed costs from the same U.S. origins to Shanghai, China both fell by 1 percent. This is mainly due to reduced farm values.
Similarly, the landed costs from Fargo, ND and Sioux Falls, SD to Shanghai, China fell about 0.5 and 2 percent, respectively.
Changes in Brazil’s landed costs were mixed during the fourth quarter, compared to the previous quarter.
The landed costs from North Mato Grosso (North MT) to Hamburg, Germany and Shanghai, China decreased, while the landed costs from South Goiás (South GO) to the same destinations increased.
Both the transportation costs and farm values from North MT decreased, while those from South GO increased.
Truck and tariff rail rates increased in the United States during the fourth quarter.
Ocean freight rates from the U.S. to China also increased.
However, there was a decrease in barge rates, from the previous quarter.
Truck rates increased during the quarter, partly due to increased demand for trucking services.
Ocean freight rates for shipping bulk grains increased during the quarter.
This increase was 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(GTR)).
The decline in soybean movement was not offset by the increase in the corn movement which led to a reduced demand for barge services during the quarter (see December 13, 2018 GTR).
As a result, barge rates declined.
Truck rates also fell in Brazil during the quarter, while ocean freight rates increased, compared to the previous quarter.
Generally, year-to-year transportation costs increased in the United States but declined in Brazil.
U.S. soybean farm values fell from year to year. Year-to-year changes in Brazil’s farm values were mixed.
Farm values declined in North MT and increased in South GO, compared to the previous year.
Soybean landed costs from the United States to Europe, ranged from $371 to $377 per metric ton (mt) (Table1), and $390 to $403 per mt to China (Table 2).
Brazil’s landed costs to Europe ranged from $392 to $398 to Europe (Table 1) and $397 to $403 to China (Table 2).
The U.S. transportation share of the landed costs ranged from 15 to 17 percent to Hamburg, Germany (Table 1) and 21 to 24 percent to Shanghai, China (Table 2).
Brazil’s transportation share of the landed costs ranged from 20 to 26 percent to Hamburg, Germany (Table 1) and 21 to 27 percent to Shanghai, China (Table 2).
According to the USDA’s grain inspection data, China imported 0.32 million metric tons (mmt) of U.S. soybeans during the fourth quarter of 2018, compared to 16.46 mmt during the same period in 2017.
Overall, China imported a total of 8.21 mmt of U.S. soybeans in 2018, compared to 30.61 mmt in 2017—a decrease of 22.4 mmt.
The significant drop in China’s soybean imports also effected U.S. soybean prices (see October 11, 2018 GTR and February 28, 2019, GTR).
Lower U.S. farm prices contributed to the decline in soybean landed costs, which may boost the competitiveness of soybeans and U.S. exports in the long term.