Moving Grains: Weather Points to Early River Navigation Season
Mild Weather on Upper Mississippi Favors Early Start of Navigation Season
Above average Midwest temperatures for February have caused less ice accumulations on northern portions of the Upper Mississippi River. The improved navigation conditions for early March has made more barges available for barge customers when sections of the frozen Upper Mississippi River becomes navigable.
For the week ending March 5, there were 505 empty barges (being positioned for down-bound movements) through Mississippi River Locks 27 (near St Louis, MO), the highest weekly number since mid-June 2015. While barge demand has been low, there has been an ample supply of barges on the Upper Mississippi River. As of early March, St. Louis to New Orleans grain barge rates have dropped to their lowest levels since May of 2007.
Total Grain Inspections Rebound
For the week ending March 3, total inspections of grain (corn, wheat, soybeans) for export from all major export regions reached 2.5 mmt, up 16 percent from the past week, 13 percent above last year, and 8 percent above the 3-year average. Total inspections of each of the three major grains increased from the previous week. Wheat and corn inspections jumped 18 and 29 percent while soybeans increased 7 percent, compared to the past week.
Shipments of grain overall increased primarily to Africa and Latin America. Mississippi Gulf grain inspections increased 35 percent from the previous week, but Pacific Northwest grain inspections were down 10 percent from the previous week as shipments to Asia slowed down. Outstanding export sales (unshipped) were up for corn but down for wheat and soybeans.
DOT Releases 30-Year Freight
Projections In projections released last week, the U.S. Department of Transportation (DOT) estimates that the freight tons moving on the nation’s transportation network will grow 40 percent in the next three decades while the value of the freight will almost double, increasing by 92 percent. Nearly 18.1 billion tons of goods (worth about $19.2 trillion) were moved on the nation’s transportation network in 2015, (about 49 million tons per day).
By 2045, total freight on all modes (air, vessel, pipeline, rail, and trucks) is projected to reach 25 billion tons (with a value of $37 trillion). Tonnage is forecast to increase 24 percent for rail, 38 percent for water, and 44 percent for truck. Tonnage for energy goods (which includes ethanol) is projected to increase 14 percent by 2045, while non-energy goods (including agricultural products) are projected to increase by 56 percent.
Snapshots by Sector
During the week ending February 25, unshipped balances of wheat, corn, and soybeans totaled 21.2 mmt, down 24 percent from the same time last year. Net weekly wheat export sales of .344 mmt were down 11 percent from the previous week. Net corn export sales were 1.10 mmt, up 18 percent from the previous week, and net soybean export sales were .370 mmt, up 43 percent from the past week.
U.S. Class I railroads originated 21,450 grain carloads for the week ending February 27, down 4 percent from the previous week, up 4 percent from last year, and up 8 percent from the 3-year average.
Average March shuttle secondary railcar bids/offers per car were $189 below tariff for the week ending March 3, down $26 from last week, and $64 lower than last year. Average non-shuttle secondary railcar bids/offers were $41 below tariff, up $9 from last week, and $41 higher than last year. There were no non-shuttle secondary railcar bids/offers this week last year.
For the week ending March 5, barge grain movements totaled 438,408 tons, 3 percent lower than last week, and down 15 percent from the same period last year.
For the week ending March 5, 267 grain barges moved down river, down 5 percent from last week; 795 grain barges were unloaded in New Orleans, up 8 percent from the previous week.
For the week ending March 3, 41 ocean-going grain vessels were loaded in the Gulf, 11 percent more than the same period last year. Fifty-two vessels are expected to be loaded within the next 10 days, 16 percent less than the same period last year.
For the week ending March 3, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $22.70 per metric ton, 1 percent more than the previous week. The cost of shipping from the PNW to Japan was $13.25 per metric ton, 2 perecent more than the previous week.
During the week ending March 7, U.S. average diesel fuel prices increased three cents from the previous week at $2.02 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.