Market Matters Blog
Mary Kennedy DTN Basis Analyst

Thursday 01/31/13

Recent Rains May Improve River Levels

As can be seen on the accompanying chart provided by the EIA in their weekly energy report, river levels at St. Louis are predicted to go lower by the end of February. The river level forecast on the chart is based on rainfall predictions as of Wednesday, January 29. As the chart also shows, recent rainfall in the busiest section of the Mississippi River at St. Louis has helped improve water levels after they dropped to levels that may have caused the river to be closed. However, two separate accidents have created more shipping delays on the river with the first being an accident at Lock 27 in St, Louis when a vessel hit a gate in the auxiliary chamber last Tuesday. The Corps of Engineers made temporary repairs to the gate and the lock reopened on Wednesday. The more serious accident occurred this past Sunday when a barge carrying 80,000 gallons of oil hit a bridge at Vicksburg, spilling as much as 7,000 gallons of oil into the river. Traffic has been stopped since the accident on both sides of the 16-mile stretch of the affected area as clean-up efforts continue. It was reported late Wednesday that the Coast Guard was letting southbound vessels pass through, but at a very slow pace so as not to disrupt the area where the spill is still in the process of being cleaned up. There were reports Wednesday night of over 532 northbound barges and 524 southbound barges waiting to pass at Vicksburg.

Source: U.S. Energy Information Administration

The slowdown due to both accidents could be seen in the USDA Grain Transportation Report on Thursday. USDA reported: "During the week ending January 26, barge grain movements totaled 498,468 tons, 6% lower than the previous week and 20% lower than the same period last year. During the week ending January 26, 307 grain barges moved down river, down 14.2% from last week; 643 grain barges were unloaded in New Orleans, up 12.4% from the previous week." Another contributing factor to the decrease in barge movement is that with the low barge freight rates the past few weeks, there have been reports that some barges companies have idled barges due to the cheap freight and the lower draft restrictions that have been in place until just recently.

USDA reported that for the week ending January 29, barge freight rates in St. Louis were 24% lower than at the same time last year and 19% lower than the 3-year average at that time. Barge freight in Illinois was 29% lower than at the same time last year and 22% lower than the 3-year average at this time. While lower barge freight normally helps the cash grain basis levels, we have seen most of the strength in soybean basis on the river in the past week south of the closure at Vicksburg. Exporters in the Gulf need to buy local supplies to fill export commitments in the Gulf as stalled barges are unable to get there in time for outbound vessels that may be waiting at the Gulf.

Posted at 3:16PM CST 01/31/13 by Mary Kennedy
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