This article has been reprinted from the USDA's March 12 Grain Transportation Report.
Total transportation costs for shipping corn and soybeans from Minneapolis, MN, to Japan via the U.S. Gulf (the Gulf route) decreased from third quarter 2019 to fourth quarter 2019 (quarter to quarter) and from fourth quarter 2018 to fourth quarter 2019 (year to year).
Likewise, quarter-to-quarter and year-to-year transportation costs were down slightly for corn, but unchanged for soybeans when shipping from Minneapolis, MN, to Japan via the Pacific Northwest (the PNW route).
Although quarter-to-quarter trucking rates rose, quarter-to-quarter barge and ocean freight rates decreased.
Quarter-to-quarter ocean rates declined as demand for iron ore and coal decreased, resulting in lower demand for oceangoing vessels (see January 16, 2020 Grain Transportation Report (GTR)).
Although rail rates for moving corn to PNW did not change from quarter to quarter or year to year, rail rates for transporting soybeans to PNW increased for both periods.
Total landed costs for shipping corn through the U.S. Gulf and PNW routes were down quarter to quarter but up year to year.
On the other hand, landed costs for shipping soybeans through the PNW route were up quarter to quarter and year to year (tables 1 and 2).
Farm values for corn decreased quarter to quarter, but increased year to year.
However, soybean farm values were up quarter to quarter and year to year.
Total landed costs for both corn and soybeans have remained mostly steady since 2015 (see figure).
U.S. Gulf costs.
Quarter-to-quarter transportation costs for shipping corn and soybeans via the Gulf route decreased 6 percent from quarter to quarter (see table 1).
Also, quarter to quarter, barge rates dropped 15 percent, and U.S. Gulf ocean freight rates decreased 4 percent.
Trucking rates, however, increased 9 percent. With lower year-to-year trucking (-5 percent) and barge rates (-16 percent), year-to-year total transportation costs for shipping corn and soybeans via the Gulf route decreased 7 percent.
Fourth-quarter total landed costs for shipping via the Gulf route were $226 per metric ton (mt) for corn and $407 per mt for soybeans (see table 1).
Quarter to quarter, landed costs for shipping via the Gulf route decreased 5 percent for corn and increased 3 percent for soybeans.
The decrease for corn was primarily in response to lower farm values.
Year-to-year total landed costs for shipping via the Gulf route increased 2 percent for corn and 1 percent for soybeans.
Fourth-quarter transportation costs for shipping corn via the Gulf route represented 38 percent of the total landed cost, which was down both quarter to quarter and year to year.
Fourth-quarter transportation costs for shipping soybeans via the Gulf route accounted for 21 percent of the landed cost, which was also down both quarter to quarter and year to year.
Pacific Northwest costs.
Total transportation costs for shipping via the PNW route decreased 1 percent for corn, both quarter to quarter and year to year.
Soybean transportation costs were unchanged, both quarter to quarter and year to year (see table 2).
Quarter-to-quarter rail rates for shipping to PNW were unchanged for corn but up 2 percent for soybeans.
Quarter-to-quarter total landed costs for shipping corn via the PNW route decreased 3 percent primarily responding to lower ocean freight rates and farm values.
Quarter-to-quarter landed costs for shipping soybeans via the PNW route increased 4 percent, primarily responding to higher farm values and trucking rates.
Total fourth-quarter landed costs for the PNW route were $229 per mt for corn and $417 per mt for soybeans.
Year-to-year total landed costs for the PNW route increased 4 percent for corn and 2 percent for soybeans, both responding to higher farm values.
Total transportation costs for shipping corn via the PNW route represented 39 percent of the total landed cost for corn, which was up quarter to quarter but down year to year.
Total transportation costs for shipping soybeans via the PNW route represented 23 percent of the total landed costs, which was down both quarter to quarter and year to year.
Fourth quarter corn and soybean inspections and annual forecasts.
According to USDA’s Federal Grain Inspection Service, year-to-year fourth-quarter export inspections of corn dropped 52 percent (see January 9, 2020 GTR).
Year-to-year inspections of corn destined to Japan dropped 61 percent, to 1.22 mmt. Likewise, year-to-year inspections of corn to all of Asia and to South America declined.
Year-to-year soybean inspections destined to Japan decreased 18 percent, to .535 mmt.
According to USDA’s March World Agricultural Supply and Demand Estimates report, the forecast for 2019/20 corn exports is unchanged from February and down 16 percent from the 2018/19 marketing year.
The drop in the year-to-year forecast corn exports is mainly because of increasing export competition from Ukraine and South America.
The forecast for 2019/20 soybean exports is unchanged from February and up 4 percent from 2018/19.