Moving Grains: Sediment Build-Up at Mouth of Mississippi
Winter Floods Impacting Mouth of Mississippi River
Unusual winter flooding has caused sediment build-up at the mouth of the Mississippi River and has reduced maximum draft allowances for vessels transiting the area of the Southwest Pass, the main navigation channel directly connecting the Mississippi River with the Gulf of Mexico. On January 30, the Associated Branch Pilots, the only trained vessel operators that can maneuver vessels through the Southwest Pass, recommended that vessels should not have a deep draft in fresh water in excess of 41 feet.
The U.S. Army Corps of Engineers is authorized to maintain a 45-foot draft, and has dredges on site that are in the process of deepening the channel. Generally, ocean-going grain vessels draft about 39 feet and so far can still transit the Southwest Pass under these conditions.
USDA Agricultural Projections to 2025
On Febrary 18, the USDA released its complete USDA Agricultural Projections to 2025 report (select tables were available earlier). These projections are a departmental consensus on a long-run representative scenario for the agricultural sector for the next 10 years, and cover agricultural commodities, agricultural trade, and aggregate indicators of the sector, such as farm income.
Among other observations pertaining to grain, USDA projects moderate growth in the demand for U.S. corn over the next decade with rising yields boosting production and supporting growth in usage. U.S. wheat exports are expected to increase from recent lows. Growth in both domestic use and export demand of soybeans is also antipated during the projection period.
If realized, the projections could impact the demand for grain transportation.
Total Grain Inspections Down but Corn Shipments Increase
For the week ending February 18, total inspections of grain (corn, wheat, soybeans) for export from all major export regions reached 2.8 million metric tons (mmt), down 6 percent from the past week, 6 percent above last year, and 13 percent above the 3-year average.
Corn inspections continued to increase, up 30 percent from the previous week as shipments to Latin America increased.
Soybean and wheat inspections, however, decreased 13 and 36 percent from the past week.
Pacific Northwest (PNW) grain inspections were down 6 percent from the previous week, and Mississippi Gulf grain inspections decreased 8 percent for the same period. Outstanding export sales (unshipped) were up for corn but down for wheat and soybeans.
Snapshots by Sector
During the week ending February 11, unshipped balances of wheat, corn, and soybeans totaled 22.7 mmt, down 24 percent from the same time last year. Net weekly wheat export sales of .254 mmt were down 3 percent from the previous week. Net corn export sales were 1.05 mmt, up notably from the previous week, and net soybean export sales were .473 mmt, down 29 percent from the past week.
U.S. Class I railroads originated 22,476 grain carloads for the week ending February 13, up 1 percent from the previous week, down 3 percent from last year, and up 10 percent from the 3-year average.
Average March shuttle secondary railcar bids/offers per car were $132 below tariff for the week ending February 18, up $19 from last week, and $119 higher than last year. Average non-shuttle secondary railcar bids/offers were $50 below tariff. There were no non-shuttle secondary railcar bids/offers last week or this week last year.
For the week ending February 20, barge grain movements totaled 374,150 tons, 50 percent lower than last week, and down 27 percent from the same period last year.
For the week ending February 20, 234 grain barges moved down river, down 49 percent from last week; 855 grain barges were unloaded in New Orleans, up 2 percent from the previous week.
For the week ending February 18, 41 ocean-going grain vessels were loaded in the Gulf, 2 percent less than the same period last year. Fifty-three vessels are expected to be loaded within the next 10 days, 7 percent less than the same period last year.
For the week ending February 18, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $22.50 per metric ton, down 1 percent from the previous week. The cost of shipping from the PNW to Japan was $13.00 per metric ton, 2 percent more than the previous week.
During the week ending February 22, U.S. average diesel fuel prices were unchanged from the previous week at $1.98 per gallon—down $0.92 from the same week last year.
The bulls were again winners in an exciting week for longs and producers. In last week’s report, I said the markets bias would be near unchanged to a bit lower.