Milling & Baking News - October 20, 2009 - 20

Transportation and Distribution 

Late harvest could stress grain movement;
most shipping costs down from 2008

he late harvest of this year's
forecast record large soybean
crop and second largest ever
corn crop may congest rail and barge
traffic, and squeeze the time period
for barges to move grain south before
northern stretches of rivers freeze over
for the winter. The good news is the
cost of shipping grain and oilseeds in
most cases has held below year-ago
levels, mostly due to lower fuel prices.
In its Oct. 8 Grain Transportation
Report, the U.S. Department of Agriculture reported unshipped grain export balances as of Sept. 24 were 35.3
million tonnes, up 34% from a year
earlier, with the amount of unshipped
soybeans up 95% and of corn up 15%.
"The higher level of unshipped balances may be due to corn and soybean
harvests that are delayed by rainy
weather throughout the Midwest,"
the U.S.D.A. said. "Harvest pace is

20 / October 20, 2009 Milling & Baking News

expected to quicken over the next
month, however, compressing demand
for transportation services across all
modes into a shorter time period."
The aggregate soybean harvest as
of Oct. 11 in the 18 largest producing
states was 23% completed, 26 percentage points behind a year ago and 34
points behind the 2004-08 average for
the date, the U.S.D.A. said in its weekly Crop Progress report. On Oct. 9 the
department forecast 2009 U.S. soybean
production at a record 3,250 million
bus, up 10% from last year.
Corn in the 18 major growing states
as of Oct. 11 was 13% harvested, 7 percentage points behind last year's late
crop and 22 points behind the fiveyear average, the U.S.D.A. said. U.S.
corn production was forecast at 13,018
million bus this year, up 8% from 2008
and only slightly smaller than the record 2007 crop of 13,038 million bus.

Although U.S. wheat outturn was
down 11% from 2008, the harvest of
winter wheat was long past and of
spring wheat was finally over, the
crop still may impact fall grain movement. Because wheat prices have been
well below year-ago levels, producers
have been slow to sell their 2009 crop.
The slow sales allowed the railroads
to stay current during and after wheat
harvest, but the result has been limited
storage space for fall row crops, especially in the Southwest. Farmers now
are faced with piling some of their fall
grain on the ground, marketing it or
selling wheat to create storage space,
of which both latter options would
add to rail demand at an already
heavy time of year.
Currently there were few if any
major concerns about transportation expressed by grain traders. One
merchandiser said rail rates were up
"about what you would expect" from
a year ago but total shipping costs
were down because of lower fuel surcharges. He noted that in some cases
the railroads would "work with people" because "they've been hungry"
due to reduced tonnage the past several months. But he also suggested those
opportunities were likely to decrease
as rail car demand increases going into
fall harvest. He added that railroads
had preplaced cars in anticipation of
increased demand.
"We are definitely seeing a pickup
in our loading as we are beginning
to finally feel the harvest," Kevin
Kaufman, group vice-president of
agricultural products for Burlington
Northern Santa Fe Railway Co., said
in a webcast last week. Rates for October shuttle trains were trading as high
as $600 over tariff in the secondary
market, he said.
B.N.S.F. shuttle trains were averaging three turns a month, Mr. Kaufman
said, and the 90 shuttles currently running were moving as much grain as
111 shuttles moved last year.
"System-wide velocity has never
been higher," he said. The railroad
still had 3,000 cars in storage, was
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Milling & Baking News - October 20, 2009

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