Market Matters Blog
Katie Micik DTN Markets Editor

Wednesday 02/03/16

Informa Sees Big South America Crops

OMAHA (DTN) -- Private analytical firm Informa Economics sees larger corn crops in Brazil and Argentina and maintains its forecasts for large soybean crops.

The firm also presented forecasts for Argentine production in 2016 that highlighted a big shift to corn following changes in the government's export tax policies.

Informa raised its forecast for Brazilian corn production to 81.6 million metric tons, slightly higher than USDA's 81.5 mmt estimate. In Argentina, the group calls for 26 mmt, more than USDA's estimate of 25.6 mmt, based on its recent survey of producers.

On soybeans, USDA sees Brazilian farmers harvesting 100.5 mmt, which is 900,000 metric tons below Informa's previous forecast but still higher than USDA's latest estimate. Argentine farmers are likely to harvest 60 mmt of soybeans, which is 1.5 mmt higher than last month's estimate and 3 mmt higher than USDA's last estimate.

Informa released early forecasts for next year's crop mix in Argentina, calling for 30 mmt of corn production and 56 mmt of soybean production. That's a big shift to corn from beans, and reflects the new president's decision to lift export taxes completely on corn while only gradually reducing them on soybeans.

"Informa's estimates had no noticeable impact on grain prices at the time of release," DTN Analyst Todd Hultman said. "The soybean and wheat estimates are close enough to USDA estimates to be considered neutral, but the increase in Argentina's corn production estimate for 2016 is a bearish factor, if true."

On wheat, Hultman noted that Informa pegged production in India at 87 mmt, a little less than USDA's 88.94 mmt. It also increased its estimate of China's wheat production to 130.0 mmt, the same as USDA's.

Katie Micik can be reached at katie.micik@dtn.com

Follow Katie Micik on Twitter @KatieMDTN

(AG)

Posted at 11:32AM CST 02/03/16 by Katie Micik
Comments (1)
O gee what a surprise the largest over estimating group there is to bad there not held accountable smaller crops are obvious and good they can lose money growing corn I suppose they have 250 bu corn too
Posted by andrew mohlman at 7:35AM CST 02/04/16
 

Monday 02/01/16

Mississippi River Swallows Another Barge; Gulf Region Still Above Flood Stage

Maybe it's time to rename the Mississippi River "The Barge Graveyard" as another barge sank on Jan. 26. The river was closed at Mile 120 near Destrehan, Louisiana, to Mile 134 near Reserve, Louisiana.

The Mississippi River at Baton Rogue remains above flood stage but has dropped down into the moderate category. (Map courtesy NWS)

According to reports, two tugs collided and caused a tank barge to capsize as the strong current from high water still is a hazard to tows moving barges.

On Jan. 27, the Louisiana Maritime Association (LaMA) released this statement: "The Coast Guard is reducing the closure to MM127-MM129. Additionally, the Coast Guard is opening the river to one way shallow draft traffic between MM127-MM129; traffic shall pass at slowest safe speed and give the Tugs GEISMER, and LOUISIANA STAR a wide berth. The overturned barge ... is being held to the right descending bank by three tugs. The Salvage Company is working on a plan to further secure the barge. Once better secured the Coast Guard will evaluate further reducing traffic restrictions between MM127-MM129."

Later that day, the LaMA said the Mississippi River at MM 128 to MM 129 AHP was re-opened to all navigation with certain rules in effect requiring minimum wake, wide berth and one-way traffic with no meeting or overtaking from all vessels from mile marker 128 to mile marker 129 AHP (above head of passes).

On January 28, Tom Russell, Russell Marine Group told DTN, "High water conditions have vastly improved in the northern and center areas of the river system; however some ice has developed on the Illinois River, slowing traffic.

"The Lower Mississippi from Vicksburg (mile 437) to New Orleans is still in high water conditions as water pushes down. Daylight only passage of tug and barges is permitted though Vicksburg and Baton Rouge. Vicksburg area will be below flood stage by the first week of February but remain at high levels into second week of February.

"The high water levels in the New Orleans and Baton Rouge Harbors have been revised and not expected to subside until last week of February. The Lower Mississippi is open and the New Orleans harbor is open to barge and ocean vessel traffic but safety protocols and restrictions remain in place. Expect and plan for continued problems until water subsides."

One good sign is the final closure of the Bonnet Carre Spillway expected to be completed by Feb. 1. The USACE started closing bays midweek and are doing a little each day to keep a proper balance between Lake Pontchartrain and the river. The spillway was opened on Jan. 10 to help alleviate the high water heading to the Gulf. The Corps had opened 210 of the 350 bays on the spillway, less than what they originally thought because the river did not rise as high as expected.

Remember back to early January when the flooding caused the St. Louis Harbor to close and caused tow and barges to pile up in the Harbor. Then, as St. Louis started to recover, the trickle-down effect took place causing slowdowns and closures from Vicksburg to New Orleans, which in turn caused tow boats and barges to bunch up in the south.

All of this affected the barge and rail basis and, while this time of year is not normally high traffic for grain movement, there is still export business taking place out of the Gulf. River terminals got behind on their loading schedules and while rail was an option to get some of the grain to St. Louis or the Gulf, those basis levels have turned lower recently because of the river shutdowns that have occurred during the past two weeks between Vicksburg into the Gulf.

With the Gulf still under safety restrictions for vessels waiting to load, shippers continue to get that much further behind. USDA reported on January 28 that for the week ending January 21, 32 ocean-going grain vessels were loaded in the Gulf, 23.8% less than the same period last year.

Russell added, "Even though the high water situation has improved, particularly in northern tier, logistics and barge traffic is upside down and has not yet returned to normal flow patterns. Tow boats and barges are out of sync as a result of high water that caused tow size restrictions and closures."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(CZ/BAS)

Posted at 11:21AM CST 02/01/16 by Mary Kennedy
 

Wednesday 01/27/16

Grains Resilient Amid Crude's Meltdown

Corn and crude oil have, at times, been best friends, joined at the hip. You couldn't talk about one without the other. But crude oil's meltdown -- it's down from more than $90 a barrel in June 2014 to a shade above $30 today -- did more than just lower farmers fuel costs. It highlighted how broken the correlation to corn has become.

Chris Narayanan is an agriculture commodities analyst at Societe Generale, a French bank that with a variety of clients including grain companies. He told me the story to be written here isn't about the breakup. It's about "the resiliency of the ag complex fundamentals. Even though they can't completely get away from outside markets, like crude oil, there are individual stories in corn, soybeans and wheat that have far greater impact on pricing than what's going on in the oil market. Oil is a double-edged sword. Yes, it pushes the commodities sector down, but it also lowers the cost of the production. That helps."

There's a lot of corn out there, and while prices may still be below many producers' breakeven, it's not totally in the dumps either. Narayanan noted futures prices have rebounded about 20 cents from December lows, and he thinks downside risk to corn prices is fairly minimal.

"I can't think of anything unless there is a big global meltdown again that would cause another leg down in prices," he said. "I'm not saying we'll rally, but we'll stabilize at this level. The next rally would either be on evidence of increased demand or, more likely, some kind of supply shock."

As I’m sure DTN Senior Analyst Darin Newsom will mention in this Friday's column (which will focus on corn and the crude oil markets), both markets are facing the same problem. Supplies have grown despite low prices.

The only way Newsom sees corn prices going up is if noncommercial, or speculative, traders buy back into the markets. They've accumulated pretty large net-short position, but gave it a pretty good haircut last week when noncommercial traders trimmed their net-long position by more than 25,000 contracts. So maybe there's some change afoot. Newsom does see potential for a late-winter rally in the corn market.

I stumbled across an interesting article in the Wall Street Journal today, called "Where Have All the Oil Speculators Gone?" It was more of a diatribe against liberal politicians who wanted the government to intervene in the oil market when prices were high than an analysis of speculative positions. Yet the headline is telling. Where have all the speculators gone?

They've gone short.

Speculative traders' net-long position dropped by more than half, from around 450,000 contracts in the summer of 2014 to about 179,000 last week.

Are the two markets married, moving in lockstep? No. Some of the same forces are at work in each. The fundamental supply problem may even, at its core, be the same.

"I think the fundamentals of each individual commodity is far more important than, is a far bigger driver than what's going on in the crude market," Narayanan said. "That just gives you added pressure, but it's not the cause."

(Here's a link to the WSJ article: http://on.wsj.com/…)

(CZ/SK)

Posted at 3:51PM CST 01/27/16 by Katie Micik
 

Monday 01/25/16

Lower Mississippi River Still Dangerous For Barges; Old Vicksburg Bridge Battered by Tows

The Old Vicksburg Bridge in Vicksburg, Mississippi, is beginning to resemble a pinball machine as river barges have bounced against piers under it. Those collisions have also affected rail transportation in the area.

Grain or soybeans being directly loaded onto barges at the Greenville, Mississippi, Cooperative Grain terminal on January 13, two days before the peak high water at Vicksburg. (DTN photo by Marcia Taylor)

River basis is slowly recovering from the more than one month of flooding, and rail basis to St. Louis and the Gulf overall has been improving a little. If barges are unable to make it to the Gulf to load waiting vessels, rail may be the best way to get it there for now.

Between January 12-21, five tows have been unable to safely navigate under the bridge due to high water and very strong current. Barges have hit the piers as the current pushed them to the side as they tried to pass under the bridge. During "calm waters", the bridge still looks like a tight squeeze; add the fury of a flooded river and you have what is obviously a recipe for disaster.

On January 12, a tow moving 22 barges of coal hit the bridge with nine barges breaking off and two sinking. On January 13, another tow pushing barges hit the bridge with two barges breaking off and one sinking. On January 14, another tow hit the bridge but did not lose any barges. On January 20, another tow hit the bridge with all six barges breaking off, but none sank. On January 21, a tow pushing 19 barges hit the bridge and one of the barges, which was carrying ethanol was damaged.

After the fifth collision on January 21, the Captain of the Port issued a waterway restriction from mile marker 363 near Natchez, Mississippi, north to mile marker 438 near Vicksburg. Lt. Brian Porter, a Coast Guard spokesman, told local news organizations, "We are not allowing any tows to transit those bridges. A light ship (tow boat only) will be able to transit the bridges, but nothing pushing a barge. We have a strong current in the river and what we're trying to do is use a common sense approach."

There has been no scheduled reopening for that area yet and in the meantime, barges will likely stack up on the side of the river waiting to pass. The longer that portion of the river is closed, river terminals north of there may have to post weaker basis in order to slow movement of grain until the river reopens.

Here is a link to the bridge and its history: http://goo.gl/…

The Kansas City Southern Railway Company uses the Vicksburg railroad bridge and is likely grateful that the restrictions were finally put in place. The KCSR serves the central and south central U.S.; its parent company is the smallest and third-oldest Class I railroad in North America still in operation. During the nine days of collisions, the KCSR had to stop running on and off for a total of about 24 hours as crews inspected the bridge, which can put other connecting railroads at a standstill as well.

While the river levels are falling at Vicksburg, it is still above flood stage of 43 feet and is not expected to drop below that until the end of January. In the meantime, the strong currents caused by the high water will continue to make river travel treacherous. http://goo.gl/…

BATON ROUGE STILL ABOVE FLOOD STAGE

Farther south to New Orleans, there have been two accidents involving runaway barges. The latest accident closed the Mississippi River January 19 between mile markers 50 to 53 in response to a 22-barge breakaway.

In a press release, the U.S. Coast Guard stated that several deep-draft motor vessels sustained damage when barges broke away and hit them. "A portion of dry-bulk soybeans from one of the vessels entered the river and the release has since been secured," the USCG stated. "The three affected deep-draft vessels are safely anchored. ... All of the barges have been accounted for and secured except one that is pushed up against the left descending bank." Late Friday afternoon January 22, the Coast Guard reopened the area and was only allowing "single-file passage, for now, to clear a logjam of vessels trying to get through."

The NWS reported on January 23 that the Mississippi River at Baton Rouge has already crested and is expected to fall very slowly to around 41.3 feet by Thursday January 28, but additional rises may be possible thereafter. Flood stage at Baton Rouge is 35 feet. http://goo.gl/…

The USCG continues to have safety protocols in place allowing daylight-only traffic in certain areas. While the high water at the Louisiana ports is slowly declining, levels are expected to remain high for the rest of the month. Certain areas of the port are requiring a temporary reduction of max ocean vessel draft as a result of shoaling caused by the fast moving river. Logistics and all movements are taking longer due to the treacherous river conditions causing slowdowns and backups at the ports.

The Bonnet Carre Spillway opened on January 10 to alleviate flooding and to keep the volume of Mississippi River flows at New Orleans from exceeding 1.25 million cubic feet per second. The U.S. Army Corps of Engineers stated, "Operation of the structure will relieve pressure on main line levees, maintain river stages, and regulate the flow of the river from the spillway southward."

As of January 22, 210 of the spillway's 350 bays are open, diverting as much as 188,000 cubic feet per second of water from the swollen Mississippi River into Lake Pontchartrain. The Corps has announced the spillway will be kept open until at least the first week of February, as long as the river continues to fall.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(SK/ES)

Posted at 12:22PM CST 01/25/16 by Mary Kennedy
 

Monday 01/18/16

Strong River Current Causing Problems

The Mississippi River at Vicksburg was at 50.2 feet on Sunday, January 17, after cresting on January 15. With flood stage pegged at 43 feet, the river there has a long way to go before it is back to normal.

The swollen Mississippi River in Vicksburg crested January 15, at a level lower than original expectations. (Photo courtesy Vicksburg Mayor George Flaggs Jr.)

"Weather remains dry in critical areas, allowing swollen rivers to continue to fall, albeit slowly," Tom Russell of Russell Marine Group told DTN. "River levels throughout the system remain at dangerously high levels and safety protocols remain in effect."

In the meantime, three different tows moving barges through the Vicksburg area hit a bridge three days in a row during the week ending January 14 as the current proved too strong to safely maneuver under the bridge. At least six barges sank and will likely not be recovered until flood waters recede as the strong current and high waters make recovery dangerous.

Farther south in New Orleans, the Mississippi River was closed temporarily through New Orleans after barges collided at an oil facility in Gretna, Louisiana, a suburban town across from New Orleans. Port of New Orleans spokesman Matt Gresham told various news organizations that barges heading upriver collided with barges at the oil facility. According to Gresham, the facility was not damaged and a small amount of fuel inside a hose connected to a barge that was hit leaked into the river.

The Mississippi River at Baton Rouge was at 43.05 feet on the morning of January 18 and is expected to hit a crest of 43.5 feet midday on January 18, according to the NWS. On Sunday, January 10, the USACE opened 20 of the Bonnet Carre 350 bays in order to relieve pressure on main line levees, maintain river stages, and regulate the flow of the river from the spillway southward. As of Friday, January 15, there were a total of 124 bays opened.

It will be up to the Mississippi River (i.e. what the river does) to determine how many more bays will be opened by the Corps. However, the Corps is anticipating that a total of 150 bays may be opened, since the river hasn't been rising as high as officials expected a few weeks ago. The spillway, located 15 miles west of New Orleans, is expected to remain open a few more weeks.

The Corps also thought it would need to open is the Morganza Spillway, located along the western bank of the Mississippi River at river mile 280, near Morganza, Louisiana. The spillway and adjacent levees help prevent the Mississippi from changing its present course through the major port cities of Baton Rouge and New Orleans to a new course down the Atchafalaya River to the Gulf of Mexico, according to Wikipedia. The spillway, also known as the Morganza Control Structure, was last opened in the 2011 floods.

However, on January 11, the Corps issued a statement saying, "Based on current Mississippi River forecasts by the National Weather Service and hydraulic modeling, the U.S. Army Corps of Engineers does not anticipate operating the Morganza Control Structure during this high-water event."

"The Mississippi River and Tributaries project allows the Corps to undertake an MR&T systems approach to managing Mississippi River high-water events," said Maj. Gen. Michael Wehr, commanding general, U.S. Army Corps of Engineers Mississippi Valley Division. "The latest information indicates that the river crest can be safely passed through South Louisiana without operation of the Morganza Control Structure."

Even still, the high water is playing havoc on the shipping industry in the Gulf. Russell told DTN at midweek that, "New Orleans and Baton Rouge Harbors are at flood stage and will remain in flood stage well into second half February." Vessel restrictions at the Gulf outlined in DTN's January 11 article remain in effect, and Russell told DTN the only additional restriction is, "Bar pilots at SWP (southwest pass) will reduce max ocean vessel draft from 47 ft to 43 ft effective 1/14/16. Draft reduction is a result of shoaling caused by a fast moving river."

http://goo.gl/…

"Logistics and all movements are taking longer due to treacherous river conditions. Port operations slowing and backups are occurring. Allow extra cushion of time for all executions," added Russell.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(CZ/SK)

Posted at 11:20AM CST 01/18/16 by Mary Kennedy
 

Friday 01/15/16

Sometimes It Pays To Ask: Brazil Ending Stocks

Sometimes it pays to ask. For months, I have been scratching my head, noticing that USDA's ending soybeans stocks estimates for Brazil were uncommonly low while Brazil's soybean prices stayed relatively cheap, trading lately at roughly $9 U.S. per bushel in Paranagua.

Then Tuesday's report from USDA lowered the estimate of Brazil's ending stocks from 36 million bushels to an unbelievably low 17 mb for the current marketing year, which ends in two weeks. So I asked USDA for help in understanding how supplies could be so low while prices seem unfazed.

USDA's economist was extremely helpful. Although the agency did not wish to have his remarks published verbatim, the insights offered shed much light on Brazil's soybean situation. Suffice it to say that I am not the only one puzzled by how unreasonable an ending stocks estimate of 17 million bushels seems, especially as export activity remains active and prices are not reflecting a lack of supplies.

The conversation offered two logical possibilities -- unreported production and/or unreported imports. While neither of us could say for sure where the extra soybeans are coming from, it did not escape our notice that Argentina is just across the border.

With those insights in hand, Markets Editor Katie Micik asked DTN's South America Correspondent, Alastair Stewart to weigh in. He pointed out that Brazil's soy industry, ABIOVE, is estimating the current year's ending soybeans stocks at 1.59 million metric tons, or 58 million bushels. This offers a little more breathing room than USDA's estimate, but reinforces the notion that soybean supplies in Brazil remain uncommonly tight -- even if actual levels are above USDA's official 17 million bushel estimate.

So far in the new-crop season, parts of Mato Grosso have suffered from dry weather, but the overall outlook for row crops in Brazil and Argentina remains generally favorable. With big harvests expected this spring, it has been curious that March soybeans have not traded lower. DTN Senior Analyst Darin Newsom also notes that the March/May soybean futures spread is nearly inverse, uncommonly bullish commercial behavior for a market that is supposed to be so well supplied.

Thursday's response from USDA suggests that Brazil has found ways to secure more soybeans than can officially be accounted for. Yet the point remains that they will not have a big surplus heading into the new season that starts in February. Should a weather problem develop, U.S. soybean exporters may become a lot busier in 2016 than most currently expect.

(AG/CZ)

Posted at 10:50AM CST 01/15/16 by Todd Hultman
Comments (6)
Could Argentina's farmers be selling through Brazil
Posted by Stan Schoen at 11:19AM CST 01/15/16
That is a strong possibility, but I can't say we have any proof that I'm aware of.
Posted by Todd Hultman at 2:50PM CST 01/15/16
Mr. Hultman: This is in the opposite direction, by a fairly good number (76 Million Bushels) from the attaché. What's up with that? What is the roll of an attaché in the USDA's process anyway? Freeport, IL
Posted by Freeport IL at 10:11AM CST 01/18/16
You are right about that and we have seen this before where the attache report was modified or over-ruled by other considerations. In this case, I was informed that there were two other pieces of important data that came in after the attache report which led them to the lower ending stocks estimate that they published on Jan. 12. Personally, I feel that the ABIOVE estimate mentioned above is probably closer to the actual situation. Thanks -
Posted by Todd Hultman at 10:58AM CST 01/18/16
Good morning, one think you need to take in consideration is Paraguay, it been a yearly trade, to sell SBS to the Brazilians crushers, the historical range has been .3-.7 million tons. that is another variable to have in mind. Another think to think about Paraguayan SBS will trade before Argentinian SBS will, because of logistics cost and availability. Hoe this help to you alll.
Posted by Gonzalo bolivar at 1:53PM CST 01/29/16
Thank you Gonzalo, that is helpful.
Posted by Todd Hultman at 8:20PM CST 01/29/16
 

Monday 01/11/16

Mississippi River Floodwaters Reach New Orleans

As predicted, the glut of water from heavy rains and melting snow that caused extensive flooding along the Mississippi River in Missouri and southern Illinois the past couple weeks is making its way farther south toward the Gulf of Mexico. The U.S. Army Corps of Engineers and shipping companies are scrambling to deal with the unusual winter flood.

Pictured is the Bonnet Carre Diversionary Spillway located in St. Charles Parish, Louisiana. It is part of the Mississippi River and Tributaries project (MRT) and is the southernmost floodway in the MRT system. The spillway reduces risk for New Orleans and other downstream communities during major floods on the Mississippi River. (Photo courtesy of USACE, New Orleans District)

On Sunday, Jan. 10, the U.S. Army Corps of Engineers opened the Bonnet Carre Spillway to keep the volume of Mississippi River flows at New Orleans from exceeding 1.25 million cubic feet per second as the flood waters moved south into Baton Rouge and New Orleans. The spillway opening, the earliest since construction was completed in 1931, has not been opened since 2011 and is expected to be open for several weeks. (http://goo.gl/…)

Operation of the structure will relieve pressure on main-line levees, maintain river stages, and regulate the flow of the river from the spillway southward, according to the Corps. The Corps removed 400 of the nearly 7,000 needles (8-inch by 12-inch wooden beams) Sunday, which opened 20 of the structure's 350 bays. An additional 30 bays may open Jan. 11, depending on river speeds and levels. The opening of the spillway chambers will take a couple of days, and while river traffic will be open during operations, speeds will be slow.

Tom Russell, Russell Marine, told DTN, "As the Lower Mississippi continues to rise, additional safety measures are being imposed by authorities in the New Orleans -- Baton Rouge Harbors. Some of these measures are being imposed for the first time as the harbor is expected to hit flood stage Jan. 11." On Sunday, Jan. 10, the Mississippi River at Baton Rouge was at 40.71 feet and is expected to crest at 42.4 feet on Jan. 15.

"Many terminals are restricted to daylight-only docking/undocking, including all mid-stream berths," added Russell. "Ocean vessel traffic will be restricted as follows as imposed by the New Orleans-Baton Rouge Steamship Pilots Association (NOBRA) Pilots for their territory. Mile 233 (Baton Rouge) to mile 90.5 (Chalmette) restricted to daylight only for southbound traffic. Vessel traffic at mile 166 (Burnside) to 232 (Baton Rouge) is restricted to daylight only. Any vessel at anchorage above mile 90 drawing over 30-foot draft will be required to have a pilot on board at all times in case of emergency."

"Tow boats and barges in the Baton Rouge-New Orleans Harbor are moving around the clock. There are some mandatory and self-imposed restrictions in place as follows: Tows passing under the Baton Rouge Bridge mile 233 can only pass during daylight-only hours. It is OK for tows to pass under all other bridges in harbor around the clock. Fleet sizes are being reduced with mandatory tugs remaining in the fleet at all times for safety purposes."

It is expected that vessel and barge shifts in the harbor will take longer through at least the first half of February. "As loading operations slow due to high water, and probably more unfavorable weather expected, barge fleets can become full and harbor congestion is likely to occur," added Russell.

Once the flooding recedes, there will be deposits of silt in the harbor and along the river-way caused by the turbulent flood waters rushing downriver. As flood waters recede, the heavy silt deposits become more problematic. These deposits can cause barge groundings and damage vessels, forcing the USACE to send dredges to troubled areas, creating further delays to barge traffic.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/BAS)

Posted at 10:33AM CST 01/11/16 by Mary Kennedy
Comments (1)
UPDATE 1-13-16 The US Coast Guard closed the River at Mile marker 437 near Vicksburg Tuesday after the US 80 bridge was hit by a tow, sinking 4 barges. Then on Wednesday, after the USCG reopened the river there, the bridge was hit again, sinking more barges. The currents are dangerously strong, likely causing the tows to veer as they head under the bridge. So far there is no apparent damage to the bridge, but the river is closed once again and it is likely the barges may not be retrieved until water levels drop.
Posted by Mary Kennedy at 4:43PM CST 01/13/16
 

Wednesday 01/06/16

Flooding Moves South to Gulf; CME Declares Force Majeure on Illinois River

As the swollen Mississippi River leaves behind a sizable path of property destruction and tragic loss of human lives and livestock in Missouri and southern Illinois, floodwaters are heading farther south to the Gulf of Mexico, threatening towns and farmland along the way.

This photo taken by NASA's Terra Satellite on Jan. 4 shows the swollen Mississippi River and its tributaries. (Photo courtesy of nasa.gov)

In the flood's wake, Illinois Gov. Bruce Rauner said in several news releases this week that, "Some communities have actually been hit harder than the '93 flood."

Backing up Gov. Rauner's statement, NASA said this week that on Jan. 1, 2016, the Mississippi River crested at its third-highest level on record for St. Louis. "By Jan. 2, the surge of water caused the highest flood on record at Cape Girardeau and Thebes, south of St. Louis," NASA said. "At Cape Girardeau, water levels peaked at 48.86 feet (14.89 meters). Above 32 feet is considered flood stage; above 42 feet is major flooding. The previous record was 48.50 feet."

As flood waters receded somewhat along the middle stretch of the Mississippi River this week, some portions of the river began to reopen to shipping traffic. Tom Russell, Russell Marine Group, told DTN, St. Louis to Cairo reopened Jan. 4, although it was something of a gridlock. "The Illinois River is still closed and is expected to open by the end of the week."

Due to the Illinois River still being closed through mile 100, the CME said in a Jan. 4 press release that beginning immediately and until further notice, CBOT was declaring force majeure for soybean shipping stations "as a majority of the facilities on the Illinois River are unable to load due to high water levels and/or flooding." To read CME Group's full statement, visit: http://goo.gl/…

Russell said that as the water moves south, "The Lower Mississippi River remains open, but many loading terminals cannot load due to high water. NOLA (New Orleans, Louisiana) Harbor is open and all terminals are open, but slow going and safety protocols in place."

Meanwhile, the U.S. Army Corps of Engineers announced its plans for managing floodwaters along the Lower Mississippi River.

The Corps said in a press release, "Flood stage in Vicksburg (Mississippi) is 43 feet, and current predictions from the National Weather Service take the river at Vicksburg to 52.5 feet on Jan. 15. Flood stage in New Orleans is 17.0 feet, and current NWS predictions have forecast the river to crest at 17.0 feet on Jan. 9.

"Current NWS forecasts indicate that the Mississippi River could reach the project-design flow of 1.25 million cubic feet per second (cfs), coinciding with a 17-foot stage, in the greater New Orleans area. If this flow occurs, the Corps has the capability to regulate the amount of water flowing through the city by operating the Bonnet Carre Spillway to safely divert up to 250,000 cfs of water into Lake Pontchartrain."

The Corps went on to say, "Upriver from Baton Rouge, the Morganza floodway control structure could be operated if river levels reach 57 feet at the structure, and there is a 10-day forecast indicating a Mississippi River flow of 1.5 million cubic feet per second and rising past the structure. The structure would be operated to maintain a water stage of 57 feet on the river side of the structure, and a Mississippi River discharge rate that does not exceed 1.5 million cubic feet per second below the floodway."

The National Weather Service predicted there will be "significant river flooding" in the Lower Mississippi River all the way into mid-January. According to the NWS, the Mississippi River is forecast to crest in Greenville, Mississippi, on Jan. 12; Vicksburg, Mississippi, on Jan. 15; Natchez, Mississippi, on Jan. 17; and Baton Rouge, Louisiana, on Jan. 18.

Russell told DTN that as the river moves south, the worst of the flooding is receding. "Believe it or not, my concern looking forward is the El Nino effect causing low water problems," he said.

Mary Kennedy can be reached at mary.kennedy@dtn.com

(AG/SK)

Posted at 1:44PM CST 01/06/16 by Mary Kennedy
 

Wednesday 12/30/15

Heavy Rains, Snow Wreak Havoc on River System

The year is ending with a bang weather-wise as heavy rains and snow over the past week are causing extensive flooding along the Mississippi River and its tributaries, creating a real headache for the nation's river transportation system. The massive flooding, which usually occurs in spring, is plaguing the entire U.S. river system this winter.

Heavy rains and melting snow from a massive winter storm this week are causing extensive flooding along the Mississippi River and its tributaries. (Graphic courtesy of the U.S. Geological Survey)

"The weekend after Christmas was indeed a washout in the Mississippi and Ohio River valleys," said DTN Senior Ag Meteorologist Bryce Anderson. "Rainfall of from 5 to 10 inches inundated much of Missouri, Arkansas, Illinois, Kentucky and Indiana, with some local totals exceeding 12 inches. Many, many rainfall records were broken."

That heavy precipitation has pushed the nation's main river system above flood stage, creating a mess for shippers. As of Dec. 30, the St. Louis Harbor was closed, according to reports, as water levels reached 41.07 feet, 1 foot above major flood stage. The harbor will not reopen until levels reach 38 feet. The Mississippi River at St. Louis is forecast to crest at 43.1 to 44.7 feet on Thursday, Dec. 31, which would represent the second-highest crest on record. The flooding comes as St. Louis has just experienced its wettest December on record.

Farther south, the National Weather Service forecasts the Mississippi River at Baton Rouge, Louisiana, to rise above flood stage by the afternoon of Jan. 4 and continue to rise to near 44.0 feet around mid-January.

Tom Russell of Russell Marine Group told DTN, "Lower Mississippi River from Cairo to New Orleans is open but either at or will soon be at flood levels as water flushes through. Expect continued slow going logistics throughout the system. Fleets in St. Louis and Cairo are at max capacity. Tow sizes will be restricted to equivalent of 280 horsepower per barge to tow ratio. This is the first time I have seen such hp restriction."

Here is what the rest of the river system looks like as reported on the Ingram Marine Group website on Dec. 30:

Allegheny River:

-- High water operating conditions. River is closed above Lock 5 (mile 30.4) due to high flows.

Ohio River:

-- High water operating conditions, smaller tows, daylight only transits, slower transit times.

Cumberland River:

-- High water operating conditions. River is closed in Nashville due to a railroad bridge failure and also at the Clarksville Bridge due to clearance issues.

Tennessee River:

-- High water operating conditions, navigation above New Johnsonville has ceased, river closed.

Upper Mississippi River:

-- High water operating conditions

Louisiana: 20.9 feet, falling. River is closed due to high water at the Louisiana RR bridge.

-- Mile 201.5 Mel Price Lock auxiliary chamber is closed due to high water levels.

-- Mile 185.5 Lock 27 main chamber is closed as of Dec. 28 due to high water. No estimate for reopening. River closure.

- Cape Girardeau: 45 feet, rising.

Illinois River:

-- High water operating conditions, navigation has essentially stopped

Lower Mississippi River:

-- High water operating conditions, reduced tow sizes, daylight only transits at Vicksburg and slower overall transit times.

-- Memphis: 28.3 feet, rising.

-- Vicksburg: 38.2 feet, rising.

Arkansas River:

-- River is closed due to high water operating conditions.

-- Mile 319.6 Webbers Falls lock is closed to navigation due to high flows, river is closed.

EFFECT OF HIGH WATER ON BASIS

In recent weeks, exports have been slow out of the Gulf of Mexico, barge freight has been cheap and many terminals had stopped buying barges for the rest of December. River basis has been in a lull for much of the last half of December. Because of the river closures, rail basis to the Gulf may move higher in order to get contracted corn, soybeans or wheat to waiting vessels.

As far as river basis, until the high water recedes and conditions improve, there likely won't be much of an improvement. River terminals can't even get barges under spouts in high water to load grain. And anything currently loaded or empty is either moving at a slow crawl or likely tied off due to river closures. If they can't load it, they certainly don't want to buy it.

On Dec. 29, Ceres Barge line said, "Most elevators are either shut down or will be shut down by Thursday on the Illinois River. All St. Louis elevators are closed. Over half of Ohio shippers are flooded out and many on the MTCT (Memphis Through Cairo Terms) are getting ready to go down."

As for land movement, flooded roads and heavy snow will likely slow any grain moving from the farm, but farmers have not been selling much due to low prices. Processing plants and ethanol plants that are relying on trucks getting to them may have to push basis some if they need product right now, which has been slow to come due to poor road conditions.

WEATHER OUTLOOK

Anderson said over the next week, high pressure is indicated to settle over the Midwest and bring drier conditions. "This should allow for some receding of floodwaters. We're looking for generally above-normal temperatures and below-normal precipitation during the first week of the new year 2016."

For current information on river levels, visit the NWS River Stages page in Ag News on DTN. Or go to http://water.weather.gov/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/CZ)

Posted at 12:04PM CST 12/30/15 by Mary Kennedy
Comments (1)
Update from USACE St. Louis District: River Stages as of Jan. 3 are lower and have the current depths: Louisiana, 16.9 feet; Grafton, 28.6; St. Louis, 38.7; Cape, 48.0. For more info: http://mvs-wc.mvs.usace.army.mil/dresriv.html USACE Memphis District: Based on readings as of Jan. 3, Ohio River was near-crest at 56 feet on Cairo gage. Stages should stay steady next two-to-three days, then fall slowly. The NWS forecast on Jan. 3 said the Mississippi River at Baton Rouge will rise above flood stage by the afternoon of Jan. 4 and continue to rise to near 44 feet around mid-January. Union Pacific RR currently has or anticipates outages on several key routes south and west of St. Louis.
Posted by Mary Kennedy at 2:50PM CST 01/03/16
 

Monday 12/28/15

STB Ready to Decide on Permanent Rail Service Updates

Several groups took advantage of the Surface Transportation Board's waiver of its prohibition on ex parte communications to give their views on the board's proposed rules on railroad performance data reporting. The waiver allowed interested parties to schedule meetings with board staff to discuss the proposed rules instead of having to submit all comments to the board through public meetings and/or written records.

Pictured is a Norfolk Southern train. (Photo courtesy of nscorp.com)

The STB first addressed the issue of performance data reporting on Oct. 8, 2014, when the board announced it was requiring all Class 1 railroads to publicly file weekly data reports to the STB to "promote industry-wide transparency, accountability and improvements in rail service."

DTN reported in January 2015 that on Dec. 30, 2014, the STB issued two decisions in regard to rail service issues and service issues-performance data. The first proposal would require new regulations of permanent weekly reporting by all Class 1 railroads and the Chicago Transportation Coordination Office (CTCO). The board also proposed to make the weekly rail service reports permanent, saying that collection of performance data on a weekly basis would allow continuity of the current reporting and improve their ability to "identify and help resolve future regional or national service disruptions more quickly, should they occur."

In a decision served Nov. 9, 2015, the Surface Transportation Board (STB) announced that it would waive its ex parte prohibition for the limited purpose of permitting parties to have discussions with board staff so that the agency could develop a more complete record with regard rail service issues-performance data reporting. Parties were allowed seven days to submit written comments in response to the ex parte meeting summaries, with comments due by Dec. 23, 2015. Summaries of those meetings, which occurred between Nov. 19, 2015, and Dec. 7, 2015, and responses to the summaries can all be found at: http://goo.gl/…

Several groups submitted comments supporting permanent reporting requirements for railroads.

Jeffrey Sloan, senior director of regulatory and technical affairs for the American Chemistry Council (ACC), on Dec. 23 commented to the STB that, "ACC supports the board's proposed permanent reporting requirements. We also support several key changes suggested by stakeholders to improve the usefulness of the data."

"As noted in numerous meeting summaries, shippers and other stakeholders regularly use railroad service data to understand trends and conditions across the rail network. For example, shippers and receivers utilize the data to help predict equipment turns and forecast freight costs. While railroads individually make select metrics available, this data is not always consistent between railroads," noted the ACC.

The ACC concluded, "The STB's current reporting requirements provide much-needed standardization as well as timely and predictable reporting intervals. While the initial requirements were prompted by the severe service disruptions seen in the winter of 2013/2014, the timely reporting of standardized service metrics continues to provide significant benefits. It would make little sense to discontinue the program now."

The National Grain and Feed Association (NGFA) noted that, "rail service metrics can provide an early alert of impending service disruptions, allowing shippers and receivers critical additional time to mitigate the business harm and economic loss if and when those disruptions occur."

USDA also commented that "if reporting requirements had been in place before recent service challenges, the problems would have been identified sooner and the situation may have been less disruptive."

In a Dec. 23 comment to the STB, the NGFA urged the board to proceed expeditiously by "issuing an updated proposal to require the weekly reporting of a standardized set of rail service performance metrics with sufficient detail and granularity to be useful to rail customers and the board itself to evaluate future service trends and anomalies."

RAIL INDUSTRY RESPONDS

In a Dec. 23 letter to the STB, Norfolk Southern objected to the call for "micro-level reporting requirements because they impose significant burdens on rail carriers without offsetting benefits to any rail shippers." Norfolk Southern (NS) believes that it would be "inappropriate for the board to require railroads to spend precious time and resources gathering and reporting data that shippers do not even intend to use, merely as a means of making this unused data more 'transparent' and making the railroads more 'accountable' for micro-level statistics that are just as likely to be caused by changes in the general demand for the reported commodity, shifts in sourcing or faulty shipper forecasts."

"System-wide metrics provide the most value and are a better approach than burdening the railroads and confusing rail service stakeholders by requiring the railroads to report data that are difficult to standardize and have marginal utility and minimal predictive value," added NS.

In their Nov. 20 meeting with the STB, the Association of American Railroads (AAR) told the STB that, the board should work backward from what it is going to do with the data to determine how it needs to collect the data. "When looking at train on-time arrival, it would be a challenge to define a 'train;' how is that definition useful and meaningful; how would the data be used? Coming to consensus is difficult and factors may change with circumstances. The railroads are not satisfied with the proposed definition of 'unit trains' because it is not consistent with how they define unit trains."

In their Dec. 23 comments to the STB, the AAR pointed out that railroad service is often a function of the amount of resources on hand to meet demand for transportation. "The amount of resources available is driven by forecasts that in large part originate with shippers. If those forecasts are not accurate, railroads will be challenged to keep their networks fluid. In such cases, railroad metrics will rise and fall, but they do not reveal anything about the causation of service problems or efforts to resolve them."

"Instead, the board's focus in this proceeding should be on monitoring the overall health of the rail network. For this purpose, the metrics published by the AAR are sufficient and many of the more granular metrics currently being collected by the board are unnecessary and create a distorted view of railroad operations." Finally, AAR requested that the board consider annual, rather than quarterly, reporting on infrastructure projects.

All that remains now is for the STB to make a final decision on this issue that has been on the table for nearly a year.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/SK)

Posted at 12:37PM CST 12/28/15 by Mary Kennedy
 

Monday 12/21/15

2015 Grain Shipping Season Ends in Duluth-Superior

An oceangoing vessel named the Federal Bering was the last saltie for this shipping season when it entered the port of Duluth-Superior Dec. 14 and docked at CHS terminal 2 in Superior to load wheat and canola bound for Mexico.

Federal Bering was at CHS 2 in Superior to take on a split load of wheat and canola to take to Mexico. (Photo courtesy of Duluth Shipping News)

"It's an interesting shipment because it will be going into the Gulf of Mexico and Mexico," spokesman Marc Gagnon of Fednav, the Canadian owners of the ship, said in the Great Lakes and Seaway Shipping news. "This proves that you can be more efficient exporting through the port of Duluth even to Mexico than to take barges down the Mississippi (River) or rail or something else."

A press release from the Duluth Port Authority stated that the Federal Bering, like its fleet mates -- the Federal Baltic, Federal Beaufort, Federal Barents, Federal Bristol and Federal Biscay -- was built by Oshima Shipbuilding in Japan. "All six sister ships are 199.98 meters (656 feet) in length and have a beam of 23.76 meters (77.9 feet); each was built with four deck cranes and four "box" holds for greater flexibility.

"These environmentally advanced vessels consume 28% less fuel and produce 28% fewer emissions than similar ships built for the company just 10 years ago; their fuel-efficient engines will also reduce nitrogen oxide emissions by over 30%. All six new-builds were delivered between May and November 2015, as part of a series of 27 new ships added to Fednav's fleet in the past four years, 14 of which are committed to Great Lakes-Seaway service."

While the Federal Behring is officially the last saltie to depart Duluth, an oceangoing freighter, the Cornelia, was sitting offshore from Duluth for six weeks after it came under investigation by the 9th District of the U.S. Coast Guard and the U.S. Attorney's Office for violations related to the discharge of oily water.

Duluth Seaway Port Authority spokeswoman Adele Yorde said that the German-owned vessel was allowed into the Clure Public Marine Terminal to refuel and take on provisions the afternoon of Dec. 16. "The vessel will dock overnight," Yorde said, while also confirming a pilot has been assigned to the ship. "Foreign vessels are required to have on board a U.S. or Canadian pilot to help them navigate the shipping channels through the Great Lakes, according to the Great lakes and Seaway Shipping."

On the morning of Dec. 18, Duluth Shipping News reported that the Cornelia left the port with her cargo of grain that she loaded at CHS 1 about 40 days ago after the Coast Guard reported that they "have reached an agreement."

Late on Dec. 18, Yorde sent a press release to DTN stating, "The Port of Duluth-Superior will bid a fond farewell this evening to the last visiting oceangoing vessel of the 2015 season, the Federal Bering, when she departs beneath the Aerial Lift Bridge Friday evening." Both ships needed to get moving by Dec. 18 or possibly risk not making the closing of the Welland Canal Dec. 26. Oceangoing vessels will then need to exit the last set of locks in Montreal before the St. Lawrence Seaway closes Dec. 30 for the season.

While the grain season is over for the year, lakers, which are confined to the Great Lakes, get a longer season if the channels don't ice up. It is likely, given the warm weather, they will make it to the Jan. 15 Soo Locks closure without much problem.

SHIPMENTS OF GRAIN STRONG IN 2015

The Great Lakes Seaway Partnership, a coalition of leading U.S. and Canadian maritime organizations, announced in a Dec. 10 press release it had a strong year in grain shipments.

"Agricultural commodities along with dry bulk, general cargo and containerized goods continued to enhance cargo tonnage on the Great Lakes-St. Lawrence Seaway System during the month of November," Betty Sutton, administrator of the Saint Lawrence Seaway Development Corporation, said in the release.

"With just under a month remaining in the 2015 navigation season, we anticipate vessel activity in the Seaway System to be robust right up to closing," she stated.

"The St. Lawrence Seaway reported that year-to-date total cargo shipments for the period April 2 to Nov. 30 were 32 million metric tons, down 10.5% over the same period in 2014. U.S. grain shipments were up by 11% in November over last year. The dry bulk category was up by 1% over 2014 with potash, stone, and gypsum in the positive column, at 94, 21, and 45% respectively. The general cargo category was down 16%. Iron ore and coal remained down in November by 7 and 38% respectively. The liquid bulk category posted a downturn of 11%."

Through November, the grain market on the Great Lakes is up sharply over 2014 -- 310,000 mmt to 191,500 mmt at the same time a year ago and about 35,000 tons over the five-year average of roughly 274,400 mmt.

"From our perspective -- and I cannot give the perspective of the farmer whether it's Canadian or U.S. -- it's been pretty good," Gagnon said. "Typically, our backhaul -- we come in with general cargo -- is we get out with grain for export." The departure of the Federal Bering and her load of grain, represent a solid year for grain shipments out of the Twin Ports in 2015.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/CZ)

Posted at 12:17PM CST 12/21/15 by Mary Kennedy
 

Monday 12/14/15

Congress Passes STB Reauthorization Act of 2015

Supporters of a bill passed by Congress last week that reauthorizes the Surface Transportation Board -- the federal regulatory body responsible for economic oversight of the nation's freight rail system -- say the legislation will make the STB more accountable and effective in addressing rail service issues.

A Canadian Pacific train runs through the Twin Cities corridor in St. Louis Park, Minnesota. (DTN photo by Mary Kennedy)

The Surface Transportation Board (STB) Reauthorization Act of 2015 establishes the STB as "an independent establishment, and for other purposes." The bill was passed by the U.S. Senate on June 18, 2015, and then by the U.S. House of Representatives on Dec. 10, 2015. The bill will reauthorize the STB for the first time since it was created in the ICC Termination Act of 1995 and became the successor agency to the Interstate Commerce Commission. This new regulation will make the board more effective for handling freight rail issues.

Sen. John Thune, R-S.D., chairman of the Senate Commerce, Science and Transportation Committee, spearheaded the rail bill with support from committee ranking member Sen. Bill Nelson, D-Fla., and House Transportation and Infrastructure Committee Chairman Bill Shuster, R-Pa., and ranking member Peter DeFazio, D-Ore. The Senate Commerce Committee, of which Thune serves as chair, has jurisdiction over the nation's freight and passenger railroads, and is a member of the Senate Agriculture Committee.

At Thune's request, USDA issued a report earlier this year concluding that the rail backlog in 2013 and 2014 lowered corn, wheat, and soybean prices in the Upper Midwest and caused shippers to pay record-high railcar premiums, 28% to 150% above the average previous levels for roughly 65 consecutive weeks."

Some of the key points of this bill listed by the Library of Congress are as follows:

-- Increases board membership from three to five members, and with proper disclosure, allows board members to talk with one another.

-- Requires the board to: maintain one or more simplified and expedited methods for determining the reasonableness of challenged rail rates in cases where a full stand-alone cost presentation is too costly, given the value of the case; and maintain procedures to ensure expeditious handling of challenges to the reasonableness of rail rates.

-- Requires the board to establish a voluntary binding arbitration process to resolve rail rate and practice disputes.

-- Requires board standards and procedures for establishing revenue levels for rail carriers to be adequate for the infrastructure and investment needed to meet the present and future demand for rail services.

Here is a complete list of the bill's contents: https://goo.gl/…

INDUSTRY LEADERS APPLAUD PASSAGE OF STB BILL

In a press release, NGFA President Randy Gordon commended Chairman Thune "for his leadership and persistence in directing with Chairman Shuster final passage of the legislation, which provides essential reforms that will improve the STB's ability to operate and oversee the nation's freight rail system."

"Shippers and receivers of agricultural products rely heavily on rail transportation and partner with the nation's rail carriers to get commodities to market," Gordon said. "However, the STB needs to have the right tools to provide the necessary oversight of freight railroads. This legislation goes a long way in improving and strengthening the STB so it can carry out its statutory responsibilities and provide the meaningful safeguards intended under existing law."

The Association of American Railroads (AAR) said on its website that it welcomed the passage of the Surface Transportation Board Reauthorization Act of 2015 (S. 808) by the U.S. House of Representatives. "In reauthorizing the Surface Transportation Board for the first time since the agency was created, Congress has clearly stated the critical need for railroads to be able to earn the revenues to build, maintain, and further modernize the nation's 140,000-mile privately owned rail network. These investments are needed to meet current and future freight transportation demands," said Edward R. Hamberger, AAR president and CEO. "This legislation strikes the right balance of preserving a market-based structure for shippers and railroads, while also providing commonsense process improvements that will allow the STB to work more efficiently."

Thune issued the following statement after the U.S. House of Representatives approved the bill by voice vote: "When the ability to transport products to and from South Dakota is jeopardized, it's the farmers, ranchers, businesses, and ultimately the consumers who pay the price. This bill, which I hope is signed into law without delay, will help address the uncertainty encountered by businesses and agriculture producers who are forced to deal with the STB, and it will increase the board's accountability. By finding common ground among many different rail customers, shippers, and railroads themselves, we are reforming the STB for the first time since the board's establishment in 1996. This is good news for states like South Dakota that depend on freight rail as a critical tool for shipments -- coming or going."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/SK)

Posted at 12:06PM CST 12/14/15 by Mary Kennedy
 

Monday 12/07/15

Closed for the Season; UMR Lock Closures Begin as Winter Sets In

The 2015 towing season on the Upper Mississippi River was extended by a few days due to unseasonably warm weather in the upper Midwest, allowing the navigation industry more time to ship this year's bumper corn crop. But, on Dec. 3, the U.S. Army Corps of Engineers, St. Paul District, locked the last tow of the season out of St. Paul, Minnesota, signaling the beginning of the end of this year's river transport season.

Empty barges wait west of downtown St. Paul, Minnesota, on the Mississippi River. (DTN photo by Mary Kennedy)

"The Motor Vessel Charlie G was locked through Lock and Dam 2, near Hastings, Minnesota, with 12 barges," the USACE said in a press release. "Traditionally, the last tow heading south of Lock and Dam 2 marks the unofficial end of the navigation season for the Twin Cities portion of the St. Paul District."

The 2015 navigation season started March 25, when the Motor Vessel New Dawn reached St. Paul. "It was a great year for navigation," said Jim Rand, St. Paul District locks and dams chief. "We saw a slight increase in the annual tonnage with an estimated 96.7 million tons of commodities being shipped within the St. Paul District." The 10-year average for commodities is nearly 93 million tons. Last year, the Motor Vessel Mary K. Cavarra was the last tow of the 2014 season after being locked through Lock 2, Nov. 20, 2014.

The Corps is now scheduled to close Lock and Dam 9, near Lynxville, Wisconsin, for winter maintenance Dec. 9; the lock was originally scheduled to close Dec. 7. Once the lock is closed, there will be no vessels moving through it until reopening next spring.

"This winter rehabilitation work is scheduled approximately every 15 to 20 years on each St. Paul District lock," the corps said in an email. "Lock 9 was last dewatered in 1993. The lock is now scheduled to reopen March 17, 2016."

While a few days may not seem like much to most people, those shipping by barge are grateful for the extra time. Barges don't move very fast -- typically about 30 to 40 miles per day -- which translates to about 30 to 40 days to reach New Orleans, Louisiana, from the Twin Cities district without any slowdowns along the way.

An Upper Mississippi River terminal manager told DTN he never had a loaded barge "freeze in" and once it was off his dock and consigned, it became the barge line's responsibility. "They usually left in plenty of time and watched the weather very closely," he said.

He also told DTN that empties usually don't get left behind. "There may be loaded barges of cement that were left behind to be unloaded during the winter or in the spring before anything else made it back upriver."

On December 14, the Corps will also close Locks 13, 14 and 17 for winter repairs. Lock and Dam 17 is located approximately three miles upstream from the mouth of the Iowa River near New Boston, Illinois. Lock 21 at Quincy, Illinois, will close for dewatering and repair on January 4. Those locks are expected to reopen on March 4, 2016, weather permitting.

Barges heading down river may run into rock removal operations that are tentatively scheduled to resume the second week of December between St. Louis and Cairo. Traffic will be able to move through the area, but tow size restrictions of 15 barges during daylight hours will be in place. The project is expected to last through the middle of February. Natural rock formations become exposed when water levels drop below zero gauge and this area has been problematic since the historic low levels of 2012.

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow her on Twitter @MaryCKenn

(CZ/BAS/AG)

Posted at 12:20PM CST 12/07/15 by Mary Kennedy
 

Thursday 12/03/15

Sorghum Demand Looks Versatile

USDA made some big revisions to the sorghum supply and demand balance sheet last month, reflecting not only the larger crop, but also shifts in demand.

Last spring, sorghum was priced higher than corn at major export locations as China rapidly ramped up its purchases. Farmers responded, planting 8.7 million acres. Mother Nature helped out too, and the national average yield is projected at 77.7 bushels per acre.

But the question always remained: what would happen if the Chinese market cooled?

To an extent, that's come true. China's trying to get rid of its corn stockpile and put some inspection requirements on sorghum imports that sent a chill over new sales.

I asked Florentino Lopez, executive director of the U.S. Sorghum Checkoff, what he thought about the export market cooling off shortly after the report. He made the argument that, while USDA's adjustments to the export forecast seemed drastic, it's still a sizeable improvement over years past.

USDA trimmed its forecast for 2015-16 marketing year exports from 430 million bushels to 325 mb. The U.S. exported 353 mb in 2014-15, which was up sharply from the year before. So the overall year-to-year reduction was just about 8%, Lopez argued.

Export sales on the books are also higher than they were at the same time last year, he pointed out. China's aggressive purchases the year before drove up prices and crowded out other buyers. Now that Chinese demand has cooled, Mexico has returned as a buyer of sorghum, along with Colombia, Venezuela and a host of other countries.

Even though USDA made a large cut to the export forecast, it actually increased total usage of sorghum by 5 mb from the previous month based on an increased forecast for feed and ethanol production.

Sorghum has gone from being more expensive than corn to being much cheaper, and it's pricing itself into other uses. Just glancing at the DTN Market Tracker, the basis for milo in Kansas is running between 55 and 75 cents below the corn futures price, while basis for corn is a little more variable, from a few cents over futures in cattle country to 45 cents under around Wichita.

USDA boosted its forecast for sorghum use for ethanol by 85 mb in November, and NASS's most recent Current Agricultural Industrial Reports on Grain Crushings and Co-Products production backs that up. In September, USDA didn't release numbers on sorghum use for ethanol because it would disclose data for an individual operation. But in October, ethanol companies used a fair amount.

Lopez thinks this has been a great year for sorghum overall. Production exceeded expectations, and despite smaller demand from a major market, other industries and a broader array of buyers have stepped in. Overall use it set to be more than 100 mb higher than last year, which partially reflects the larger crop.

One point Lopez always comes back to is that it's very important for farmers to be profitable, which requires not only good production techniques but also dependable markets. Sorghum's popularity got a boost this year, and Lopez hopes it made a strong enough impression that more farmers will consider as a part of their crop mixes.

(SK/ES)

Posted at 3:27PM CST 12/03/15 by Katie Micik
 

Monday 11/30/15

Dairy Industry Asks for Heavier Truck Weight Permits

Several U.S. senators are asking for truck weight flexibility for America's dairy farmers to be included in the final draft of a national transportation bill.

A truck loads milk at Meyer Dairy, a family-owned dairy farm located in Stearns County, Minnesota. (Photo courtesy of Tara Meyer)

On Nov. 20, President Barack Obama signed into law a bill to extend highway funding for two weeks. Lawmakers are now working to push a long-term surface transportation funding package through Congress and send the bill to the president by Dec. 4.

One of the items missing from the short-term funding extension was the Safe, Flexible, and Efficient (SAFE) Trucking Act that would have allowed states the option of increasing weight limits on interstate highways from 80,000 to 91,000 pounds for trucks with additional sixth axles. The U.S. House of Representatives voted against the heavier weights on Nov. 3. (For more on House vote, visit http://goo.gl/…)

However, on Nov. 23, U.S. Sens. Al Franken, D-Minn.; Ron Johnson, R-Wis.; Tammy Baldwin, D-Wis.; Mike Crapo, R-Idaho; Chris Murphy, D-Conn.; Jim Risch, R-Idaho; Patrick Leahy, D-Vt.; Kelly Ayotte, D-N.H.; and Angus King, I-Maine, sent a letter to bipartisan leaders on the conference committee asking that the final bill allow bulk milk trucks to carry milk "without being forced to offload portions, which increases food safety risks for consumers and costs for dairy farmers," according to Sen. Franken's website.

The senators wrote: "By classifying milk as a non-divisible load, this provision acknowledges that milk cannot be easily divided or dismantled between farms and processing plants. Milk is a perishable product that must be sealed for safety and transported quickly. When milk truckers pick up bulk milk, they must load the entire stock of bulk milk that a farm produced that day -- not just the amount of milk that would keep the trucker in compliance with state truck weight limits. This is problematic because the amount of milk produced at a farm varies from day-to-day, based on weather, feed, and other factors. As a result, milk truckers perpetually risk being overweight. While milk truckers can break the seal and offload a portion of the milk to bring their truck weight into compliance, doing so increases transportation time and compromises the safety and security of the milk."

Current law already permits states to issue special permits for "non-divisible" loads, such as trees, boats, or any other products whose integrity would be compromised through division.

"Adding milk to the list of products that qualify as non-divisible loads would improve the safety and security of bulk milk," the senators stated in their letter. "What's more, this provision would improve the stability of trucks loaded with fluid milk. As the conference committee deliberates which provisions will be included in the final version of the DRIVE Act, we strongly urge your support the inclusion of this important milk classification." (For the full text of the letter, visit http://goo.gl/….)

Gordon Speirs, president of the Dairy Business Association (DBA) told DTN, "Partially empty trucks mean more fuel, more traffic and more costs for road maintenance. Allowing for heavier trucks with a sixth axle would have improved all of those areas. Representative Ribble's amendment would reduce logistic expenses. This would make commerce more efficient, and we think that makes perfect sense."

The DBA is a Wisconsin nonprofit organization comprised of dairy farmers, food processors, and agricultural businesses representing all facets of Wisconsin's dairy industry. According to the USDA statistics of states with the highest number of milk cows as of January 2014 and 2015, Wisconsin was second both years with the number of milk cows amounting to about 1.27 million.

Congresswoman Elizabeth Esty, D-Conn., a member of the House Transportation and Infrastructure Committee, and Rep. Richard Hanna, R-N.Y., co-introduced an amendment to the national highway bill to classify milk as a non-divisible load. Rep. Esty said on her website that the Hanna-Esty Amendment was introduced "after hearing from dairy farmers in Connecticut about the challenges they face transporting bulk milk."

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary Kennedy on Twitter @MaryCKenn

(AG/CZ)

Posted at 11:42AM CST 11/30/15 by Mary Kennedy
Comments (1)
UPDATE: On December 1, The House and Senate reached an agreement on a 5-year, transportation bill which included the milk hauling ammendment sought by the dairy industry. In a statement on their website, The National Milk Producers Federation and International Dairy Foods Association praised Congress "for its decision to include in a conference report a dairy-specific amendment that would benefit producers, processors and consumers." The organizations now urge Congress to pass the report so that it can reach President Barack Obama's desk by the Dec. 4 deadline. Posted by Mary Kennedy, DTN Basis Analyst
Posted by Mary Kennedy at 6:12PM CST 12/02/15
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