By the end of January, ocean freight rates for shipping bulk grains dropped to their lowest levels since the end of January 2009. During the week ending January 30, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $28 per mt, down 18 percent from the previous week and 50 percent less than a year ago. The cost of shipping from the PNW to Japan was $16 per mt, down 14 percent from the previous week, and 43 percent less than a year ago. The reduction in rates is fueled by excess vessel supply and insufficient demand.
Pacific Northwest Grain Inspections Rebound
For the week ending January 29, total grain inspections from the Pacific Northwest (PNW) rebounded, reaching 0.818 million metric tons (mmt), up 31 percent from the past week and 11 percent above last year. PNW soybean inspections, shipped mainly to China, jumped 79 percent from the previous week, and wheat inspections increased 15 percent. Mississippi Gulf grain inspections, however, were down 10 percent from the past week.
Total inspections of grain (corn, wheat, and soybeans) from all major export regions reached 2.74 million metric tons (mmt), down 2 percent from the past week, up 30 percent from last year and 16 percent above the 3- year average. Total wheat and soybean inspections increased 23 and 5 percent from the past week, but could not offset the 24-percent drop in corn inspections.
Falling Diesel Prices Lower Rail Fuel Surcharges
As fuel prices have continued to fall, monthly fuel surcharges on the Class I railroads have dropped to the lowest level since April 2010. Class I railroads peg changes in their monthly fuel surcharges to the Highway Diesel Fuel Index published by the Energy Information Administration.
Falling diesel prices have resulted in the weighted average monthly fuel surcharge for February 2015 dropping to $0.214 per mile per railcar, down 20 percent from last month’s surcharge of $0.266 per mile per railcar and down 34 percent from the three year average of $0.324 per mile per railcar. The weighted average fuel surcharge in April 2010 was $0.206 but was as high as $0.371 per mile per railcar in May 2012.
Snapshots by Sector
During the week ending January 22, unshipped balances of wheat, corn, and soybeans totaled 32.6 mmt, 7.5 percent lower than at the same time last year. Corn export sales reached 1.07 mmt, down 51 percent from the previous week, but unchanged from the prior 4- week average. Wheat reached 0.544 mmt, up 19 percent, and soybeans, at 0.888 mmt were up noticeably from the previous week.
U.S. railroads originated 23,447 carloads of grain during the week ending January 24, down 6 percent from last week, up 1 percent from last year, and 10 percent higher than the 3-year average.
During the week ending January 29, average February shuttle secondary railcar bids/offers per car were $213 below tariff, up $88 from last week and $1,359 lower than last year. There were no non-shuttle secondary railcar bids/offers.
During the week ending January 31, barge grain movements totaled 699,590 tons–25 percent higher than the previous week and 13 percent higher than the same period last year.
During the week ending January 31, 432 grain barges moved down river, up 28 percent from last week; 787 grain barges were unloaded in New Orleans, down 1.6 percent from the previous week.
During the week ending January 29, 41 ocean-going grain vessels were loaded in the Gulf, 11 percent more than the same period last year. Seventy-four vessels are expected to be loaded within the next 10 days, 24 percent less than the same period last year.
During the week ending January 30, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $28 per mt, down 18 percent from the previous week. The cost of shipping from the PNW to Japan was $16 per mt, down 14 percent from the previous week.
During the week ending February 2, U.S. average diesel fuel prices decreased 4 cents from the previous week to $2.83 per gallon. They were down $1.12 cents from the same week last year.