This has been reprinted from the Feb. 13 USDA Grain Transportation Report.
Fourth-quarter 2019 shipping costs for transporting wheat to Japan from Kansas and North Dakota through the Pacific Northwest (PNW) and U.S. Gulf were mostly unchanged from 2018 (tables 1 and 2).
From third to fourth quarter 2019 (quarter-to-quarter), wheat transportation costs from Kansas and North Dakota via PNW to Japan1 increased slightly but were unchanged for the route from Kansas and North Dakota via the U.S. Gulf to Japan.
From fourth quarter 2018 to fourth quarter 2019 (year-to-year), wheat shipping costs via the PNW and Gulf routes decreased slightly with lower truck and ocean freight rates.
Year-to-year wheat inspections increased 4 percent, but quarter-to-quarter inspections declined 8 percent (see January 9, 2020, GTR).
Fourth-quarter transportation costs for shipping wheat totaled $101/metric ton (mt) via the KS-PNW route and $95/mt via the ND-PNW route.
These were up 1 percent from the third quarter along with higher trucking rates (table 1).
Year-to-year transportation costs for shipping wheat decreased slightly via the KSPNW route but held steady via the ND-PNW route.
The cost to ship wheat through the Gulf routes was mostly unchanged from quarter to quarter and from year to year (table 2).
Across all four routes, fourthquarter wheat transportation costs as a percentage of the landed cost were 39-41 percent for the PNW routes and 42-44 percent for the Gulf routes (tables 1 and 2).
As ocean freight rates and farm values decreased, the total landed cost (TLC) for shipping wheat decreased for all routes, ranging from $243/mt to $272/mt (see figure).
Quarter-to-quarter landed costs for the KSPNW and -Gulf routes were down 2 percent each and, for the ND-PNW and -Gulf routes, were down 4 percent each.
Year-to-year landed costs for the KS-PNW and -Gulf routes were down 12 percent each, down 13 percent for the ND-PNW route, and down 12 percent for the ND-Gulf route.
These decreases paralleled lower trucking rates and lower farm values.
Lower iron ore and coal trade during the fourth quarter forced down demand for ocean vessels and pushed ocean freight rates lower (see January 16, 2020, GTR).
Quarter to quarter, ocean freight rates for the PNW routes decreased 6 percent from the third quarter and, year to year, decreased 2 percent (table 1).
Quarter to quarter, ocean freight rates for the Gulf routes decreased 4 percent, but year to year, remained unchanged. Both quarter to quarter and year to year, rail rates for the KSPNW route remained unchanged.
Quarter to quarter, rail rates for the ND-PNW route were unchanged, but year to year, they were up 1 percent from last year.
Quarter to quarter, rail rates for the KS-Gulf route remained unchanged, but year to year, rose 2 percent.
Quarter to quarter, rail rates for the ND-Gulf route were also unchanged, but year to year, rose 1 percent.
Strong fourth-quarter demand for wheat pushed each State’s grain trucking rate up 25 percent from the third quarter.
Year-to-year trucking rates, however, decreased 5 percent, partly reflecting lower diesel prices.
Wheat Market Outlook
Fourth-quarter inspections of wheat destined to Japan reached .730 million metric tons (mmt) in 2019, according to the USDA’s Federal Grain Inspection Service (FGIS).
Year to year, wheat exports to Japan increased 12 percent, and the share of wheat exports to Japan accounted for 13 percent of the total U.S. wheat exports in the fourth quarter.
For 2019, exports of U.S. wheat to Japan totaled 2.5 mmt, down 11 percent from 2018, and accounted for 9 percent of total U.S. wheat exports in 2019.
In 2019, total U.S. wheat inspected for export reached 28 mmt, up 27 percent from 2018, reflecting increasing demand from Asia, Latin America, and Africa, according to FGIS.
According to USDA’s February World Agricultural Supply and Demand Estimates report, wheat exports for the 2019/20 marketing year are projected to increase 3 percent from 2018/19.