Highwater Continues to Disrupt Barge Navigation
Consistent highwater levels on most of the inland waterways has caused disruptions throughout the system. For the week ending March 2, Ohio River Olmsted Locks and Dams (L&D) did not report any down-bound grain traffic.
While Olmsted has been operational during the highwater events, grain traffic expected to arrive at Olmsted has been stopped by the flood-induced closure at nearby Smithland L&D. Smithland was closed on February 20 due to highwater causing a backup of traffic. As of March 7, there were 65 tows of barges above Smithland waiting to transit the lock.
Elsewhere, there are navigation restrictions on the lower Mississippi River that include tow size restrictions and daylight only transit through Memphis, Vicksburg, and Baton Rouge. As of March 3, the year-to-date number of grain barges unloading at the Gulf were 6,282, which is 10 percent lower than the 3-year average.
Rail Service Challenges and Higher Demand from Shippers Boost Secondary Market
Prices in the secondary railcar market for shuttle freight have continued to increase, rising well above-average in recent weeks. Average bids/offers for delivery of (shuttle) railcars in March rose from about $300 per car, as of February 7, to $2,000 per car, as of February 28. A review of grain exports and rail service data suggest two factors could be at play: (1) recent higher demand for grain rail transportation, and (2) rail service delays due to weather problems.
Grain News on AgFax
Grain inspected for export in the Pacific Northwest and Texas Gulf, which are largely rail-supplied, was 143 million bushels in February, up 7 percent from the prior 3-year average. At the same time, multiple railroads have reported severe weather impacting their operations over the past month. BNSF Railway and Union Pacific Railroad issued customer notices on March 1 and March 6, respectively, noting harsh winter weather conditions affecting rail operations.
Average grain train speeds, across all 7 Class I railroads, were 3 percent lower in February compared to January. At the same time, average terminal dwell times were up 2 percent, while average grain origin dwell times were up 38 percent.
Total Grain Inspections Recede but Corn Up
For the week ending February 28, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 2.20 million metric tons (mmt). Inspections were down 25 percent from the previous week, down 10 percent from last year and 16 percent below the 3-year average. Grain inspections included much lower wheat and soybean inspections for the week.
Despite the decrease in total inspections of grain, corn inspections increased 14 percent due primarily to a rebound in shipments to Asia. Inspections of grain in the Pacific Northwest (PNW) dropped 31 percent from the previous week, while Mississippi Gulf grain inspections decreased 26 percent.
Snapshots by Sector
U.S. Class I railroads originated 21,695 grain carloads for the week ending February 23—up 2 percent from the previous week, 8 percent from last year, and 2 percent from the 3-year average.
Average March shuttle secondary railcar bids/offers (per car) were $2,061 above tariff for the week ending February 28—up $749 from last week, and $1,344 from last year. Average non-shuttle secondary railcar bids/offers were $275 above tariff, up $25 from last week. There were no non-shuttle bids/offers this week last year.
For the week ending March 2, barge grain movements totaled 239,000 tons—39 percent less than the previous week and down 38 percent from the same period last year.
For the week ending March 2, 161 grain barges moved down river, which is 83 barges less than the previous week. There were 513 grain barges unloaded in New Orleans, 19 percent lower than the previous week.
For the week ending February 28, 33 ocean-going grain vessels were loaded in the Gulf, 20 percent less than the same period last year. Sixty-seven vessels are expected to be loaded within the next 10 days, 26 percent more than the same period last year.
For the week ending February 28, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $39.50 per metric ton, 1 percent more than the previous week. The cost of shipping from the PNW to Japan was $22.75 per metric ton, 2 percent more than the previous week.
For the week ending March 4, the U.S. average diesel fuel price increased 2.8 cents from the previous week, to $3.076 per gallon. This is 8.4 cents above the same week last year.