Ocean Freight Rates Ticked Up in Past Two Weeks
Ocean freight rates for shipping bulk commodities, including grain, increased for two consecutive weeks. As of July 11, the rate for shipping grain from the U.S. Gulf to Japan was $46.50 per metric ton (mt), an 8 percent increase over the past 2 weeks, and 2 percent above the same period last year.
The rate from the PNW to Japan was $25.50 per mt, 7 and 3 percent over the last 2 weeks and the same period a year ago, respectively. According to the July 11 Transportation and Export Report, by O’Neil Commodity Consulting, the rate increase could be attributed to an uptick in iron ore demand and the increased cost of complying with the International Maritime Organization’s low-sulphur emission regulations scheduled for 2020.
Port of New Orleans Closes Briefly due to Hurricane Barry
On July 13, Hurricane Barry made landfall onto the Louisiana coast about 160 miles west of New Orleans. The storm dissipated to a tropical storm as it headed north through the state, while producing several hours of rain and severe weather. On July 14, after closing it for a short period, the U.S. Coast Guard reopened the Port of New Orleans to normal conditions.
Grain News on AgFax
The anticipated Mississippi River flooding did not occur, and vessels were able to get in and out of New Orleans. The storm did slow barge operations as only 299 grain barges were unloaded for export, for the week ending July 13. The number of grain barges being unloaded has been low for most of the summer as barge logistics have been hampered by system wide highwater disruptions.
During a previous major storm, conditions had a greater impact on grain barge movements. On September 1, 2008, Hurricane Gustav stuck Louisiana, resulting in only 42 grain barges being unloaded during that week.
Grain Inspections Down, but Soybeans Continue to Increase
For the week ending July 11, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 1.9 million metric tons (mmt). This amount is down 11 percent from the previous week, down 22 percent from last year, and 16 percent below the 3-year average. Although total inspections of grain decreased from week to week, soybean inspections rose 17 percent, as shipments to Asia and Latin America increased.
Inspections of wheat and corn were down 49 and 6 percent, respectively, from the previous week. Total grain inspections decreased 12 percent from the previous week in the Pacific Northwest (PNW) but were up 9 percent in the Mississippi Gulf.
Snapshots by Sector
For the week ending July 4, unshipped balances of wheat, corn, and soybeans totaled 20.3 mmt. This indicates a 12 percent decrease in outstanding sales, compared to the same time last year. Net corn export sales reached .505 mmt, up significantly from the previous week. Net soybean export sales totaled .132 mmt, down 84 percent from the past week. Net weekly wheat export sales reached .284 mmt, up 3 percent from the from the previous week.
U.S. Class I railroads originated 23,651 grain carloads, for the week ending July 6. This is a 13 percent increase from the previous week, 11 percent higher than last year, and 18 percent above the 3-year average.
Average July shuttle secondary railcar bids/offers (per car) were $75 above tariff for the week ending July 11. This is $33 more than last week and $356 less than last year. Average non-shuttle bids/offers were $38 above tariff. There were no non-shuttle bids/offers last week or this week last year.
For the week ending July 13, barge grain movements totaled 676,770 tons. This is a 13 percent decrease from the previous week and 42 percent lower than the same period last year.
For the week ending July 13, 428 grain barges moved down river. This is 61 fewer barges than the previous week. There were 299 grain barges unloaded in New Orleans, 31 percent less than the previous week.
For the week ending July 11, 24 ocean-going grain vessels were loaded in the Gulf. This is 14 percent less than the same period last year. Forty-five vessels are expected to be loaded within the next 10 days. This is 6 percent less than the same period last year.
As of July 11, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $46.50. This is 4 percent more than the previous week. The rate from the PNW to Japan was $25.50 per mt, 5 percent more than the previous week.
For the week ending July 15, the U.S. average diesel fuel price decreased 0.4 cents from the previous week, to $3.051 per gallon. This price is 18.8 cents less than the same week last year.