This article has been reprinted from the May 30 USDA Grain Transportation Report.
During the first quarter of 2019, total transportation costs of shipping grain (corn, soybeans, and wheat) from the United States to Mexico via land and sea routes fell from the previous quarter (see table below).
The transportation costs of shipping corn, soybeans, and wheat via the water route declined 4 percent, compared to the previous quarter.
The costs of shipping corn, soybeans and wheat by land declined 1 percent, respectively, from the previous quarter.
The decrease in transportation costs of grain shipped through the water route was caused by a fall in truck and ocean freight rates during the quarter.
Similarly, truck rates fell for shipments through the land route, while the tariff rail rates remained relatively unchanged.
The reduction in truck rates was partly caused by lower diesel prices during the quarter, especially from January to mid-February when the prices fell (see Grain Transportation Report (GTR Figure 13).
Ocean freight rates for shipping bulk commodities, including grains fell during the quarter, compared to the previous quarter and a year earlier (see April 25, 2019 GTR).
Lower ocean freight rates were attributed to a slowdown in trade activity due to New Year holidays around the world, including the Chinese New Year celebration.
Coal trade also slowed because of high coal inventories at Chinese ports.
Also, there was a low supply of iron ore from Australia and Brazil due to bad weather in Australia and a collapsed dam in Brazil (see April 25, 2019 GTR).
Year-to-year transportation costs decreased for seaborne corn and soybeans, however, increased for wheat.
Transportation costs for all grains shipped through the land route also increased from year to year.
Corn and wheat farm values increased from quarter to quarter and year to year, pushing up the landed costs.
Farm values for Illinois soybeans decreased from quarter to quarter and year to year. Farm values for Nebraska soybeans increased from quarter to quarter but decreased from year to year.
However, the transportation share of the landed costs for corn and wheat declined, compared to the previous quarter, while soybean transportation share remained the same (see table).
The landed cost ranged from $188 to $369 per metric ton (mt) for the water route (see table and figure 1) and $235 to $401 per mt for the land route (see table and figure 2).
The transportation share of the landed cost ranged from 13 to 25 percent for the water route and 25 to 41 percent for the land route (see table).
According to USDA’s grain inspection data, less corn and soybeans, but more wheat, were inspected for export to Mexico during the first quarter of 2019, compared to the previous quarter.
However, more corn, soybeans, and wheat were inspected for exports to Mexico compared to the same period a year ago.
During the first quarter of 2019, 3.06 million metric tons (mmt) of corn, 1.12 mmt of soybeans, and .70 mmt of wheat were inspected for export to Mexico.
This compares to 2.78 mmt, .91 mmt and .63 mmt, respectively, during the first quarter of 2018.
In 2019, corn, soybeans and wheat inspected for export to Mexico were respectively 10, 24, and 11 percent more than 2018.
United States proximity to Mexico and lower transportation costs could continue to boost the competitiveness of U.S. grain exports to Mexico.