Market Matters Blog
Katie Micik DTN Markets Editor

Monday 11/23/15

STB Seeks More Information on Proposed Rules for Weekly Rail Performance Reports

In an effort to collect as much information as it can on proposed rules on railroad performance data reporting, the Surface Transportation Board earlier this month announced it will waive its prohibition on ex parte communications. The move means that instead of having to submit all comments to the board through public meetings and/or written records, interested parties may schedule meetings with board staff to discuss the proposed rules.

A BNSF train heads east along the Mississippi River near St. Paul, Minnesota. (DTN photo by Mary Kennedy)

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."…

The STB required comments on both decisions to be submitted by March 2, 2015. Reply comments were due by April 29, 2015. The STB reported on their website that, "The board received 17 opening comments submitted by 35 parties and nine reply comments from 30 parties. A number of parties filed written comments requesting meetings with Board staff to discuss the proposed rail service performance metrics."

On Nov. 9, the STB announced it "will waive its general prohibition on ex parte communications and permit interested parties to schedule meetings with board staff to discuss the proposed rules on railroad performance data reporting."

"The agency has long interpreted its general ex parte communication prohibition to encompass informal rulemakings such as this one. Our predecessor agency, the Interstate Commerce Commission, stated 'that ex parte communication during a rulemaking is just as improper as it is during any other proceeding. The commission's decisions should be influenced only by statements that are a matter of public record.'"

However, the STB said it can waive its regulation on ex parte communications in appropriate proceedings. "In doing so, the board can take steps to ensure that a fair process is established, including notice, disclosure, and an opportunity for all parties to comment on information discussed during informal meetings."

"In this quasi-legislative proceeding, we find good reason to waive our prohibition on ex parte communications. It is important to make sure that any rule we adopt regarding service data results in the collection of information that will be useful to the agency and its stakeholders. As the comments submitted so far have demonstrated, the manner in which railroads collect and maintain data has a number of technical aspects and varies between carriers."

Here is the STB's complete decision on waiving its prohibition on ex parte communications and information on how the process will be expected to work:…


The massive transportation backlog of 2014 cost farmers and grain shippers hundreds of thousands of dollars in lost revenue because rail cars were behind in getting placed, which left elevators full and in turn left farmers with no place to sell or haul their grain.

At the end of September 2014 with a record corn harvest facing South Dakota, Tim Luken, elevator manager at Oahe Grain, Onida, South Dakota, told DTN that one of his producers asked, "How am I going to get cash to pay bills if no one will take any grain because they're full?" Oahe Grain is serviced by the Rapid City, Pierre & Eastern Railroad (RCPE) a shortline that receives cars from the Canadian Pacific, but also has trackage rights over the BNSF Railway between Yale and Watertown, South Dakota.

Fast forward to one year later and Luken has a different story to tell. "The service on the RCPE has been outstanding. I have not one bad thing to say about them."

It is important to note that during 2014 when Luken was behind on railcars, it was because the Canadian Pacific (CP) was behind in supplying them to the RCPE. However, Luken said he feels "weekly reporting is a great thing; maybe not today, but we will see a day again when it will be a viable resource of information how railroads are performing."

Luken said there are plenty of cars to go around now because "producers are having a harder time with cash values today than they did the last seven years when we had robust exports and lower U.S. dollar values. Another factor for the good performance is that I believe since the Bakken oil fields have cut back on oil production, there are less oil trains crowding the tracks."

"Remember, too, that famers have more grain storage today than they did 10 years ago," Luken said. "I am not talking 15,000- and 20,000-bushel bins, I am talking 50,000- to 100,000-bushel bins. It's the domino effect. When grain isn't moving, it affects everyone in the grain business: elevators, implement dealers, railroads, and so on."

An elevator on the Canadian Pacific mainline in North Dakota told DTN, "I think some reporting should continue. When grain movement picks up and the railroads fall behind, the STB will have some benchmark. Keep some thumb pressure on them. We never completely find out everything anyway."

He added that, "Current service is good, almost too good. Dedicated trains are turning in 10 to 14 days, which is too quick in this market environment. CP freight is trading at tariff to -$100/car and will probably go to -$300 by mid-December. One issue facing the CP is that they lack competitive destinations, in particular for corn. The BNSF takes everything straight through while the CP has to hand off to other railroads."

Things have definitely changed from the disaster of 2014. Besides the cheaper secondary freight costs on both the BNSF and CP, tariff rates have also been reduced in some corridors as the railroads are trying to generate revenue. Even still, it is likely that the STB will continue to require the railroads to provide service updates. The question remains as to how detailed and how often those reports will be.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 2:36PM CST 11/23/15 by Mary Kennedy

Thursday 11/19/15

How the CME Makes Money

Futures contracts are important tools for farmers in their marketing. I've met some who use them more than others, and yet others who have a gift for seeing option strategies. I've also met many farmers who would prefer to sign a contract with their local elevator, and the let the elevator shoulder the margin call.

Whatever your relationship with futures and options -- I understand that some in farm country are still upset about CME's decision to shift from a member-owned club to a for-profit company back in 2000 -- there's an article in the Financial Times that you need to read.

Part profile, part think piece, it leads the read in some interesting directions. Is this the way our futures market should be run? At present, the core issue surrounds trading in CME Group's interest rate futures and the relative importance of that as the Federal Reserve begins to raise interest rates.

It also discusses how CME's business model has helped consolidate 99.97% of U.S. interest rate futures and options volume on one exchange. It touches on the challenges of automated trading. It highlights the company's CEO, Terry Duffy, and the power of company's close relationship with politicians in Washington, D.C. And then, there's this gem:

"Mr. Duffy's blunt manner and deep understanding of Washington politics have helped CME emerge from the financial crisis as one of the most lucrative US businesses. As Wall Street banks scale back, the world's biggest exchange group racks up operating margins of 60 per cent. This ranks CME among the three most profitable members of the S&P 500 index, alongside Visa, the card network, and Gilead Sciences with its $1,000-a-day hepatitis pill."

Agriculture is a risky business, and CME's products are core tools farmers and agribusinesses use to manage those risks. Whether you personally trade on CME's futures or options products or not, it's worth understanding how CME grew into one of the nation's most powerful and profitable financial institutions outside of the agriculture space. The Fed thinks it's systemically important financial utility to the general economy. It's easily 10 times as important to farmers, county elevators and agribusiness.…


Posted at 3:24PM CST 11/19/15 by Katie Micik

Monday 11/16/15

Minnesota Expected to Produce Record Corn Crop

In its Nov. 10 Crop Production report, USDA raised its production estimate for U.S. corn, with Minnesota showing one of the larger gains. The state will produce an estimated 1.45 billion bushels of corn this year, 5% higher than the record set in 2012. Average yields are projected at 187 bushels per acre, 31 bushels higher than last fall and 10 bushels higher than the record set in 2010.

The Le Sueur-Henderson wrestling team lends some muscle to Patriot Grain owner Tyler Sunderman, helping tarp one of the elevator's two 100,000-bushel corn piles. (Photo courtesy of Patriot Grain, Cleveland, Minnesota)

For confirmation of this year's bumper crop, just ask Tyler Sunderman, owner of Patriot Grain in Cleveland, Minnesota, a small town east of St. Peter. He and his father have owned the 425,000-bushel elevator since 2012 which services producers in the area.

Sunderman told DTN that when the corn price rallied in July, his customers sold old-crop corn and contracted new crop as well. By the time harvest was in full swing this fall, Sunderman ran out of bin space and had to pile corn on the ground. He told DTN that his father always wanted to pile corn, and now he could "check it off his bucket list."

Patriot Grain has two 100,000-bushel piles that consist of high-test-weight corn with average moisture of 15%. Sunderman said he didn't see any corn below 57 pounds, which would help account for the average yield of 210 bpa in his area. He does have fans running on both piles, and when it came time to tarp the piles, he enlisted the help of the Le Sueur-Henderson wrestling team. He said it was quite a sight watching the boys crawling all over the pile pulling the tarp as they moved.

While a tarped pile of dry corn is good temporary storage, it's not without some spoilage in the end. Chad Schmidt, a 14-year veteran of the grain industry and former grain manager at a Mississippi River terminal, told DTN that the main reason for running a fan is "to keep the tarp sucked into the pile and less susceptible to wind pulling it off the pile." Schmidt piled 1.2 million bushels of corn at the terminal in 2010 and held it all winter until the river opened up in the spring."

He added that it is not a cheap investment to pile corn and "costs such as interest, tarps, the labor cost to pile and pick up; all need to be figured into the final price you want to net."

"The first key to storing corn outside is using good-quality corn above 56 pounds. Then, have a good base that is crowned to keep rain and melted snow from seeping under the tarp and walls," Schmidt said. "The base is peaked in the center both length- and width-wise so the water would run away from the pile. It was a challenge to get our pile half full and tarped before rain."

Schmidt added, "Seepage would be the second biggest source of spoilage. Then, hope the weather is dry from when the pile goes down until it is picked up. It did seem that having too many fans will pull moisture into the pile. Usually, the most spoilage occurs is around the aeration tube inside the pile, where the moisture has collected."


Sunderman, who with his family farms 5,200 acres of corn and soybeans, told DTN that his corn is all hedged in the futures, but he is a "fan of the basis" now. So far, he has been doing well as the corn basis has been getting stronger this fall. Since the start of the corn harvest in late September, the weekly DTN National Average basis has strengthened by 11 cents as of the third week of November.

Since Patriot Grain has no rail service, Sunderman relies completely on trucks to move his corn. He said he usually feeds two ethanol plants south of him and also has a contract with a large dairy to provide 11,000 bushels of corn for feed each week.

His plan right now is to get rid of the pile after the first of the year. He said when he opens a pile, he will keep the trucks moving until the pile is off the ground to avoid spoilage.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 12:34PM CST 11/16/15 by Mary Kennedy

Monday 11/09/15

Ag Groups Disappointed; Will Continue to Advocate for SAFE

Many ag groups were disappointed with the U.S. House of Representative vote against an amendment allowing heavier truck weights on interstate highways and vow to continue to push for the increase.

Loading sunflowers onto a semi-truck during harvest in Zeeland, North Dakota. (Photo courtesy of Mark Rohrich)

On Nov. 3, the U.S. House of Representatives voted against an amendment in the highway bill 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 $325 billion, six-year highway bill passed Nov. 5, minus the proposed change in weight limits.

The National Grain and Feed Association (NGFA) issued a press release applauding the House of Representatives for approving the six-year transportation bill, but said they "will continue to advocate for provisions not included in the bill. For instance, the Association supported the Safe, Flexible, and Efficient (SAFE) Trucking Act, sponsored by Rep. Reid Ribble, R-Wis., that would have allowed trucks with six axles to transport up to 91,000 pounds on interstate highways. The federal weight limit for interstate highways has been set at 80,000 pounds since 1982."

"Federal highway truck weight limits currently are lower than most state road weight limits, and this inconsistency presents obstacles to efficient movement of U.S. grains," said NGFA Director of Economics and Government Affairs Max Fisher. "Our organization, as well as the rest of the coalition that supports the amendment, is evaluating how to proceed in our efforts to update truck weight limits on Interstate highways."


Soy Transportation Coalition (STC) Executive Director Mike Steenhoek told DTN, "It is correct that certain Western states have weight allowances on their state (and sometimes on federal) roads that exceed the 80,000-pound limit. For those states, the six-axle, 91,000-pounds configuration would not be as consequential. For the majority of the country, though, having this increased weight limit would benefit agriculture and a host of additional industries."

"The railroads were certainly working to oppose this amendment. The reality is that truck and rail are increasingly not interchangeable modes of transportation. It's more a hub-and-spoke system -- rail are the hubs; trucks are the spokes. That's why we would witness a very modest amount of diversion from rail to truck if the Ribble amendment is adopted."

Steenhoek said, "Supporters of the amendment represented a significant percentage of the freight moved in this country, so we were able to exert influence as well. It just wasn't enough. One of the biggest problems is that many of those representatives in highly urban areas -- who don't have constituent engagement on issues like freight transportation efficiency -- simply voted no without delving into the pros and cons of the legislation."

When asked about the future of SAFE, Steenhoek said, "I don't see a path forward in the near future. The concept itself certainly isn't dead -- we do need to find a way to increase trucking efficiency in a safe, responsible manner. However, for the immediate term, I don't see a legislative vehicle that will allow this to move forward in the near future."

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, told DTN, "We were certainly disappointed in the outcome of the vote. In Minnesota, 'raw and unprocessed agricultural commodities' are allowed to be hauled up to 90,000 pounds on six axles and up to 97,000 pounds on seven axles. In the winter 'freeze period,' you are allowed to haul up to 99,000 pounds on six axles or seven axles. Unfortunately, this allowance does not apply to the interstate system in Minnesota, which is why we were actively supporting the Ribble amendment and for all the right reasons."

North Dakota DOT allows a 10% weight increase permit which is valid July 15 to Nov. 30. This permit allows a vehicle 10% more weight when hauling a harvested farm product from the field to the first point of storage. "Solid waste, sugar beets, and potatoes may be hauled from any location to a point of storage with 10% more weight. The weight exemption permit is valid for 10% over legal axle weights and/or 10% over legal exterior bridge distance (measurement between extreme axle centers), whichever is more restrictive. The fee is $50 per 30-day period."

South Dakota DOT allows vehicles hauling agricultural products from a harvesting combine to the point of first unloading a tolerance of 10% in excess of the legal limits. "These vehicles may not exceed a speed of 50 miles per hour, and are only granted this tolerance within a range of 50 miles from the harvested field. This tolerance is not permitted on the interstate highway system. Vehicles hauling agricultural products from farm storage or livestock from a farm are given a tolerance of 5% in excess of the legal limits. These vehicles may not exceed a speed of 50 miles per hour, and are only granted this tolerance within a range of 50 miles of the loading site. Such vehicles may not exceed any posted weight of any bridge or road. This tolerance does not apply during spring load restrictions and is not permitted on the interstate highway system."

Mark Rohrich, Rohrich Farms, Zeeland, North Dakota, told DTN, "I would have like to have seen the increases in freight efficiencies on the interstates by increasing payload. It would have been especially beneficial for our agriculture freight up here like cattle, commodities and fertilizer as they utilize interstate highways. Right now many trucks in North Dakota and South Dakota have to avoid the interstate travel to keep the opportunities to carry more payloads per trip on state highways. Trucks with higher gross loads and the right axle combinations carry loads safely. Trucking regulations will continue to reduce number of drivers and companies that are operating."

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 11:55AM CST 11/09/15 by Mary Kennedy
Comments (2)
The problem is, as with many ag issues, the ill conceived perception of infrastructure by the voter. Railroads and highways were constructed for National Defense and to allow farmers to engage in commerce. That is, move food to the population centers. Not to allow driving around from mall to mall.
Posted by Bonnie Dukowitz at 7:18AM CST 11/10/15
I bet that if the people in the highly populated areas were told that thier cost for food would drastically increase if the billis not passed or had some assurrance that the prices would not increase and may actually decrease if the bill passed, they would be pressuring their legislature to pass the bill but right now it is not even an item of concern for them or their representatives.
Posted by Dale Paisley at 10:29AM CST 11/12/15

Wednesday 11/04/15

DDG Exports to China Ahead of Last Year

Exports of dried distillers grains to China may have declined month-to-month, but year-to-date exports to China are 30% higher than year-ago levels.

(DTN Chart by Todd Hultman)

September’s DDG exports totaled 1.109 million metric tons, up 22% from the same month a year ago, said DTN Analyst Todd Hultman. The data, which is released by the Foreign Ag Service, is based on U.S. Census Bureau tallies.

China was the biggest DDG customer in September, buying 484,535 metric tons, 192% more than the same month last year. In August, China bought more than 600,000 mt of U.S. DDG.

“Yes, exports are down on the month, so it could be spun as bearish or bullish, but overall I would say DDG activity to China is a bullish factor this year,” Hultman said.

U.S. ethanol exports are also stronger than last year, up 7% from a year ago. Exports totaled 60.3 million gallons in September, 6% higher than the same month a year prior, with Canada as the largest buyer.

Biodiesel exports in September increased 47% from a year ago to 28,205 mt. Canada bought 17,796 mt of that. Year-to-date exports in 2015 are down 6%.


Posted at 10:51AM CST 11/04/15 by Katie Micik

Monday 11/02/15

Shutdowns Threatened by Class 1 Railroads Averted

MINNEAPOLIS (DTN) -- U.S. railroads will have more time to install new required safety systems thanks to legislation passed by Congress last week.

Tank cars cross the Mississippi River south of downtown St. Paul, Minnesota. (DTN photo by Mary Kennedy)

On Oct. 27 and 28, bipartisan votes by lawmakers in the House and Senate passed HR 3819, which extended the deadline for implementing positive train control (PTC) by three years, to Dec. 31, 2018. President Barack Obama signed the bill into law on Oct. 29.

Here is a link to the adjusted timeline planned for railroads to implement PTC by 2018:…

The extension was welcome news to the rail industry, which had threatened slowdowns and/or shutdowns if the PTC deadline was not extended.

Association of American Railroads (AAR) President and CEO, Edward R. Hamberger said in a press release: "Members of the House and Senate are to be commended for taking the responsible action to extend the PTC deadline. This provides the certainty American industries and businesses need to serve the millions of Americans who rely on rail every day. The extension means freight and passenger railroads can continue moving forward with the ongoing development, installation, real-world testing and validation of this complex technology."

"The rail industry remains fully committed to being accountable and transparent in completing PTC, and we look forward to working with Congress to get a broader long-term surface transportation bill to the desk of the president expeditiously," added Hamberger.

Norfolk Southern Railroad also praised the extension, saying the extra time to implement PTC systems would allow the railroad to continue its service without interruption. In a statement on its website on Oct. 30, the company said, "Following this commendable step by Congress and the president, Norfolk Southern has rescinded its cessation of service notice for poisonous-inhalation-hazard commodities, and for passenger and commuter trains. The government's action makes it possible for Norfolk Southern to conduct lawful operations beyond the former deadline of Dec. 31, 2015, maintaining full access to the rail network for customers and passengers."

Agriculture groups also praised the deadline extension.

In a news release, NGFA President Randy Gordon said: "U.S. agriculture depends upon efficient and safe transportation involving all modes -- rail, truck, barge and vessels -- to move commodities to domestic and international customers."

National Farmers Union President Roger Johnson also applauded Congress' decision to extend the implementation of PTC, ensuring American family farmers, ranchers, and all those who rely on rail will not experience interrupted service.

"The entire country relies on freight rail to ensure delivery of everything from chlorine for drinking water to anhydrous ammonia for fertilizer," Johnson said in a news release on Oct. 28. "It has been clear for a while that the deadline was unreachable and could have done serious damage to the nation's economy if not dealt with."

Johnson added, "Each side of the debate had legitimate concerns that we now must work together to address for the benefit of American consumers and producers. We stand ready to work with Congress to ensure the timely implementation of PTC technology."

Prior to Congress extending the deadline for PTC implementation, agriculture and commodity groups had sought to keep railroads from suspending service if they failed to meet the original deadline. In a letter to the Surface Transportation Board on Oct. 23, 32 national agricultural producer, commodity and agribusiness organizations as well as NGFA state and regional affiliates, said they supported a petition filed with the agency arguing that "rail carriers cannot suspend unilaterally their common carrier obligation to serve shippers simply because they have not complied with the positive train control (PTC) requirement."

To read the full letter, visit:…

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 11:20AM CST 11/02/15 by Mary Kennedy

Monday 10/26/15

High Marks for 2015 HRS Wheat

Hard red spring wheat -- the preferred wheat for baking -- earned high marks in 2015. But with protein premium spreads quite narrow, those high numbers may not lead to higher prices for producers.

Posted high side of MGEX cash spring wheat milling basis. (Chart courtesy of Dan Maltby, Risk Management Group)

The North Dakota Wheat Commission recently issued a report on HRS quality, saying that in 2015 the crop "produced high grades, high protein and is sound in overall kernel traits."

Average ranking of the crop was #1 dark northern spring, compared to #1 northern spring in 2014. NDWC said DNS has significant improvements in color and vitreous color than NS. "Specifically, the crop averages a 61.6-pound-per-bushel (81 kg/hl) test weight, 0.4% damage and 83% vitreous kernels," NDWC stated. "Vitreous kernels are vastly improved over the historically low 53% recorded in 2014.

"Average protein is 14.1%, up from 13.6% in 2014 and similar to the five-year average. All parts of the region show higher kernel protein levels. Nearly two-thirds of the 2015 crop is above 14% protein (12% moisture basis), compared to just 40% in 2014. Likewise, only 12% of the crop falls below 13% protein, compared to nearly 30% last year."


Tim Dufault, a spring wheat farmer in Crookston, Minnesota, told DTN in early September: "As usual, I have protein, but it's not worth anything." This was in response to a conversation about how narrow the protein premiums had become compared to 2014. During the end of the first half of September this year, 13% protein was at +60 to +70 over the Minneapolis December, 14% was at +80 to +90 and 15% was at +140 to +175. In contrast, just one year prior at the same time, 13% protein was at +85 to +140, 14% protein was at +250 to +600 and 15% protein was at +605 to +650.

Protein premium spreads continue to remain narrow; the Minneapolis spot basis on Oct. 22 showed no 13% proteins for sale, 13.5% was at +105 to +140, 14% was at +115 to + 130 and 15% was at +180 to +200. In contrast to the same day one year ago, 13.5% was +150 to +195, 14% was at +225 to +250 and 15% was at +500 to +550.

Dan Maltby, consultant for the Risk Management Group in Minneapolis, Minnesota, told DTN, "The spring wheat basis often reflects the overall protein content of the crop, which is almost always determined by weather, and a key factor is night-time temperatures during wheat filling stages. This year, the crop experienced warm nights, and thus the protein content of the 2015 crop was higher."

The NDWC also mentioned the protein-boosting effects of the weather. "A warmer, drier finish to the growing season favored the higher protein average," NDWC's report stated. "An extended period of warm, dry conditions supported the harvest of a sounder, drier crop compared to 2014."

Malty said with the higher proteins "... one would expect the basis on 15% proteins to drop, relative to 14%, which it did."

He continued, "This year, so far, there has been a stunning collapse of protein premiums. Fifteen percent proteins are averaging much lower, at +175 and while this will probably increase, maybe approach +200, 15 proteins certainly will be down more than $2.50 per bushel. This is directly a result of this crop averaging almost a full point higher than last year."

Maltby talked about export demand, stating that 14% proteins, not 15% proteins, are exported. "However, if 14s are tight supply, then 15s and 13s can be blended together to make 14s. But in years when 14s are plentiful, 15s will only be used for specialty milling end uses and generally, demand for these products does not fluctuate greatly."

Maltby pointed out in the accompanying chart that the 15% protein average posted high side milling basis from 2005/06 to 2014/15 was +230 and the average 14% protein basis in the same period was +140. He said, "Fifteens averaged a 90-cent premium in those 10 years and currently 15s are quoted at a 70-cent premium to 14s, so in my opinion, they are historically a bit of a relative bargain."


Kernel moisture is about one-half percentage point lower, and the average falling number for the overall crop is 372 seconds, up from 339 seconds in 2014. Distribution of falling number better reflects the improved crop soundness, as 94% of the crop averages above 350 seconds compared to just 73% in 2014.

In 2015, spring wheat planting began in early April, which was well ahead of 2014 planting pace and the five-year average. "Emergence was a bit slow to start due to cool, dry conditions in late May and early June," said the NDWC. "As temperatures warmed up, emergence took off at an above-average pace. Growing season conditions were more favorable than last year with lower disease pressure. "Overall yields were above average, but varied from record yields in the eastern half of the region to below-average yields in the west where much drier conditions prevailed throughout the growing season."

"Regional production is up slightly from 2014, but a larger share in 2015 was produced in the eastern half of the region due to higher planted acres and record per-acre/hectare yields. Production was lower across the western half due to less planted area and reduced yields due to minor to severe midsummer drought conditions."

Hard red spring wheat is one of the six classes of wheat grown in the U.S., primarily in the Northern Plains. The high protein content and superior gluten quality of this specialty wheat makes it the "aristocrat of wheat" for use in some of the world's finest baked goods, according to the North Dakota Wheat Commission. All specialty breads such as bagels, hard rolls, hearth breads and even pizza crust taste better when spring wheat flour is used because they can be stored longer than breads made with low protein wheat, according to the NDWC. Adding hard red spring to lower-protein wheat improves dough handling and mixing characteristics as well as water absorption. The resulting flour can be used to make an assortment of bread products, as well as Chinese-type noodles.

The entire report can be found here:…

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 1:40PM CDT 10/26/15 by Mary Kennedy

Monday 10/19/15

How Big Should Big Rigs Be?

Federal law says the maximum allowable weight for freight-shipping trucks is 80,000 pounds, although some states have higher limits that were grandfathered in when the federal rule was passed. The U.S. Department of Transportation (USDOT) has been studying allowing an increase of that maximum weight to 91,000.

Trucks waiting to be unloaded at Cargill elevator and biodiesel plant, KCMO. (DTN photo by Jim Patrico)

On October 5, the Transportation Research Board (TRB) published a review of the USDOT's "Comprehensive Truck Size and Weight Limits Study" and found some areas lacking.

The TRB stated that, "... a more comprehensive and useful response would have been possible." The TRB continued, the study "... lacks a consistent and complete quantitative summary of the alternative configuration scenarios, and major categories of costs -- such as expected bridge structural costs, frequency of crashes, and infrastructure costs on certain roads -- are not estimated."

The USDOT report should have provided a framework for understanding all the costs and benefits, TRB stated. "A comprehensive list of the categories of costs and benefits, the features of the hypothesized regulatory change that influence each category, the direction of change, and the categories that are likely to be critical to the evaluation all can be identified from results of the present and past studies."

Read the TRB's review here:….


The Soy Transportation Coalition (STC) also did a study on increasing truck weights which was funded by the soybean checkoff. Executive Direct Mike Steenhoek told DTN that trucking and rail are increasingly not interchangeable modes of transportation. "This is particularly the case with agriculture. Over the past several decades, railroads have adopted a business model of emphasizing long haul service, which has resulted in limiting access to the rail network in rural areas. Years ago, every soybean and grain handler enjoyed rail service at their facility. That is no longer the case.

"As a result, farmers and grain handlers must increasingly utilize trucking to access the rail network. Given how trucking and rail are less interchangeable, the potential modal shift from rail to trucking due to the adoption of 91,000 lbs. semis is significantly limited. The U.S. Department of Transportation calculated that the potential modal shift nationwide would amount to less than one third of one percent of railroad revenues. This minimal modal shift would be even less for agricultural shipments," said Steenhoek. Here is a link to the study done by the STC:….

Bob Zelenka, executive director of the Minnesota Grain and Feed Association told DTN, "We have been generally supportive of increased truck weights since the U.S. government took control of truck weight and length in the early 1980s. At that time, the feds grandfathered in states that had weights that exceeded the federal 80,000-pound limit. Unfortunately and contrary to a few of our neighbors, Minnesota was still at the 80,000 pound limit at that time.

"In 2008, the Minnesota Legislature passed a law allowing permits to be issued for 'raw and unprocessed agricultural commodities' to be hauled at 90,000 pounds with six axles and up to 97,000 pounds on seven axles. The fuel savings were a big part of the reasoning, through reduced trips to haul the same amount of product. However, one does wonder if real savings do occur, when figuring the cost of a new six- or seven-axle trailer, plus the $300 to $500 state permit fee and with some counties also charging a fee to travel overweight on their roads." An elevator manager in eastern North Dakota told DTN that the biggest benefit to farmers would be that higher weight limits "lessen the work load. What was once hauled in 10 trucks can now be hauled in nine. That means less hours."


The state of Michigan's truck weight laws allow more than the federal limit spread out over more axles.

"Michigan has a unique system of truck-weight laws, which allows greater maximum gross vehicle weight (GVW) than in other states," according to The Michigan DOT, Bureau of Transportation Planning, Intermodal Policy Division. "Gross vehicle weight includes the weights of the truck, cargo carried, fuel, and driver. Maximum allowable axle loadings are the same in all states, including Michigan. Michigan and several other states allow gross vehicle weights greater than 80,000 pounds, when spread over more than five axles. These weight laws are allowable under 'grandfather clauses' in federal law, but if these laws are repealed, they may not be re-enacted.

"The maximum gross vehicle weight allowed on a 'federal-weight-law truck' is 80,000 pounds, with four of its five axles carrying 17,000 pounds each and the steering axle carrying 12,000 pounds. The calculated maximum allowable gross vehicle weight on the heaviest 'Michigan-weight-law truck' is 164,000 pounds, which can only be achieved by use of 11 properly-spaced axles. Most of these axles carry only 13,000 pounds each. The alternative to a single Michigan combination carrying 160,000 lbs. on 11 axles is two standard trucks carrying 160,000 lbs. on 10 axles. Pavement research has shown that these two smaller trucks actually cause about 60% more pavement damage than does the single heavier truck, because of their higher axle loadings and the extra weight of additional tractors at about ten tons each."

States and provinces bordering Michigan also allow certain vehicles heavier than the federal weight law trucks. Ontario allows nine-axle vehicles carrying a total of 140,000 pounds. Ohio, Indiana, and Wisconsin issue permits allowing heavier Michigan-style trucks to travel on selected highways. This allows access by Michigan shippers to the steel industry in Gary, bulk rail and marine terminals in Toledo, and the forestry industry in northern Wisconsin. Other states along the Canadian and Mexican borders increasingly allow heavier trucks from their neighboring countries.

The Michigan DOT believes that state's truck weight law is based on sound research and results in less highway damage and improved safety relative to federal weight law. "Several of this state's key industries benefit by being able to transport their goods much more efficiently and economically," the Michigan DOT concluded. "Recent trends and studies suggest that the federal government and other jurisdictions are beginning to recognize the validity and benefits of the approach Michigan has used for decades."

The House Transportation and Infrastructure Committee will be marking up a surface transportation bill on October 22. Steenhoek, told DTN that, "We and other proponents of this legislation are working to ensure it gets included in the larger highway bill."

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 1:14PM CDT 10/19/15 by Mary Kennedy

Monday 10/05/15

Legislation Introduced to Extend PTC Deadline

On September 30, the Transportation and Infrastructure (T&I) Committee introduced bipartisan legislation to extend the December 31 deadline for U.S. railroads to be compliant with Positive Train Control (PTC) technology.

Tankers heading west on the BNSF Northern Transcon. (DTN photo by Mary Kennedy)

The Association of American Railroads (AAR) President and CEO Edward R. Hamberger provided the following response to committee leaders: "The freight rail industry is pleased the House T&I bipartisan leadership has introduced legislation to extend the PTC deadline. The committee leadership clearly recognizes the need for immediate action to forestall the looming economic crisis that would result from widespread freight and passenger rail service disruption. We look forward to working with both the House and Senate bipartisan leadership to quickly get the PTC extension across the finish line and to the President's desk for signature."

The AAR said on its website that, "Train systems cannot be shut down or restarted overnight so freight railroads, passenger rail providers and shippers are being forced to make decisions now to prepare for the severe disruptions in rail service that will occur if Congress does not act soon on a PTC extension."

U.S. Senator Richard Blumenthal (D-Conn.), member of the Senate Commerce, Science and Transportation Committee, released the following statement on his website in response to the House Transportation and Infrastructure Committee's legislation to extend the deadline for railroads to implement PTC technology:

"Any Congressional action on PTC must ensure that railroads move swiftly and vigorously to install it without needless delay. It has been more than 45 years since the National Transportation Safety Board first urged railroads to implement positive train control -- an unacceptable delay in implementation of this critical, life-saving technology that has allowed numerous, preventable tragedies. Instead, the House Transportation and Infrastructure Committee's bill provides a blanket extension to 2018, a troubling move considering that some railroads are on track to meet the current deadline. Extensions should be granted only to railroads that have demonstrated diligent, good faith efforts to meet the mandate. Only by holding railroads' feet to the fire will this critical, life-saving technology finally be implemented."

The legislation introduced September 30 would extend the Positive Train Control Enforcement and Implementation Act of 2015 deadline to the end of 2018. The details of the extension includes limited authority for the U.S. Department of Transportation Secretary to extend the deadline beyond 2018 if railroads can prove they are still facing difficulties in completing the mandate and have made every effort to install PTC. Railroads will be required to complete progress reports on their progress of compliance with the installation of PTC on their lines. (To see legislation, go to…)

It's no secret that many rai1roads have said they may start the shutdowns before the end of the year. That's unnerving to grain shippers and farmers who are just getting geared up for a large harvest. Grain shipments could be stalled if the line they run on needs to switch cars to a neighboring railroad that has shut down operations or if the line they ship on is closed down. Railroads have said they will shut their lines down to avoid any legal ramifications or fines if they can't get railroad accident-avoidance equipment installed on time.

It's a Catch 22 for farmers and shippers who want safe railroads, but also want to move their new crop corn and soybeans. They do not want nor can they afford a repeat of the economic disaster they experienced in 2014 when railroads underperformed.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 11:59AM CDT 10/05/15 by Mary Kennedy

Thursday 10/01/15

CFTC Fines Two Grain Trading Operations

The Commodities Futures Trading Commission publicized two enforcement actions against physical grain trading operations in the past week. The total price tag: Just shy of $1 million dollars.

In the first, announced last week, CFTC ordered Cargill's Mexico branch to pay a $500,000 fine for executing wash trades between March 2010 and August 2014.

In the second, announced Wednesday, grain merchandiser Alfred C. Toepfer International was ordered to pay a $400,000 fine for inaccurately reporting its physical positions in grain markets. The misstatements occurred before ADM acquired Toepher in 2014.

CFTC sends out emails almost daily listing enforcement actions, but they're most commonly for issues like commodity pool fraud, brokers operating without the proper licenses and such.

When you take into account last April's charges that Kraft Foods manipulated the soft red winter wheat market, clearly, the commodities market regulator is focusing on anti-competitive practices across the spectrum of market participants.

In the case against Cargill de Mexico, CFTC alleged that it "engaged in wash sales and unlawful non-competitive transactions in certain agricultural futures products, including corn, soybeans, and wheat on the CBOT, as well as in hard red wheat traded on the KCBT," a CFTC press release stated. "Before orders for these trades were entered on an exchange, Cargill de Mexico employees, either acting alone or with another employee, entered equal and opposite transactions in the same futures contract for another account that was also owned by Cargill de Mexico, and matched the product, quantity, price, and timing of those orders and trades. The Order finds that by so prearranging, structuring, and entering these orders, which negated the risk incidental to an open and competitive marketplace, Cargill de México also engaged in noncompetitive transactions."

In addition to the fine, CFTC ordered Cargill de Mexico to improve training for employees on compliance and ethics as well as submit reports on how it's preventing these kinds of uncompetitive practices from occurring.

The tone of the Toepfer enforcement press release was a little different. CFTC seemed to sing the company's praises for replying quickly, cooperating and "instituted remedial action to strengthen the internal controls and policies relating to the preparation of CFTC Form 204 reports."

Form 204 reports show the composition of fixed price cash positions in each commodity that a company hedges, and CFTC uses it to check compliance with speculative position limits.

"The Order finds that during the period from at least May 2010 through December 2013, Toepfer held reportable positions in Form 204 commodities and was required to file Form 204 reports showing the quantities of the fixed price purchase and sale open cash positions of such commodities it hedged. The Order further finds that during the period, Toepfer filed 44 Form 204 reports with the CFTC that did not accurately state the quantities of Toepfer’s fixed price cash positions of each such commodity it hedged.

"Specifically, the Order finds that Toepfer included in its Form 204 reports both basis and fixed priced cash positions. Toepfer, thereafter, submitted corrected Form 204 reports and displayed significant cooperation during the CFTC’s investigation of the matter."

So what's the take away for farmers and agribusinesses? CFTC may not act swiftly, but they're monitoring both speculative and commercial traders for engaging in practices that skew the market.


Posted at 1:26PM CDT 10/01/15 by Katie Micik

Monday 09/28/15

Low Water, Lock Repairs Cause Shipping Delays

As the gut slot of harvest nears, farmers who rely on hauling their grain to a river terminal could face added costs and storage issues. Low water and construction are hampering river traffic in many areas and barge loadings may continue to be compromised if these conditions don't improve.

The Locks and Dams 52 and 53 Replacement Project, known as the Olmsted Locks and Dam, is under construction between Illinois and Kentucky about 17 miles upstream from the confluence of the Ohio and Mississippi rivers. (Photo courtesy of USACE Louisville District)

In early July, heavy rains overburdened the Illinois River system, the center area of the Upper Mississippi River, and the Upper Mississippi River between St Louis and Cairo. Flooding conditions existed in these three problems areas for weeks, which led to slowdowns in barge traffic and some river traffic closures. At the end of July, waters started to recede, but by then barges were behind in delivering shipments to the Gulf. River terminal corn basis dropped nearly 20 cents between the first and fifteenth of July and barge freight was either not quoted or was lower.

Fast forward to September 24 and low water is now bothering barge traffic and causing corn and soybean basis levels to weaken at affected river terminals. Tom Russell, co-owner of the Russell Marine Group told DTN via email, "Water levels on the Lower Mississippi are still relatively low but recently holding steady. A safety zone remains in effect at mile 480-490 where several groundings did occur earlier in the month. There have not been any additional groundings, but transit through this area is currently restricted to daylight only. A dredge will be on location to clear up the shoaling from Sept 23 to Oct 7. Some off-and-on closures will take place during this time period.

"Some shoaling has occurred on the Upper Mississippi between St Louis and Cairo that has required some dredging operations. Dredging operations are currently taking place at mile 48 until Sept 30. Barge traffic is allowed to transit through the area at slow speed," added Russell. "The New Orleans and Baton Rouge Harbor is also experiencing low water levels. Ocean vessel and barge traffic are moving but some shoaling is occurring alongside some terminal docks." Ceres Barge Line noted on their daily freight wire to DTN, "Drafts are being cut in St. Louis and south as river stages are working their way lower and no rain in sight." Water levels at St. Louis are at 9.3 feet and expected to drop to 4.7 feet or lower by October 8.…

Barge operators have reported shippers seem to have enough freight in front of them, but it is tough getting empties on the Illinois and Mid-Mississippi rivers. This may worsen as low water and delays due to repairs may limit the barge supply to certain areas.


Ingram Marine's website posted Sept. 24, that on the Mid/Lower Ohio, "Lock 52 main chamber was closed as of 9/14/15 and will be closed until 9/25/15 for lock and dam sill repair. While the auxiliary chamber will be available, major delays are occurring. Lock 52 auxiliary chamber will be closed for repair 10/5/15 to 10/19/15, but the main chamber will be available and delays are expected. Lock 53 is not operating, but is expected to open by Friday, September 25."

The U.S. Army Corps of Engineers (USACE) said on their website, "USACE Lock 52 and another nearby lock were built in 1929 and are scheduled to be replaced by the Olmsted Locks and Dam project in 2018, with the cost put at $3 billion. Olmsted will replace locks and dams 53 and 52 and greatly reduce tow and barge delays through the busiest stretch of river in America's inland waterways. Locks and Dams 52 and 53, in the lower portion of the river, are remnants of the original 1929 river navigation system. The highest tonnage in the nation passes through Lock and Dam 52. Locks and Dams 52 and 53 on the lower Ohio River are the last of the old wicket dams. The wickets are constructed of heavy timber about 4 feet wide and up to 20 feet long. Raising or lowering the wickets is done by a crew on a steam boiler winch barge and track hoe that moves along the upstream face of the dam."…

Martin Hettel, a senior manager with AEP River Operations, a large inland river vessel operator told the Wall Street Journal there was a bottleneck of 72 tow boats and 757 barges on September 20. Hettel said, "AEP had seven of its own tow boats waiting in the snarl, moving about 105 barges, mainly of grain." According to the USACE, both locks were expected to fully reopen by Friday, Sept. 25, but delays will continue to be an issue.

"Tows waiting to pass through Locks 52 and 53 are experiencing four- to five-day delays," Russell said, which are causing exporters at the Gulf to become concerned about loading waiting vessels in time for scheduled shipments. Basis on the Ohio River has been weaker with corn basis dropping over 20 cents so far and soybean basis over 8 cents for the week ended Sept. 25. However, both Gulf soybean and corn basis levels have been firm, hoping to entice grain to move south of the dredging and lock delays.

But the Gulf is not without its problems. Russell told DTN, "The New Orleans and Baton Rouge Harbor is also experiencing low water levels. Ocean vessel and barge traffic are moving but some shoaling is occurring alongside some terminal docks."

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 10:07AM CDT 09/28/15 by Mary Kennedy

Friday 09/25/15

Perspective on China's Big Soybean Buy

Chinese buyers agreed to purchase 484 million bushels of soybeans for a little more than $5 billion at a contract signing ceremony in Iowa on Thursday.

Cutline: U.S. grain companies sit down with Chinese soybean buyers for a signing ceremony in 2014. (DTN photo by Katie Micik)

That's a lot of beans -- about 17% of what USDA thinks China will import in the 2015-16 marketing year.

"There is a lot about this sale that I don't understand," one reader wrote to me. "Why such a large sale now? If my math is correct, that comes out to $10.95 per bushel. Cash beans in my area are $8.40ish. I could just be naive about international sales but it seems weird to me, weird in the sense of the timing. If we are going to have such a large crop soon there should be an abundance of cheaper beans in the near future. How long has this sale been in the works? Are they fearful of supply, or just ensuring a reliable supply? I don't keep track of what international buyers typically pay for soybeans. Is this a cheap buy right now for them? Maybe they anticipate the low is in and we are set for a rally?"

I love a good, complex question.

I think there are several important points to keep in mind.

First, there's a strong ceremonial aspect to China's culture. I've been to several of these signing ceremonies in the past and they are very formal. Important people give speeches. A representative from a U.S. grain company sits next to someone from Chinese company. They're introduced to the audience, sign a contract and shake hands. Rinse and repeat, until everyone has had a chance to sign and shake hands. Then they pass around champagne and have a toast. I'd say less than half actually drink it. It's more about the tradition of celebrating success by raising a glass of fizzy white wine and hearing it clink against your friend's glass.

These signing ceremonies recognize and honor the successful U.S.-China trade relationship. It’s as much of a cultural exercise as a business deal. Relationships are at the heart of trade, and this is one way the soybean industry recognizes and respects our relationship with China.

There were 24 agreements signed yesterday. Some of them were actual contracts with all of the specific terms (price, quantity, deliver date, etc.) figure out, but others were framework agreements that left a lot of the details to be determined at a later date. The actual sales and shipments of the beans bought on Thursday will likely be spread throughout the 2015-16 marketing year. So while this was a large one-day event, this isn't going to impact the market all atonce.

As for the difference in prices, it'simportant toremember end users pay more forgrain than farmers are paid at their local elevators because there's a cost involved with shipping grain halfway around the world, hence the difference between the purchase price and a farmer's cash grain bid.

Transportation makes up about 20% of the total customers in China pay for grain, according to this Soy Transportation Coalition chart (…).

So, to my reader's question, does the magnitude of this sale -- it's the largest in price and volume ever -- reflect the Chinese perspective on global soybean supply?

According to the latest supply and demand report, USDA thinks China will import 79 million metric tons of soybeans in 2015-16, about 2 mmt more than they bought the year prior. Now, that's not 79 mmt from us, the world's second largest soybean exporter. That's from everywhere.

Chinese companies agreed to buy 13.1 mmt from the U.S. on Thursday, or almost 17% of what USDA thinks China will buy this year. That's an impressive amount for a one-day sale.

Low prices tend to spur new demand. One thing we know about China is that its burgeoning middle class is eating more meat, and as Chinese farmers raise more hogs and poultry, they feed more soybean meal. It also means higher demand for vegetable oil. This has led to an excess of crush capacity in China.

China has the capacity to crush 130 mmt of soybeans each year, but it only crushed 71 mmt in the 2014-15 marketing year, according to a USDA report from earlier this year (…). That means businesses are very confident, and invested, in continued growth. Low prices give them an opportunity to utilize some of this excess capacity.

Crush margins -- the difference between what companies pay for beans and what they earn from selling the meal and oil -- are also expected to stay positive this year. According to an article on, margins for the second half of the year are expected to average $15 per metric ton. While that's down from the $30 per ton they received in the first half, it's an improvement from last year's narrow margins. (…)

China is making money with beans at these prices, and apparently, they think the profit margins are good enough to commit to lock in 17% of what they're likely to buy this year.

So, back to my reader's question: "Are they fearful of supply, or just ensuring a reliable supply?"

I don't think China is worried about running out of beans to buy, unless they know something I don't. USDA's currently forecasting global ending stocks for 2015-16 at almost 85 mmt with a stocks-to-use ratio of 27.4%. Brazil is expected to grow -- and is starting to plant -- a crop that’s several million metric tons larger than last year's bin-buster. All indications point toa bountyof beans.

With a healthy crush margin on the table, I lean towards thinking China's just trying to ensure they have reliable supply of high-quality U.S. beans. But then again, does anyone really know what China's thinking?


Posted at 3:53PM CDT 09/25/15 by Katie Micik
Comments (1)
A big thumbs up to USB, ASA and USEC. There continued leadership has opened up markets for our soybeans and their byproducts. Wish all growers would commit to there state Association's and become involved with helping grow our industry.
Posted by SCOTT HENDRICKSON at 7:13AM CDT 09/28/15

Monday 09/21/15

Possible Rail Shutdown Threatened if Safety Law Extension Not Granted

MINNEAPOLIS (DTN) -- The deadline for U.S. railroads to install a new federally mandated system of safety measures is only a few months away. But with most railroads still a year or more away from implementing the new system, some members of Congress and agriculture groups are concerned that if the deadline isn't met, railroads will stop rail service and cease hauling commodities and other products.

BNSF train heading east through Randall, Minnesota. (DTN photo by Mary Kennedy)

The Rail Safety Improvement Act of 2008 mandated that positive train control (PTC) be implemented across a significant portion of the nation's rail industry by Dec. 31, 2015. PTC are integrated command, control, communications and information systems for controlling train movements with safety, security, precision and efficiency. Now, as that deadline looms, some in Congress are concerned if railroads don't meet the deadline they will stop rail service and/or cease hauling certain commodities affected by the PTC rule, which would be detrimental to agriculture.…

Besides agriculture, passenger rail service could also be negatively affected if the PTC rule deadline stands. Positive train control is required by federal law to be in place on all Class I railroads and other railroads carrying passengers by the end of the year. Some railroads are already warning they will stop service due to the deadline.

Sen. Claire McCaskill, D-Mo., said on her website, "Amtrak has notified the Kansas City Terminal Railway of its intention to discontinue passenger service into and out of Kansas City starting next year if the matter of how to pay for PTC on the railway's 85 miles of track is not resolved. Last year more than 737,000 people traveled on Amtrak in Missouri." McCaskill added, "There's no way Amtrak or Missouri can pay $30 million for this."

In a Jan. 28 hearing, U.S. Senator John Thune, R-S.D., chairman of the Senate Committee on Commerce, Science and Transportation, said, "Although the PTC deadline is quickly approaching, it remains unattainable. Through the end of 2014, railroads have invested over $5 billion in PTC, and they expect to spend billions more in the coming years," according to his website.

"They have begun installation of the radio towers, locomotive technology, and other PTC infrastructure, but full compliance with the statutory requirements cannot be achieved by the end of this year. The FRA and the Government Accountability Office have documented the immense technical and programmatic challenges with implementing PTC," said Thune.

Then, during a Senate committee hearing held September 15 for Sarah Feinberg's nomination as administrator of the Federal Railroad Administration (FRA), Thune and other members of his committee told Feinberg that some railroads have already said they will shut down service on January 1, 2016, unless a compromise is reached. According to various news sources, Feinberg has been clear that the FRA will enforce the current deadline and will fine railroads that are not in compliance.

In a letter to Thune, Carl R. Ice, president and CEO of BNSF said, "Despite our strong commitment to this technology, BNSF has faced significant technical, regulatory and operational obstacles to meeting the PTC implementation deadline imposed, the RSIA and will not meet the RSIA deadline for deployment. As a result, BNSF believes that Congress must move the PTC deadline in order to achieve successful PTC implementation and to avoid potential significant and unnecessary congestion and shipper service impacts.

"We have analyzed what train operations could continue if operations are halted on mandated subdivisions without PTC installed and believe that operations across our entire network will likely be compromised by congestion and effectively shut down. BNSF would do whatever is reasonably possible to mitigate this impact, but the consequences for the economy and for our company would be substantial," said Ice.…

Mike Steenhoek, executive director of the Soy Transportation Coalition told DTN in an email, "This is an issue that is causing concern among agricultural shippers. Once the calendar turns to 2016, will railroads be able to fully accommodate soybeans and grain produced from the 2015 harvest? Moreover, as we know, many cooperatives have made/are making plans to receive and distribute fertilizer for spring of 2016. In order to conduct this planning, cooperatives require a predictable forecast for rail service. The lack of resolution to the PTC debate is creating uncertainty.

"There are a number of significant headwinds currently confronting U.S. agriculture -- from low commodity prices to the strengthening of the U.S. dollar. This is certainly not the time to add insult to injury by allowing such a self-imposed problem to materialize," Steenhoek added.


On Sept. 4, the U.S. Government Accountability Office (GAO) released a study on the issue, finding that, "Most railroads in GAO's review (20 of 29) estimate that they will implement positive train control (PTC) -- a communications-based system designed to prevent certain types of train accidents -- one to five years after the statutory deadline of Dec. 31, 2015 (three did not have an estimated completion date). Of the remaining six railroads, one was exempted from installing PTC based on limited speeds on its track, and four commuter railroads and one small freight railroad estimate they will have PTC operational on their own tracks by the deadline.

"However, the ability of these five railroads to fully operate with PTC may be affected because other railroads that operate equipment on their tracks -- known as tenants -- or that own tracks that they operate on -- known as hosts -- may not be equipped with PTC. In addition, the ability of railroads to meet the deadline may be affected by the interoperability of their PTC system with those of other railroads and whether they can obtain final system approval from the Federal Railroad Administration (FRA). Railroads GAO interviewed said they continue to face implementation challenges."…

The report added, "GAO recommends that FRA develop a plan that outlines how the agency will hold railroads accountable for making continued progress toward the full implementation of PTC by, among other things, collecting any additional information needed to track progress of individual railroads. DOT agreed with the recommendation."

While there are some who feel the railroads have had enough time to implement PTC, there are others who know some railroads could hold true to their threats. Farmers and grain shippers are concerned if rail service slows or stops on some lines as of Jan. 1, 2016, there could be another economic disaster similar to 2014 if the PTC deadline is not extended.

Mary C. Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 1:58PM CDT 09/21/15 by Mary Kennedy
Comments (3)
Like in many other areas of industry, sounds like more government overkill.
Posted by Bonnie Dukowitz at 9:05PM CDT 09/21/15
There is no problem government can't create or make worse.
Posted by David Kessler at 8:23AM CDT 09/22/15
Once again our government is creating laws that are not attainable, either because the technology is not there or the cost of implementation is so high that it is not feasible. It sure would be nice if these people making the laws had some degree of knowledge about the mater before passing the laws. Just because someone has the idea does not mean it can happen. I understand that it has been some time since the law was written and therefore lots of time to make it happen but the money is just not there for the railroads to spend and they are already trying to keeps costs down to stay in business but this would require a huge rise in prices and hurt the country as a whole since higher prices for shipping would result in lower prices for the porducer or higher prices in the stores.
Posted by Dale Paisley at 1:05PM CDT 09/24/15

Wednesday 09/16/15

FSA Acreage Debacle

Numbers junkies were thrown for a loop this morning when USDA erroneously published the last year's Farm Services Agency acreage data instead of this year's data.

Historically, FSA's prevent plant acreage estimates grow from month to month as they receive updated information from farmers. The market, and Twitter, reacted when the numbers unexpectedly showed a decline in corn prevent planted acres.

But when the dust settled and FSA released the correct data set shortly after 9 a.m. CT, the numbers conformed to historical trends. Prevent plant corn acres inched up slightly to 2.35 million from 2.30 last month. Soybean prevented planting acres grew to 2.22 ma from last month's 2.17 ma.

The confusion, and irritation, over this morning's debacle is just a new chapter in the conversation about how this particular release fits into the bigger picture of acreage estimates. It's important to remember that FSA used to only release this information when the data was final at the end of the year. The agency switched to a monthly release in 2011.

USDA's National Ag Statistics Service (NASS) incorporates FSA's acreage data into its corn and soybean estimates in the October Crop Production because that's when it feels FSA's numbers have reached a level of statistical reliability.

However, the two agencies operate on different definitions, so FSA's numbers don't directly translate to changes into NASS's acreage estimates. Lance Honig, who leads NASS's crop statistics branch, explained in a memo (that you can find here:…) how the categories differ.

"The FSA categories 'acres planted' and 'acres failed' represent acres actually planted to each specific crop, and combined are comparable to the NASS planted acreage definition. The FSA category 'acres failed' also serves as a minimum level of abandonment and is useful to NASS in establishing harvested acreage estimates. The FSA category 'acres prevented planted' is helpful in understanding current conditions, but does not directly correspond to any NASS acreage estimates."

It's important to not read too much into these numbers. At best, they lend numbers to conversations about this spring's planting challenges and can help gauge trends. At worst, I've seen them over used to try to make an overly bullish or bearish argument about how "off" NASS's acreage numbers.

The bottom line: Don't read too much into these numbers, especially with the Grain Stocks report and updated Crop Production estimates coming our way soon.


Posted at 10:52AM CDT 09/16/15 by Katie Micik

Monday 09/14/15

Heavier Loads on the Roads?

MINNEAPOLIS (DTN) -- Individual states could decide whether to raise the maximum allowable weight for freight-shipping trucks from the current 80,000 pounds to 91,000 pounds under a bill introduced in the U.S. House on Sept. 10.

Loaded semi-trucks wait to dump corn at a Cargill elevator and biodiesel plant in Kansas City, Missouri. (Progressive Farmer photo by Jim Patrico)

U.S. Representative Reid Ribble, R-Wis., who introduced the Safe, Flexible, and Efficient (SAFE) Trucking Act, stated in a press release last week that the bill "would allow our freight shipping industry to be more efficient while creating less pavement wear and tear and improving safety on our shared roads and bridges." (…)

The National Grain and Feed Association supports the bill and said in a press release that the SAFE Trucking Act would mean more efficient grain transportation by allowing trucks to carry an additional 11,000 pounds of weight on federal highways while adhering to U.S. Department of Transportation safety guidelines.

"Federal highway truck weight limits currently are lower than most state road weight limits, and this inconsistency presents obstacles to efficient movement of U.S. grains," said NGFA Director of Economics and Government Relations Max Fisher. "Congressman Ribble's bill would improve this situation, taking better advantage of our Interstate highway system infrastructure while still protecting highway safety."

The dairy industry, in a press release, said they also welcomed the legislation. "IDFA (International Dairy Foods Association) thanks Congressman Ribble for his leadership on an issue that is vitally important to the makers and marketers of dairy products and the many other industries relying on trucks to move goods to market, as to those who share our highways with them," said Connie Tipton, president and CEO of IDFA.

In February 2015, the Soy Transportation Coalition (STC) published an update of an earlier 2009 report that analyzed the impact of increasing semi weight limits on federal roads and bridges from an 80,000-pound, five-axle configuration to a 97,000-pound, six-axle configuration. The STC said in their report: "If supply of trucking is not keeping pace with demand for trucking, we need to find safe and responsible ways to increase trucking capacity."

The study, funded by the soybean checkoff, noted that, "The impact on roads of a six-axle, 97,000-pound semi is less than a five-axle, 80,000-pound semi. Most research has found that stress to bridges depends more on the truck's total load than the number of axles."

The study also noted, "For transporting soybeans and soy products, allowing six-axle, 97,000-pound semis will result in 1.2 million fewer truck trips, 5.5 million fewer gallons of fuel consumed, 56,000 fewer tons of carbon dioxide emissions, and between $11 million to $28 million in reduced fuel costs. Allowing six-axle, 97,000-pound semis will enable farmers to transport at minimum an additional 183 bushels of soybeans per load. By 2022, this will annually save soybean farmers 602,000 truck trips, 1.7 million gallons of fuel, and between $4 million to $8 million in reduced fuel costs."…


In June 2015, the U.S. Department of Transportation (DOT) released a report examining the impacts of increasing current federal truck size and weight limits. The DOT said it needs more data to determine the safety ramifications of allowing heavier trucks on the nation's roads. Various news agencies reported that in a June 5 letter to Congress, DOT Under Secretary for Policy Peter Rogoff said the research for the study "revealed very significant data limitations that severely hampered the Federal Highway Administration's efforts to conclusively study the effects of the size and weight of various truck configurations."

Rogoff added, "As such, the department believes that no changes in the relevant truck size and weight laws and regulations should be considered until these data limitations are overcome." DOT recently stated that public comments must be submitted by Oct. 13 to be considered for inclusion in the MAP-21 Comprehensive Truck Size and Weight Limits Study Report, which will be submitted to Congress. (MAP-21 is a 2012 transportation funding bill.)

According to the Association of American Railroads (AAR), "The study noted that if federal truck weights were increased to 91,000 pounds, more than 4,800 bridges would need to be strengthened or replaced because of added stress, at a cost to taxpayers of more than $1.1 billion. The DOT analyzed just 20% of the nation's bridges for its report -- the remaining 80% are probably even more vulnerable to heavier trucks."

The AAR added that, "In addition, because many parts of the Interstate highway system were not built for longer and heavier trucks, their widespread use could require massive new spending to strengthen or replace bridges and pavement, as well as to widen vehicle lanes and shoulders. The (AAR) on their website stated that, 'Freight railroads support a continuation of existing truck size and weight allowances.'"

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 12:06PM CDT 09/14/15 by Mary Kennedy
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