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Moving Grain: Barge Tonnages 14% Above Average

Ernst Undesser
From USDA July 13, 2017

Moving Grain: Barge Tonnages 14% Above Average

Mississippi Gulf Grain Inspections Rebound

For the week ending July 6, total inspections of grain (corn, wheat, and soybeans) for export from major U.S. export regions reached 2 million metric tons (mmt), up 6 percent from the previous week, down 5 percent from the same time last year, but 13 percent above the 3-year average.

The week-to-week increase in total grain inspections was helped by a 41 percent increase in Mississippi Gulf grain inspections. Inspections of each of the major grains increased in the Mississippi Gulf, but Pacific Northwest inspections dropped 52 percent from the previous week.

Total soybean inspections jumped 69 percent from the previous week as shipments to Asia rebounded. Wheat inspections increased 3 percent from the previous week, but corn inspections decreased 10 percent. Outstanding export sales were down from the previous week for corn and wheat, but up slightly for soybeans.

First Half 2017 Barge Tonnages 14 Percent Above Average

For the first 6 months of 2017, grain barge tonnages on the locking system of the Mississippi, Ohio, and Arkansas Rivers were 17.6 million tons, 14 percent higher than the 3-year average. Corn was the principal grain moved, representing 63 percent of tonnages for the first half of 2017, soybeans were 30 percent, and wheat, sorghum, barley and oats were 7 percent.

Despite the increased demand for barge services, barge freight rates have been below average for most of the year, which may be due to barge supply. As of July 11, barge rates for export grain at major shipping origins are 5 to 26 percent below average, indicating that the barge supply has been more than adequate for the current demand and may be dampening rates.

According to barge operators, the size of the covered barge fleet has increased in recent years as more new barges have been built and a substantial number of open barges have been converted to covered. Barge operators have reported that future rates for barge services will likely remain below average for the second half of the year. For more on grain transportation demand for 2017, see this week’s feature article.

Cosco Announces Intent to Acquire OOCL

On July 9, Cosco Shipping Holdings and Shanghai International Port Group announced their intent to purchase Hong Kong based Orient Overseas International Ltd., the parent company of Orient Overseas Container Line (OOCL). This merger will be the latest in a series of mergers and acquisitions in the container ocean shipping industry over the past few years.

The deal awaits final approval from shareholders as well as regulatory authorities in both the United States and China. Should the deal go through, Cosco will be the third largest global ocean container carrier with more than 400 vessels and a capacity exceeding 2.9 million twenty-foot equivalent units.

Snapshots by Sector

Export Sales

For the week ending June 29, unshipped balances of wheat, corn, and soybeans totaled 20.7 mmt, down 18 percent from the same time last year. Net weekly wheat export sales were .375 mmt, down 31 percent from the previous week. Net corn export sales were .140 mmt, down 56 percent from the previous week, and net soybean export sales were .366 mmt, up 17 percent from the past week.

Rail

U.S. Class I railroads originated 23,472 grain carloads for the week ending July 1, up 7 percent from the previous week, up 1 percent from last year, and up 18 percent from the 3-year average.

Average July shuttle secondary railcar bids/offers per car were $252 below tariff for the week ending July 6, down $21 from last week, and $333 lower than last year. Average non-shuttle secondary railcar bids/offers per car were $0, $25 lower than last year. There were no non-shuttle bids/offers last week.

Barge

For the week ending July 8, barge grain movements totaled 795,989 tons, 16 percent lower than the last week, and down 25 percent from the same period last year.

For the week ending July 8, 514 grain barges moved down river, down 16 percent from last week, 610 grain barges were unloaded in New Orleans, down 10 percent from the previous week.

Ocean

For the week ending July 6, 36 ocean-going grain vessels were loaded in the Gulf, 13 percent more than the same period last year. Forty-eight vessels are expected to be loaded within the next 10 days, 19 percent less than the same period last year.

For the week ending July 6, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $37.00 per metric ton, 1 percent less than the previous week. The cost of shipping from the Pacific Northwest to Japan was $19.00 per metric ton, unchanged from the previous week.

Fuel

During the week ending July 10, average diesel fuel prices increased 1 cent from the previous week to $2.48 per gallon, 7 cents higher than the same week last year.

Full report.

Ernst Undesser
From USDA July 13, 2017