Ice seen backing up U.S. ag shipments
I wanted to share with you a note that I received across my desk, this morning. I think it's important and might have relevance to the grain markets.
Mike Steenhoek, Executive Director of the Soy Transportation Coalition, was kind enough to bring me up to speed on the icy situation that has built up on the U.S. export thoroughfares.
"A development we have been monitoring over the past 2-3 weeks has been the ice accumulations that have occurred on the Mississippi, Illinois, and Ohio Rivers and the resulting impact on barge transportation. The following may be of interest," Steenhoek stated in an email Friday.
- According to the U.S. Department of Agriculture, weekly grain tonnages along the inland waterway system have been significantly reduced. For the first two weeks of January, grain barge tonnages were 496 thousand tons – 63 percent lower than the same period last year.
- According to the U.S. Department of Agriculture, ice accumulation on the Illinois River has reduced the number of upbound empty barges to 10 for the week of January 13. During the same period last year, 180 upbound empty barges were shipped on the Illinois River.
- A number of barge companies have continued to suspend operations on the Illinois River and portions of the Ohio River until conditions improve.
- Ice accumulation can present a number of adverse impacts on navigation. The entire channel can be closed entirely. The channel width can be reduced and, therefore, the size of barge flotillas will need to be reduced. There are numerous reports of normal 15 barge flotillas being reduced to 6 to 9 barge flotillas. A 15 barge flotilla can transport up to 855,000 bushels of soybeans (57,000 bushels per barge). A 6 barge flotilla will only be able to transport 342,000 bushels of soybeans. A 9 barge flotilla will transport 513,000 bushels of soybeans. Ice accumulation can also impede the ability of lock gates from opening and closing.
- Whenever barge transportation becomes more encumbered, whether precipitated by weather or neglect, the results are disproportionately passed onto farmers. If there is a supply chain disruption and logjam along the river, soybean and grain shippers that utilize the inland waterway system are less able to move product via their back door. If a soybean and grain shipper cannot move product via their back door, they are less able to accept product via their front door. As a result, soybean and grain shippers will drop the price offered (i.e. basis will be widened/more negative) to farmers. Therefore, farmer profitability will be impacted not because they did anything wrong, but simply because the supply chain is not operating as expected.
- We are pleased that warmer weather is arriving in many portions of the Midwest. However, this ice accumulation can have more lingering effects than one would expect. I anticipate soybean and grain shippers to be contending with this for a number of weeks.
- Given that 80 percent of soybean exports depart from the U.S. between September and February, this is a critical period for our supply chain to be operating as normal. Any impediment, like the ice accumulations, have a negative impact.
- Locks along portions of the Upper Mississippi River (as a rule north of Quincy, Illinois) are typically closed between December and March due to cold weather and scheduled repairs. However, the Illinois River and Ohio Rivers are typically open 365 days a year as well as areas south of Quincy, Illinois, along the Mississippi. The recent ice accumulations are impacting areas of the inland waterway system that normally are operating at this time of the year.
What say you?
Re: Ice seen backing up U.S. ag shipments
This might explain some of the year over year reductions of exports. It's been a much harsher winter in much of the cornbelt.
The strikes of workers in South America don't seem to matter as far as eventual shipments from there. While inconvenient, This probably won't matter much here either.