Soaring Cost of River Freight Hits Ag

U.S. farmers are running out of options for their recently harvested corn and soybeans as delays on the Mississippi River—the main conduit for crops to export markets—cause shipping backlogs. Meanwhile, grain storage fills up along the river’s banks.

Low river levels and back-ups at aging locks have slowed navigation on the Mississippi and driven the cost of hauling Midwestern crops to Gulf Coast export terminals to near-record highs.

As newly harvested supplies reach the market, elevators with barges on hand are prioritizing loading soybeans. They store corn if they have space, traders and barge brokers say.

In the Midwest, cash soybean premiums at large river terminals fell to the lowest point since at least 2011, while soy processors and inland elevators also dropped bids amid ample available supplies, grain merchants said.

“There are a lot of trickle down effects being felt throughout the whole industry,” said Terry Linn, analyst at Chicago brokerage Linn and Associates. “It starts with the low water on the rivers and the trouble getting bushels where they need to be in exporters’ hands.”

The grain handling woes come as farmers are beginning to harvest bumper corn and soybean crops amid weakening prices at harvest, with soybean stocks at a decade high and corn supplies at the biggest in 29 years.

“People are running out of space. Everybody’s been stuffing their bin space with corn and shipping beans. Now they can’t find enough barges when they need them to move the beans,” said a barge broker.

Shippers that have barges on hand are loading them with less grain to keep them from grounding in parched rivers, while barge lines are reducing the number of barges per tow to navigate the narrower shipping channel.

Barges in the Memphis, Tenn., to Cairo, Ill., market traded at an all-time high while spot barges on the lower Ohio river were booked at a level reached just once in September 2014.  

Source: St. Louis Post-Dispatch