Milling & Baking News - October 16, 2012 - 22

Transportation and Distribution 

for trucks, the U.S.D.A. said. Year-to-date U.S. grain delivered to ports totaled 240,833 carloads through Sept. 26, down 14% from the same period last year, the U.S.D.A. said in its Oct. 4 Grain Transportation Report. Shipments to the Mississippi Gulf were down 66%, to the Texas Gulf were down 56% and to the Atlantic and East Gulf were down 29%, while shipments to the Paciﬁc Northwest were up 10% and cross-border shipments to Mexico were up 12%. Rail originations of U.S. grain totaled 745,235 carloads for the year-to-date through Sept. 22, down 9% from the same period in 2011, according to the Association of American Railroads. Cumulative U.S. grain export shipments for the respective marketing years to date were 11,241,000 tonnes as

carried about 11% less corn, due to low water levels in both cases, according to data from the Army Corps of Engineers cited by the U.S.D.A. As of Oct. 3, ﬁve river gage locations were at “action stage” at which point steps are taken to improve navigation, according to the Army Corps. Those locations were Vicksburg, Miss.; Greenville, Miss.; Memphis, Tenn.; St. Louis and Herman, Mo. Low water levels also restricted two-way barge trafﬁc in some locations, the U.S.D.A. said. Barge freight rates for St. Louis to New Orleans during the ﬁrst half of 2012 were below average, but gradually increased from July to mid-September “as a result of drought incurred barge costs and an early corn harvest,” the U.S.D.A. said. Rates at St. Louis moderated in the last half of

of Sept. 20, down 11% from a year earlier, the U.S.D.A. said. Marketing year-todate shipments of wheat were 8,631,000 tonnes, down 10%, of corn were 1,669,000 tonnes, down 19%, and of soybeans were 941,000 tonnes, up 4%. The marketing year began June 1 for wheat and Sept. 1 for corn and soybeans. Export grain shipments in 2011-12 totaled 101,254,000 tonnes, down 14% from 2010-11, with wheat at 26,627,000 tonnes, down 19%, corn at 37,900,000 tonnes, down 15%, and soybeans at 36,727,000 tonnes, down 8%. The summer’s drought did negatively impact barge activity and capacity. “Widespread drought has reduced water levels in the Mississippi river, the Ohio river and their tributaries,” the U.S.D.A. said. “The low water conditions reduce the cargo capacity of an individual barge.” During most of September barges loaded in the Upper Mississippi river contained 4% less corn than normal, while barges in the Lower Mississippi
22 / October 16, 2012 Milling & Baking News

September, the U.S.D.A. said, while rates north of St. Louis have been increasing as harvest activity intensiﬁed in the northern reaches of the river. Although barge grain unloads in New Orleans were above the four-year average the last three weeks of September, year-to-date unloads averaged 522 per week, 2% below the four-year average. The reduced barge grain unloads coupled with the reduced barge capacities “can be a limiting factor in sourcing grain by barge for export in New Orleans,” the U.S.D.A. said. But in the week ended Sept. 29, barge grain movements totaled 460,074 tons, up 147% from a week earlier and up 38% from the same week a year ago, the U.S.D.A. said. The increased barge trafﬁc likely reﬂected a backlog from Mississippi River Lock 27 closure part of the previous week, a 49% increase in total grain inspected for export during the week ended Sept. 27, the highest level since March 8, and the early corn and soybean harvests.

High grain prices may result in a temporary surge in immediate transportation demand as producers sell grain at harvest or shortly thereafter, indicated by higher grain railcar loadings and higher secondary grain rail car bids in late September, the U.S.D.A. said. However, such sales were expected to be short-lived as grain and oilseed prices fell from their summer highs, and because of adequate storage capacity in most areas. The greatest impact on shipping needs may be domestically as grain is moved from surplus areas to deﬁcit locations. Comments at the Sept. 13 Surface Transportation Board’s National Grain Car Council meeting in Irving, Texas, indicated some grain that usually would move west or south by rail for export was moving east and north into domestic markets. “Higher crop prices will help mitigate drought-induced shortages across the country by enabling surplus regions to proﬁtably ship longer distances and allocate crops among deﬁcit areas,” the U.S.D.A. said. Further, the U.S.D.A. said it expected the amount of grain transported by hired carriers to increase during 2012-13 because the “unusually large regions affected by the drought” that normally produce adequate crops for their own use or source from nearby regions may need to ship grain from more distant areas. “In typical years, producers in these regions haul directly to nearby domestic users,” the U.S.D.A. said. “This year, however, because the distances hauled will be longer, hired carries will probably haul a great proportion of crops to domestic users. Almost inevitably, new suppliers will be located further from the user than normal.” The most likely candidates for this will be the eastern Corn Belt/western Central states of Missouri, Illinois, Indiana, Ohio and Michigan where 2012 corn production was estimated in September at a combined 2,959 million bus, down more than 1,000 million bus, or 26%, from 2011. With corn production in Iowa also expected to be down about 20% from 2011, supply may have to be shipped from the Upper Midwest states of North Dakota and Minnesota where production increased from 2011. The longer domestic shipping requirements likely will favor rail transportation over trucks. “Because rail transportation is more cost-efﬁcient for long hauls, rail transportation will gain market share from
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Milling & Baking News - October 16, 2012

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