This article has been reprinted from the Aug. 22 USDA Grain Transportation Report.
Transportation costs for shipping corn and soybeans from Minneapolis, Minnesota (MN) to Japan, through the Gulf and the Pacific Northwest (PNW), were mixed during the second quarter of 2019.
The overall costs of shipping corn and soybeans from the Gulf remained unchanged from quarter to quarter because increases in ocean and trucking rates were offset by decreases in barge and rail rates (see Table 1).
Higher trucking rates drove the increase in quarter-to-quarter transportation costs for shipping grain to Japan from the PNW.
Trucking rates for moving grain increased as demand for grain remained strong during the second quarter.
Ocean rates increased as well, from quarter to quarter, due to strong demand for coal and iron ore (July 25, 2019 Grain Transportation Report (GTR)).
Although year-to-year transportation costs for shipping corn from the PNW were unchanged, the costs for shipping soybeans decreased for the same period.
Total landed costs for shipping corn from Minnesota to Japan, through each export region, increased from quarter to quarter. However, total landed costs decreased for shipping soybeans to each of the export regions (see Tables 1,2).
U.S. Gulf Costs: Quarter-to-quarter transportation costs from Minneapolis, MN to Japan through the Gulf were unchanged for corn and soybeans (see table 1).
Lower transportation costs were caused primarily by lower barge rates from St. Louis to the U.S. Gulf.
Barge rates were pushed down by persistent flooding and lock closures earlier in the quarter, which reduced the demand for barge services (April 4, 2019 GTR).
Quarter-to-quarter trucking rates for moving grain from Minnesota to locally served grain elevators jumped 25 percent and ocean rates increased 5 percent.
During the second quarter, corn and soybean farm values accounted for 54 and 72 percent, respectively, of the landed costs for shipping grain through the Gulf (see Figure).
The share of landed costs was below the first quarter for corn, but above for soybeans (see Table 1).
During the second quarter of 2019, farm value increased from last year for corn shipped from MN through the Gulf to Japan. Farm value for soybeans decreased during that same period.
Transportation costs for shipping corn and soybeans accounted for 46 and 28 percent, respectively, of the landed costs in the Gulf. The costs were below the first quarter for corn, but above the first quarter for soybeans (Table 1).
The barge share of total landed costs was below the first quarter for corn and soybeans, but the ocean share was above the first quarter for corn and unchanged for soybeans.
Second quarter corn exports in the U.S. Gulf, down 43 percent from last year, reached 6.4 mmt and accounted for 53 percent of total corn exports.
Second quarter soybean exports shipped from the U.S. Gulf, up 3 percent from last year, totaled 4.3 mmt and accounted for 55 percent of total soybean exports. (July 18, 2019 GTR).
Pacific Northwest Costs: Total transportation costs for shipping corn and soybeans from Minneapolis, via the PNW to Japan, increased 3 percent from quarter to quarter (see Table 2).
Quarter-to-quarter rates increased for trucking and ocean shipping.
Due primarily to lower trucking rates, year-to-year transportation costs for shipping grain from the PNW to Japan were unchanged for corn, but down 2 percent for soybeans.
Year-to-year rail rates for shipping grain from the PNW increased 4 percent for corn and 2 percent for soybeans.
Due to higher transportation costs and farm values, quarter-to-quarter total landed costs for shipping corn from Minnesota through the PNW to Japan, increased 4 percent.
Total landed costs for soybeans, however, decreased 2 percent because of lower farm values.
Year-to-year landed costs for shipping corn to Japan increased 2 percent due to higher rail rates and farm values.
During the same period, landed costs for shipping soybeans decreased 11 percent due to lower transportation costs and farm values (see table 2).
First quarter transportation costs, for grain shipped through the PNW, accounted for 38 percent of the total landed costs for corn and 24 percent for soybeans.
The share of corn to total landed costs was below the previous quarter and last year, while the share for soybeans was above for each of these periods.
Farm value accounted for 62 percent of the total landed cost for corn shipped through the PNW, while soybeans accounted for 76 percent (see figure).
Corn exports from the PNW reached 3.5 mmt during the second quarter, down 50 percent from last year and due primarily to lower demand from Asia (July 18, 2019 GTR).
PNW corn exports accounted for 29 percent of total second quarter corn exports.
Second quarter soybean exports from the PNW reached 1.4 mmt, down only 5 percent from last year.
PNW soybean exports accounted for 18 percent of total soybean exports during the second quarter.