U.S. Grain Transportation: Barge Rates Remain Well Above Average

Barge rates for export grain at principal inland origins averaged 33 to 60 percent higher than the 5-year average during October. In anticipation of a record corn and soybean harvest, barge rates began to increase in late August and reached an annual high in late September when barge rates increased from 76 to 123 percent of average.

However, rains slowed the harvest progress during much of October and resulted in some decreases for barge services.

The lower Illinois River barge rate on October 28 was 873 percent of tariff ($40.60 per ton), nearly $9 less per ton than the September 30 rate of 1,067 percent of tariff ($49.51 per ton). Barge rates for November delivery are averaging 35 to 52 percent above average.

Industry Requests that Fertilizer be Included on New Weekly Rail Service Metrics

On October 22, railroads submitted the first of the new weekly public reports in response to an October 8 order from the Surface Transportation Board (STB) aimed at improving industry-wide transparency, accountablility and improvements in rail service.

In addition to metrics on dwell time and cars on line, the new reports include information by specific commodity group on average train speed, number of trains held short of destination or interchange for more than 6 hours, and number of loaded and empty cars in service that have not moved in more than 120 hours. The reports currently include intermodal, grain, coal, automotive, crude oil and ethanol. On October 23, the Fertilizer Institute (TFI) sent a letter to STB requesting that fertilizer be added to this list, believing separate reporting for fertilizer shipments is critical to fertilizer placement in time for Spring planting.

TFI also believes STB’s emphasis on reporting grain car loadings may prioritize grain shipments over fertilizer shipments. TFI has requested the new reports include information on cars loaded and billed for both grain and fertilizer.

Strong Soybean Gulf Basis May Explain Soybean Inspections, Grain Barge Movements

During the week ending October 16, USDA reported another strong export sales week for soybeans (2.17 mmt) and corn (1.0 mmt).

During the past 2 weeks, corn basis at the Gulf have averaged 61 cents per bushel above the December futures contract, 11 cents lower than at the same time last year. Soybean basis, however, have averaged at $1.19 per bushel above the November futures, 19 cents higher than during the same period last year. The increasing export sales and the relatively stronger soybean basis at the Gulf could explain higher soybean barge movements.

Strong First Half of 2014 for Containerized Grain Exports

Containerized grain exports between January and June reached a new record at more than 299,000 twenty-foot equivalent units, 5 percent higher than the previous year and 29 percent higher than the 5-year average.

Despite the disruption to imports of some U.S. dried distillers grains (DDGS) into China, they remain the top containerized grain export, representing 58 percent of containerized exports for the first half of the year. China remains the top destination market, representing 70 percent of containerized DDGS exports for the first half of the year.

Snapshots by Sector

Rail U.S. railroads originated 21,838 carloads of grain during the week ending October 18, up 7 percent from last week, down 2 percent from last year, and 4 percent below the 3-year average. During the week ending October 23, average November non – shuttle secondary railcar bids/offers per car were $800 above tariff, down $1,350 from last week and $384 higher than last year. Average shuttle bids/offers per car were $1,892 above tariff, down $282 from last week and $792 higher than last year.

Barge During the week ending October 25 barge grain movements totaled 737,098 tons — 21 percent higher than the previous week but 12.7 percent lower than the same period last year. During the week ending October 25, 472 grain barges moved down river, up 24 percent from last week; 858 grain barges were unloaded in New Orleans, down 5.6 percent from the previous week.

Ocean During the week ending October 23, 41 ocean-going grain vessels were loaded in the Gulf, 7 percent less than the same period last year. Sixty vessels are expected to be loaded within the next 10 days, 5 percent less than the same period last year. During the week ending October 24, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $46 per mt, up 1 percent from the previous week. The cost of shipping from the PNW to Japan was $24.50 per mt, unchanged from the previous week.

Fuel During the week ending October 27, U.S. average diesel fuel prices decreased 2 cents from the previous week to $3.64 per gallon — down 24 cents from the same week last year.

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