Low Water Conditions Disrupting Barge Traffic
On September 17, low water conditions closed a section of the Illinois River near La Grange Lock and Dam. The U.S. Army Corps of Engineers is planning to begin dredging the Illinois River on September 21. No completion date has been scheduled.
As of September 21, there have been traffic delays at Ohio Locks and Dam 52 and 53 due to repair-related and low water conditions resulting in long waiting times for barges to transit the locks. Generally, low water conditions reduce the cargo capacity of barges causing increases in freight rates.
Grain Inspections Recede
For the week ending September 14, total inspections of grain (corn, wheat, and soybeans) for export from major U.S. export regions reached 2.13 million metric tons (mmt), down 10 percent from the previous week, down 21 percent from the same time last year, and 4 percent below the 3-year average. Corn inspections were unchanged from the previous week, but wheat and soybean inspections decreased 9 and 16 percent, respectively, from the previous week.
Grain inspections in the PNW were down 34 percent from the past week, and Mississippi Gulf inspections dropped 14 percent for the same period. Texas Gulf grain inspections rebounded notably, jumping 170 percent from the previous week, due mainly to increased wheat and corn inspections after improvement from the recent hurricane slowdown. Outstanding (unshipped) export sales were up from the previous week for soybeans, but down for wheat, and corn.
Dry Bulk Ocean Freight Rates Up
Ocean freight rates for shipping dry bulk commodities, including grains have been rising over the past 6 weeks. As of September 14, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $42.50 per metric ton, 15 percent increase over the past 6 weeks. The cost of shipping from the Pacific Northwest (PNW) to Japan was $23.50 per metric ton, 24 percent increase over the past 6 weeks.
The Gulf-to-Japan rate has increased 21 percent since the beginning of the year and the PNW-to-Japan rate has increased 32 percent since the beginning of the year. Both rates have almost doubled since February 2016. According to the September 14 edition of O’Neil Transportation and Export Report, rates have increased due to strong coal and iron ore imports by China, as the Chinese government plans to reduce domestic coal mining by as much as 25 percent.
However, it is yet to be seen if the higher ocean freight rates are sustainable, especially after the fall grain harvest season.
Grain News on AgFax
Snapshots by Sector
For the week ending September 7, unshipped balances of wheat, corn, and soybeans totaled 21.4 mmt, up 4 percent from the same time last year. Net weekly wheat export sales were .317 mmt, down 15 percent from the previous week. Net corn export sales were 1.05 mmt, up significantly from the previous week, and net soybean export sales were 1.61 mmt for the same period, also up notably.
U.S. Class I railroads originated 17,445 grain carloads for the week ending September 9, down 4 percent from the previous week, down 23 percent from last year, and down 9 percent from the 3-year average
Average September shuttle secondary railcar bids/offers per car were $263 above tariff for the week ending September 14, up $133 from last week. There were no September shuttle bids/offers this week last year and no non-shuttle bids/offers this week.
For the week ending September 16, barge grain movements totaled 557,832 tons, 42 percent lower than the previous week, and up 6 percent from the same period last year.
For the week ending September 16, 357 grain barges moved down river, down 42 percent from last week, 733 grain barges were unloaded in New Orleans, down 14 percent from the previous week.
For the week ending September 14, 36 ocean-going grain vessels were loaded in the Gulf, 22 percent less than the same period last year. Fifty-eight vessels are expected to be loaded within the next 10 days, 16 percent less than the same period last year.
For the week ending September 14, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $42.50 per metric ton, 6 percent higher than the previous week. The cost of shipping from the PNW to Japan was $23.50 per metric ton, 9 percent higher than the previous week.
During the week ending September 18, average diesel fuel prices decreased almost 2 cents from the previous week at $2.79 per gallon, 40 cents above the same week last year.