Market Matters Blog
Mary Kennedy DTN Basis Analyst

Friday 11/02/12

Weekly Barge Transportation

In the weekly Grain Transportation Report, USDA stated that barge rates during the third quarter increased 189% of tariff from the second quarter. This increase was due to the slow navigation caused by a major lock closure which stranded barges for almost a week and lower water which caused barges to run aground. Barge availability was scarce due to the navigation problems and the cost of freight reflected that. While rates actually dropped 7% last week compared to the prior week, rates were higher than normal for the first month of the fourth quarter, as water levels in the Mississippi did not improve due to the lack of significant rainfall in October.

(Map courtesy USDA)

The drop in rates last week was positive for the soybean and corn basis for the week ending October 26. The DTN national average soybean basis was 2 cents higher than the previous week and the DTN national average corn basis was almost 2.5 cents higher than the previous week. As of the end of the week on October 27, grain barge movement was 32% less than it had been the prior week. While movement down river was 31% lower from last week, barge unloads in New Orleans were actually up almost 4% from the prior week. Soybeans were responsible for most of the barge traffic while corn loadings have decreased this year due to weak export demand at the Gulf.

While the low water on almost the entire river system is still an issue, USDA reported that the Missouri River has become a concern due to below average precipitation in the past few months along with predictions for more of the same during the fall. The Missouri River is an important piece of the puzzle as it is responsible for maintaining proper navigation levels on the Mississippi at St. Louis and along the mouth of the Ohio River. According to the U.S. Geological Survey, the Missouri River is responsible for 45% of the annual flow of the Mississippi River past St. Louis and up to as high as 70% in drought years. While the Army Corps of Engineers controls the water levels from the reservoirs upstream, conflict remains among the states both upstream and downstream when it comes to priorities of the Missouri flow. But the priority now lies in trying to plan for water flow next spring if the Missouri river states continue to remain dry in the fall and through the winter.

Posted at 2:47PM CDT 11/02/12 by Mary Kennedy
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