Barge Shipments Reach Yearly High
Barge shipments have set a new yearly high with 957,863 tons moving through the locks in week 47, the week ending on November 23. Together, week 46 (which had the third-largest volume of 2019) and week 47 had the most barge traffic in the locking system of any 2-week period in the year so far.
However, despite this rally, the rolling 4-week average remains below that of the previous year and the 3-year average, as harvest, navigation, and export market conditions have affected the demand for shipping.
STB Extends Revenue Adequacy Hearing to 2 Days
Last week, the Surface Transportation Board (STB) provided a schedule of appearances for an upcoming hearing on revenue adequacy and announced the hearing will encompass 2 days (as a result of a high number of prospective speakers).
The hearing will take place December 12-13, 2019 in Washington, DC. Participants are asked to address recommendations raised by STB’s Rate Reform Task Force, such as the definition of long-term revenue adequacy, the possibility of a “rate increase constraint,” bottleneck rate changes, and changes to the Simplified Stand-Alone Cost procedure.
Brazil Expands Market for Wheat Imports
In a November 14 press release, U.S. Trade Representative Robert Lighthizer and U.S. Secretary of Agriculture Sonny Perdue welcomed Brazil’s implementation of an annual duty-free tariff rate quota (TRQ) of 750,000 metric tons (mt) of wheat imports.
Historically, most imports have originated duty-free from the Mercosur (South American trading bloc) countries of Argentina, Paraguay, and Uruguay. However, according to the United Nations Comtrade database, U.S. wheat made up 46 percent and 48 percent of Brazil’s imports, respectively, in 2013 and 2014 when Brazil opened the TRQ to allay temporary shortages of wheat within Mercosur.
Brazil’s implementation of the TRQ for wheat could affect U.S. wheat transportation demand both by increasing export volumes and shifting volumes across ports. According to USDA’s Foreign Agricultural Service, the United States exported 9.5 mmt of wheat to Brazil between 2009 and 2018. Of the total wheat exported to Brazil from 2009 to 2018, 6.4 mmt (67 percent) of it occurred in 2013 and 2014.
The majority of the wheat exported to Brazil during those years originated in the western Gulf of Mexico ports of Houston-Galveston, TX and Port Arthur, TX. Those two Texas ports and the Port of New Orleans typically handle over 90 percent of wheat exports to Brazil and therefore may experience a temporary increase in transportation demand.
Soybean Inspections Drive Increase in Total Grain Inspections
For the week ending November 21, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 3.08 million metric tons (mmt). Total grain inspections were up 12 percent from the previous week, up 15 percent from last year, and down 6 percent from the 3-year average.
Grain inspections continued to increase primarily because of a 26-percent jump in inspections of soybeans. Inspections of soybeans were the highest since mid-November 2017, with over 70 percent destined to China. Corn and wheat inspections were down 7 percent and 9 percent, respectively, from the previous week.
Inspections of grain increased 20 percent in the Pacific Northwest (PNW) and 9 percent in the Mississippi Gulf.
Snapshots by Sector
For the week ending November 14, unshipped balances of wheat, corn, and soybeans totaled 23.3 mmt. This represents a 19-percent decrease in outstanding sales, compared to the same time last year. Net corn export sales reached .788 mmt, up 36 percent from the past week. Net soybean export sales were 1.52 mmt, up 22 percent from the previous week. Net weekly wheat export sales reached .438 mmt, up 83 percent from the from the previous week.
Grain News on AgFax
U.S. Class I railroads originated 22,331 grain carloads during the week ending November 16. This was a 2-percent increase from the previous week, 6 percent less than last year, and 6 percent lower than the 3-year average.
Average December shuttle secondary railcar bids/offers (per car) were $100 below tariff for the week ending November 21. This was $38 more than last week and $50 more than this week last year. There were no non-shuttle bids/offers this week.
For the week ending November 23, barge grain movements totaled 957,863 tons. This was an 8-percent increase from the previous week and 4 percent more than the same period last year.
For the week ending November 23, 622 grain barges moved down river—60 more barges than the previous week. There were 855 grain barges unloaded in New Orleans, 16 percent more than the previous week.
For the week ending November 21, 30 oceangoing grain vessels were loaded in the Gulf—19 percent less than the same period last year. Within the next 10 days (starting November 22), 44 vessels were expected to be loaded—19 percent fewer than the same period last year.
As of November 21, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $46.25. This was 1 percent less than the previous week. The rate from PNW to Japan was $24.75 per mt, unchanged from the previous week.