This article has been reprinted from the June 13 USDA Grain Transportation Report.
The landed costs of U.S. soybeans from Minneapolis, MN, and Davenport, IA, to Hamburg, Germany (table 1) and Shanghai, China (table 2), increased during the first quarter of 2019, compared to the previous quarter.
However, the landed costs of soybeans shipped from Fargo, ND and Sioux Falls, SD, to China, decreased from the previous quarter (table 2).
The landed costs of soybean shipments from North Mato Grosso (North MT) and South Goiás (South GO), Brazil to both foreign destinations decreased from the previous quarter (tables 1 and 2).
Despite the reduction in the truck and ocean freight rates and farm values, the landed costs of shipments from Minneapolis and Davenport were pushed up by the substitution of rail transportation from barge due to closure of the Upper Mississippi River, during the quarter.
Usually, the northern-most segments of the Upper Mississippi River are closed for navigation during the winter due to ice accumulations.
Therefore, shipments from areas above the closed portion of the river must be railed to locations like St. Louis, MO and then transferred to barges to be transported to New Orleans for shipping overseas.
Total transportation costs for soybeans from Minneapolis and Davenport to Hamburg, Germany increased 40 and 30 percent, respectively, compared to the previous quarter.
Total transportation costs from the same shipping origins to Shanghai, China increased by 24 and 16 percent, respectively, compared to the previous quarter.
On the other hand, total transportation costs for soybeans from Fargo, ND, and Sioux Falls, SD, to Shanghai, China decreased 7 percent.
Although changes in Brazil’s total transportation costs were generally mixed, lower farm values pushed down the landed costs from Brazil shipping origins to both Hamburg, Germany and Shanghai, China
The landed costs from the United States to Hamburg, Germany ranged from $386 to $401 per metric ton (mt) (table 1) and $378 to $424 per mt to Shanghai, China (table 2).
The landed costs from Brazil to Hamburg, Germany ranged from $364 to $380 per mt (table 1) and $374 to $390 per mt to Shanghai, China (table 2).
The U.S. transportation share of the landed costs to Hamburg, Germany ranged from 19 to 23 percent (table 1) and 23 to 27 percent to Shanghai, China (table 2).
Brazil’s transportation share of the landed costs to Hamburg, Germany ranged from 19 to 28 percent (table 1), and 21 to 29 percent to Shanghai, China (table 2).
In general, year-to-year transportation and landed costs decreased in both the United States and Brazil.
According to USDA’s grain inspection data, China imported 4.61 million metric tons (mmt) of U.S. soybeans during the first quarter of 2019, compared to 0.32 mmt in the previous quarter, and 6.16 mmt during the same period in 2018.
Although first quarter 2019 imports are about 15 times more than the fourth quarter 2018, they total 25 percent less than the first quarter 2018.
The lower Chinese imports, during the fourth quarter 2018, were a result of the trade dispute between the United States and China.
Hopefully, soybean exports to China will pick up as trade negotiations improve.
In addition, lower U.S. soybean farm prices could boost the competitiveness of U.S exports to China.
surajudeen.olowolayemo@usda.gov