Milling & Baking News - May 15, 2012 - 21

trucks, but are equally high since most are mileage-based using the E.I.A. average on-highway diesel fuel price with a two-month lag. Some railroads have multiple fuel surcharge programs, including per cent of revenue and crude oil based formulas. Based on information available from the web sites of two major U.S. rail shippers, Burlington Northern Santa Fe (BNSF Railway Co.) and Union Paciﬁc Corp., the mileage-based fuel surcharge for shipping grain in May and in June will be 41c per car per mile for both companies. For U.P. that’s the highest rate since 45c a mile in October 2008, and just above last year’s high of 40c a mile in June 2011 for both companies. Crude oil prices seen ﬂat through 2013 Also in its April short-term energy outlook, the E.I.A. forecast West Texas intermediate crude oil to average about $106 a barrel in 2012, up $11, or 11%, from about $95 in 2011. Last year crude oil prices peaked in the second quarter, dropped sharply in the third quarter and rose in the fourth. The E.I.A. expects W.T.I. crude oil prices to hold about steady from the second quarter through the end of the year. In its May outlook, the E.I.A. lowered its 2012 average W.T.I. crude oil price forecast to about $104 a barrel, still up about $9 from 2011. “E.I.A. expects that global oil markets will continue to remain tight in 2012, although markets have eased somewhat since mid-March,” the agency said. “E.I.A. expects crude oil prices to remain relatively ﬂat in 2013.” The E.I.A. adjusts its projections monthly if necessary. Nearby New York crude oil futures prices, meanwhile, tumbled about $11, or 10%, the past two weeks to about $95 a barrel by last Tuesday, the lowest level since December 2011, mainly on concerns about fuel demand because of recent political events in Europe. How much of an impact the domestic and global economies put on petroleum prices remain to be seen, but the E.I.A. forecast U.S. 2012 summer gasoline demand (April through September) would decline 0.5% to the lowest level in 11 years, due in part to gasoline prices that are about 25c a gallon above year-ago levels, peaking at $4.01 a gallon in May. In its May outlook, though, the E.I.A. reduced its summer driving season gasoline price forecast by 16c a gallon from its April projection. Tonnage gains in 2011, mixed in 2012 Tonnage moved by trucks, as
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tracked by the American Trucking Associations’ For-Hire Truck Tonnage Index, ended 2011 at a seasonally-adjusted record high of 124.4% of the year 2000 base of 100, up 5.8% from 2010, which grew at the same rate from 2009, the A.T.A. said. But the truck tonnage index has wavered since the strong showing in 2011. The seasonally-adjusted index declined 4% in January, rose 0.5% in February and inched up 0.2% in March to 119.5, the A.T.A. said. “March tonnage, and the ﬁrst quarter overall, was reﬂective of an economy that is growing, but growing moderately,” said Bob Costello, A.T.A. chief economist. “The pace of freight deﬁnitely slowed from the torrid pace of 2011.” Mr. Costello said he expects truck tonnage to grow at a moderate 3% for the year, “which is more in line with normal growth.” On the rail side, the Association of American Railroads also has documented mixed results so far this year. For the ﬁrst 17 weeks of 2012, U.S. rail

‘Despite the drop in total corn inspections, shipments to China were up over 1,000% during the ﬁrst quarter. Also, (2011-12 marketing) year-to-date corn export sales to China were up over 1,200%.’
— The U.S. Department of Agriculture
carloads of all products were a cumulative 4,792,195, down 3.2% from the same period in 2011, while trailers and containers totaled 3,875,396, up 2.8%, the A.A.R. said. Shipments of coal, by far the largest bulk commodity moved by rail, at 1,983,598 carloads for the year-to-date ended April 28, were down 11.3% from the same period last year. Grain originations in the ﬁrst 17 weeks totaled 352,373 carloads, down 12.1% from a year earlier. “There is no denying that coal is a crucial commodity for railroads, and there’s also no denying that recent declines in coal traffic are presenting significant challenges to railroads right now,” John T. Gray, A.A.R. senior vice-president, said in March, when coal carloads dropped nearly 16% from March 2011.

Rail carloads originated in April totaled 1,113,105, down 5.5% from April 2011, the A.A.R. said, while intermodal volume was 946,951 trailers and containers, up 3.6% from a year ago. Grain carloads tumbled 18% in April while coal carloads fell 16.2% from April 2011. At the same time, freight rates for shipping grain by rail have been mixed but mostly higher. For the week ended April 26, the average non-shuttle secondary railcar bids/offers per car for May were $5 below tariff and $14 lower than a year ago, the U.S.D.A. said in its May 3 Grain Transportation report. But average shuttle bids/offers were $329 below tariff, up $133.50 from a year ago. Unit train rates effective May 1 were mostly 4% above year-ago rates for wheat while shuttle train rates were up 3% to 5%, according to the May 3 U.S.D.A. Grain Transportation report. Rates for corn were up 5% to 19% for unit trains and 4% to 7% for shuttle trains. And rail rates for shipping soybeans were mostly up about 20% for unit trains and 5% to 6% for shuttle trains. Across all three grains and depending on route, rail tariff rates per car ranged from a low of $1,934 to a high of $5,854, and fuel surcharges ranged from a low of $87 per car to $779 as of May 1, the U.S.D.A. said. Shipments to Mexico increase One area that has shown an increase in trafﬁc is surface trade (truck, rail and pipeline) between the United States, Canada and Mexico. In 2011, surface trade increased 14% from 2010, according to the Bureau of Transportation Statistics, with February 2012 trade up 17% from a year earlier. U.S. 2011 agricultural exports to Mexico rose 25% in value from 2010, due to a combination of drought, a freeze and increased tourism in Mexico, according to the U.S.D.A. “As the drought continues in 2012, Mexico is expected to become the second largest U.S. agricultural export destination due to an increase in U.S. shipments of corn, wheat, dairy and poultry,” the U.S.D.A. said. In 2011 Mexico ranked third behind China and Canada. Shipments of U.S. railcars of grain to Mexico totaled 48,782 in 2011, up 14% from 2010, the U.S.D.A. said. Tariff rail rates to Mexico increased 11% to an average of $6,291 per car, with fuel surcharges up 3% at $646 per car. U.S. corn and soybeans are mostly shipped by rail to Mexico. Ocean freight rates for bulk grain shipped to Mexico averaged $19.68 to $22.02 per tonne in 2011, down 7% and
Milling & Baking News May 15, 2012 / 21

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Milling & Baking News - May 15, 2012

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