Market Matters Blog
Katie Micik DTN Markets Editor

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

Monday 08/31/15

Railroads Respond to STB Requests to Provide Service Outlook

MINNEAPOLIS (DTN) -- Will the nation's railroads be ready for harvest? That's the question transportation regulators, and grain shippers want answered ahead of harvest this fall following last year's lengthy and widespread backlogs.

Will this be the scene this fall, or will railroads be able to handle the upcoming large corn and soybean harvest? BNSF railroad tracks along the Northern Transcon early September 2014. (DTN photo by Mary Kennedy)

On July 13, Surface Transportation Board (STB) Chairman Dan Elliot sent a letter to all the Class 1 railroads asking them if they will be ready for the "fall peak" period. He asked that each railroad provide their general outlook and plans for the remainder of 2015 as well as the entire winter season. Each railroad was asked to provide specific answers to different issues, but the main theme was the same for all railroads: "Provide the expectations for any season peaks in traffic and the actions it will take to prepare, with specific references to critical commodities such as grain, coal, propane and automotive traffic." Here is the link to the letter sent to the BNSF:…

The BNSF responded to the STB saying, "After an incredibly challenging 2014, BNSF's network is performing well. We, and more importantly our customers, began to see marked improvements in service performance in the fourth quarter of last year as the capacity expansion projects that were part of our $5.5 billion 2014 capital plan were placed in service. We have continued that momentum through this year, and it continues to build as our $6 billion 2015 capital plan is executed across our network."

"We won't realize the full capability of the network while we are constructing these expansion projects and undertaking this year's significant maintenance program. Our customers will see additional velocity improvement as the expansion projects and annual maintenance are concluded for the year, in addition to realizing the benefit of the additional capacity through the fall and into the winter," added the BNSF.

"We are well-positioned to address anticipated fall and winter volumes with additional resources available. Current economic conditions have required us to store over 750 locomotives and, unfortunately, furlough over 1,700 people. While we are doing everything we can now to bring our employees back to work, we will be able to move quickly to deploy people and locomotives if volumes increase more rapidly than expected."…

In their weekly update as of Aug. 28, the BNSF website reported: "The operation experienced mostly steady performance and good fluidity across the network this week. Minor service interruptions associated with ongoing maintenance and capital expansion as well as the wildfire situation in the Pacific Northwest contributed to a small spike in total trains held. We also moved the highest weekly volume of 2015 to date at 207,908 units, exceeding the 200,000 level for the fifth week in a row and the 14th week this year."

On Aug. 27, the BNSF reported that there was a track outage in their Hi-line subdivision at Essex, Montana, due to the wildfires. Train traffic was suspended and crews applied approximately 18,000 gallons of water and about 80 gallons of foam to a one mile span along the tracks to slow down the fire's advance and mitigate any damage to property.

The BNSF stated that, "If conditions improve, several trains are staged and ready to take advantage of any opportunity to operate through the area safely. We will also continue to re-route traffic to minimize any service disruption caused by this situation. Fire conditions could worsen Saturday with strong winds in the forecast; however, a changing weather pattern will increase the chances for rain and bring much cooler temperatures to the area as we move into next week."


One year ago on Sept. 4, 2014, the STB held a nine-hour hearing in Fargo, North Dakota, to address industry concerns over rail backlogs that had persisted for over 10 months. State leaders, shippers and farmers were all concerned the rail backlog would cost the U.S. export business if purchasing countries became concerned they would not receive grain shipments on time. As the 2014 harvest was fast approaching, some elevators at the time of the hearing were waiting for cars ordered for the spring of 2014. A shipper in South Dakota told DTN last fall that he would be unable to dump new-crop soybeans because his elevator was full and he was waiting for past-due orders.

At the time of the hearing, the Class 1 railroads were still struggling to catch up, but as the fall and winter progressed, there was less grain shipped due to lower cash prices and a more mild winter than the previous year, which certainly made a difference for railroads in placing empties and moving loaded cars.

Probably the biggest help to alleviating congestion was the slowdown in oil car shipments due to the collapse of crude oil prices. Fewer oil cars crowded the railroads as oil production slowed due to the cheap prices. Many shippers and agriculture organizations believed that the oil cars were likely the biggest culprit in preventing timely placement and movement of grain cars.

Bob Zelenka, executive director of the Minnesota Grain and Feed Association, told the STB at the Sept. 4, 2014, hearing that railroads did not adjust quickly enough to the unprecedented oil traffic. "It just added substantial congestion to the whole BNSF and CP network," Zelenka said, "and neither was well prepared with the infrastructure to handle that increase in volume."

The difference in service from one year ago can be seen in the comparisons by the BNSF for the week ending Aug. 25, 2015. Total trains held for the week were at an average of 69.4, down by 70.3% versus the same week last year. Locomotive velocity, measured in miles per day (MPD), was 278.0, versus 249.2 for the week ending Aug. 19, 2014, with car velocity at 214.0 MPD versus 176.7. Train velocity was at 18.3 miles per hour (MPH) versus 14.6 MPH, up by 25.3% versus one year ago. Total volume was at a year-to-date high of 207,908 units moved in Week 33 versus 198,959 units at the same time last year, and terminal dwell was at 25.0 hours, down by 11.3% from one year ago.

One item stuck out in the latest service update by the BNSF more than the others: past-due car orders. The BNSF reported that for the week of Aug. 22, past-due car orders system wide, were at 425 cars and days late was at 3.2. One year ago, for the week ending Aug. 19, past due orders were at 2,609, at an average of 12.9 days late.

Yes indeed, what a difference one year makes.

Here is the link to all Class 1 Railroads fall service plans to the STB:…

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 11:36AM CDT 08/31/15 by Mary Kennedy

Wednesday 08/26/15

2014-15 Crop Year Ends For Corn, Soybeans, Spring Wheat Basis

As the 2014-15 crop marketing year draws to a close, let's look at how basis fared in the past 12 months. In general, at the end of August 2015, corn, soybean and wheat basis is about 30 to 40 cents weaker than the 5-year averages for each crop.

(DTN chart)


The national average soybean basis for the last week of the crop year is at 7 cents under the November futures, 1 cent weaker than last week and 34 cents weaker than the DTN five-year average at this time.

The average soybean basis for the 2014-15 crop year was -35. Basis spiked at the beginning of the crop year as supplies became tight ahead of new-crop harvest. Processors were bidding strong with many paying above posted prices in order to meet their needs for crushing.

Once harvest began in late September 2014, with good yields reported, soybean basis dove off its highs -- which can be seen on the accompanying chart.

Soybean basis spiked a little in June as heavy rains caused the closure of the Illinois River twice, stopping river terminals from loading out beans. High water problems also existed in St. Louis, slowing and in some cases, stopping barges from getting to the Gulf and preventing empties from moving back up river.

After USDA surprised the market on August 12 with an average soybean yield estimate of 46.9 bushel per acre, the cash price fell apart, leaving the basis to do the work of enticing farmer selling in order to meet exporter and processor needs. The market had expected USDA to report lower yields due to heavy rains and flooding in much of the Eastern Corn Belt, causing many fields to go unplanted and damaging waterlogged soybean plants. As the crop year comes to a close, basis has been mixed, but new-crop basis has been stronger as exporters need soybeans to start fulfilling export contracts at the Gulf and Pacific Northwest.


The national average corn basis for the last week of the 2014-15 crop year is at 23 cents under the September futures, 1 cent stronger than last week and 29 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -28.

Corn basis was steady most of this crop year thanks to decent export and ethanol demand. Ethanol plants have enjoyed positive margins much of this year, encouraging them to keep producing ethanol, which in turn requires more corn usage. In June, basis was firm due to the heavy rains caused by Tropical Storm Bill, which greatly affected the Illinois and Upper Mississippi river levels and caused problems down river as flood debris threatened moving tows and barges. Basis remained steady as the year came to an end, mainly due to continued demand from exporters and ethanol plants and lower cash prices caused by the prospects for a large harvest this fall.


The national average spring wheat basis for the last week of the 2014-15 crop year is at 47 cents under the September Minneapolis futures, unchanged from last week and 37 cents weaker than the DTN five-year average at this time. The average basis for the crop year was -10. Spring wheat basis was strong at the beginning of the crop year due to lower protein and low vitreous kernel content, along with rain, which prolonged harvest. Premiums for higher protein milling quality wheat spiked as mills vied for blending material. The high basis for the crop year for spot 14 protein on the MGEX spot market was at +350mwz and the high for spot 15 protein was at +675mwz. In contrast, current MGEX spot 14s are trading at +70 to +105 and 15 proteins are at +160.

As the 2015 new-crop harvest moves along, average protein so far has been reported at 14.3 vs. the final 2014 average of 13.6. With 75% of the spring wheat harvested as of one week ago, the samples so far are showing test weights of 61.9 pounds vs. last year of 60.6 and average vitreous kernel count is at 77% vs. last year of 65%, making the new-crop grade DNS vs. NS last year. Dark Northern Spring Wheat is the preferred flavor of wheat by the nearly all buyers of U.S. spring wheat.

Mary Kennedy can be reached at

Follow her on Twitter @MaryCKenn


Posted at 3:41PM CDT 08/26/15 by Mary Kennedy

Monday 08/10/15

STB Needs to Make Timely Decision on Revenue Adequacy, Grain Rates

MINNEAPOLIS (DTN) -- The Surface Transportation Board needs to quickly move ahead with a comprehensive set of proposals for railroad grain shipping rates and rail revenue adequacy in order to create more certainty for both shippers and railroads, the former acting chairman of the STB told attendees at this year's National Grain and Feed Association Ag Transportation Summit. The event was held Aug. 4-5 in Rosemont, Illinois.

A BNSF train heads east on the Northern Transcon. (DTN photo by Mary Kennedy)

Deb Miller, former acting chairman of the STB, told attendees at the summit that, in her opinion, "The STB should move forward with a comprehensive package of all current proposals before the board and not piecemeal them one by one." Miller said that "shippers and railroads need more certainty as some of the issues have been open for years."

The STB is currently reviewing whether to establish a new process that agricultural commodity shippers could use to challenge freight rates they believe are unreasonable or unlawful under the Staggers Rail Act of 1980. It is also reviewing how it annually determines whether a rail carrier is revenue adequate -- that is, whether it is earning sufficient revenue to cover its costs and earn a reasonable return sufficient to attract capital.

Shippers and railroads had until Aug. 6 to submit new or additional comments to the STB on these two key issues before the board. The STB also held two hearing prior to the public comment period deadline. The first, on June 10, addressed the rail transportation of grain and rate regulation review. A second hearing addressing railroad revenue adequacy was held July 22-23.

Miller told attendees at the NGFA Transportation Summit last week that she was "amazed by the level of complexity for a shipper to bring a rate case before the board." She said that she felt there were "fairly simple" things the board could do to make the process more helpful. She said that "many shippers have complained that it's not easy to get tariff rates, especially those that are password protected." The current process is unclear if a group of shippers, rather than just one shipper, could bring a rate case before the board, which would spread out the legal costs, she said.

In a June 23 filing commenting on the June 10 STB hearing, a group of shippers said that they "concur with the NGFA, the Alliance for Rail Competition, and the U.S. Department of Agriculture that the board's current rail rate reasonableness rules are not usable to test the reasonableness of railroad rates for the transportation of agricultural commodities. For the multitude reasons explained by these parties, the current rules are too costly, too unwieldy, too time consuming and provide no opportunity for relief to the vast majority of captive rail shippers of agricultural commodities." The group included the National Oilseed Processors Association, South Dakota Grain and Feed Association, Wisconsin Agribusiness Association, Michigan Agri-Business Association and Minnesota Grain and Feed Association among other state shipper organizations.…

Miller also talked at the NGFA summit about the second issue at hand concerning rail revenue adequacy. She said that as railroads have become more revenue adequate, there needs to be a "different approach" to the issue.

Current STB Chairman Dan Elliot said at the June 22 hearing, "Now that the industry is both financially healthier and restructured with fewer large railroads, the STB needs to examine core practices to meet the goals Congress has laid out for the agency," Elliot said. "The board's reexamination of its economic regulatory policies does not mean that significant changes to these policies are in order."

Miller noted the comments from the Association of American Railroads (AAR) made it clear that re-regulation of the railroad industry "was bad."

In their comments at the July 22 hearing, the AAR urged the STB to "beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies." AAR President and CEO Edward R. Hamberger testified, "Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let's call it what it is: They want you to institute a regime of wide-ranging price controls on freight railroads."

Miller said at the NGFA summit that the rail industry is a mix of public and private ownership with private companies fully funding their own business. However, she was quick to point out that what happens on one rail line can affect other networks and that since networks are shared, there is still a "common carrier obligation."

According to Wikipedia, a common carrier "offers its services to the general public under license or authority provided by a regulatory body. The regulatory body has usually been granted 'ministerial authority' by the legislation that created it. The regulatory body may create, interpret, and enforce its regulations upon the common carrier (subject to judicial review) with independence and finality, as long as it acts within the bounds of the enabling legislation."

Miller said that the resolution on the proposals could take place by the end of this year.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 12:59PM CDT 08/10/15 by Mary Kennedy

Friday 08/07/15

A Windshield Tour

I've done a wee bit of driving over the past week. It started with a trip to see my sister in Springfield, Illinois. I left Omaha, drove south and cut across northern Missouri. On Monday I drove to Chicago for the Agricultural Transportation Summit, and on Wednesday took a straight shot back to Omaha across northern Illinois and central Iowa.

I drove more than 1,000 miles in the past week, and what I saw was all over the board. As for general observations, the best crop seems to be in Iowa. Corn had great color, height and consistency. There's lots of variability in Illinois, and it's clear that some fields lost a lot of nitrogen.

Missouri was banking on beans, but just couldn't get them in the ground. There's been a lot of corn planted across US 36 the past few years, but there's a lot that just didn't get planted this year. I have a feeling USDA will trim soybean acres in next week's report (they resurveyed producers in Missouri due to the lateness of planting).

Holy weeds, Batman. Even if farmers got the crop planted, it looks like a lot of folks in Missouri and Illinois couldn't get into their bean fields to spray.

Now, for more details.

I-29 to Rockport, Missouri --- Crops looked like they were planted late, but overall corn height was pretty consistent across the fields. Soybean fields were late, but looked okay. There were a few good looking bean fields closer to Omaha.

I-29 Rockport to St. Joseph --- There was a fair amount of prevent planting in the river bottoms. Weeds were everywhere in some of those fields. Most of the beans were tiny & hadn't closed rows yet, some were a rather yellowish green. Corn was a lighter color green than you'd like to see, and it looked like the crop emerged unevenly.

US 36 from St. Joseph to Chillicothe --- It's very, very variable with a lot of prevented planting. I think oats and oat mixes were a very popular cover crop choice. Some of the double crop beans that were planted into wheat stubble looked like they were up to about 8 leaves per plant. First crop beans, if they got planted, were really uneven and weren't the right color. I saw a few fields of what looked like corn that hadn't tasseled, but I noticed a few fields of sorghum that had just started to flower near Chillicothe, so I wonder if that wasn't what I saw. Corn in the area looked decent, but it depended on whether the field was on a hill or in a valley. Farmers had definitely planned on expanding soybean acreage here. In years past this road was corn, corn, corn, and it was not that way this year.

US 36 Chillicothe to Hannibal --- The crops looked better than the western half of the state. Much less prevent plant, and some soybean fields had closed rows and had a nice deep green color. Others still looked sickly and small, but overall there was a more equal mix between decent and poor fields. Corn had some height variability issues, but I didn't see as many fields turning yellowish green. Overall it looked healthier.

I-72 to Springfield, Illinois --- Lots of corn on this side of the river, and it looked much better and much more consistent than anything I saw in Missouri. The corn was a deeper green and there were more even fields, except around the Illinois River bottom. Corn straight-up died in some of the wettest fields there, and there was hardly a soybean field to be seen. Crops looked much better from Jacksonville to Springfield, but there were still signs of wetness.

I-55 Springfield to Bloomington --- You could see the issues related to a wet spring in Illinois --- corn of varying heights, yellowing, etc. It's far from dead, however. There were some bean fields planted really, really late, but others looked pretty healthy.

I-88 Chicago to Davenport, Iowa -- Corn east of Interstate 39 showed signs of wet spring. Most cornfields had varying heights, and rows were still visible in a large number of soybean fields. I saw one or two fields that were more mature than others, but they also had a brownish tint. In the western part of the state, it seemed like crops planted on the hills looked much better than what was planted in the low spots. I've seen years where those low spots have had more ponding issues than this year.

I-80 across Iowa -- Best crops I saw. The corn had consistent color and height. I'd almost forgotten what corn was supposed to look like until I got to Iowa. Sure, I'd seen a few good fields scattered across parts of Missouri and Illinois, but the change was dramatic. Soybean fields looked healthy, consistent and like farmers had a chance to spray for weeds. What a change!

In summary, corn's all over the board. I didn't see too much that looked outstanding (except in Iowa), but there are some good fields out there. It's not dead by any means. It's just not ideal. Soybean fields were generally planted late, and some look better than others.


Posted at 9:58AM CDT 08/07/15 by Katie Micik
Comments (3)
Not everyone is/was wet. My little pocket is extremely dry - been missed by the rains.
Posted by Unknown at 10:30AM CDT 08/07/15
Thank You Katie you are the first report to admitt things are not at all rosie. Sounds like you seen the same as I did in July on our trip from michigan to Texas. Yet USDA and those reporting want us to believe the corn crop will recover.
Posted by Raymond Simpkins at 11:22AM CDT 08/07/15
yes I'm from Wis. and was down 88 and 80 two weeks ago and the biggest thing was the color very pale corn way short of N they must of forgot what corn looks like to get high yields. Up here corn and beans look good for now but it have forgotten to rain the last two weeks and starting to see a little stress
Posted by Unknown at 9:06PM CDT 08/09/15

Wednesday 08/05/15

Mr. Market Lives In China Too

Famed investor Warren Buffett once wrote about a creation of his teacher, Ben Graham, named Mr. Market. Mr. Market, he explained, is a poor, unstable fellow with incurable emotional problems. He shows up each day to offer a price at which he will either buy your interest in a business or sell you his. "Under these conditions," Buffett explained, "the more manic-depressive his behavior, the better for you."*

Recent selling in China's stock market have ignited bearish concerns for soybean prices, but so far, soybean demand remains intact (Source: DTN ProphetX chart).

I couldn't help but think of Mr. Market as I watched soybean prices get hit with selling in the month of July, part of which was blamed on the recent decline in China's stock market. So far, 1.087 billion bushels of U.S. soybeans have been exported to China in 2014-15, so it is understandable why soybeans are allergic to this kind of bearish news; but were these concerns about China legitimate or just another example of Mr. Market's neurotic behavior?

China's state-run economy is inherently difficult to assess as it is hard to know exactly what information is credible and what might be politically motivated. Many analysts cite slower economic growth in China this year, but the same analysts peg China's real GDP growth at roughly 6.5% to 7.0% -- hardly a cause for concern yet.

According to Dow Jones, China's Customs Office reported soybean imports in the first half of 2015 as being up 2.8% from a year ago and we can see USDA showing U.S. exports to China up 7.4% in 2014-15 from a year ago.** More concerning however, is that new-crop sales of U.S. soybeans are down 50% from a year ago. Is this the proof of China's falling demand for soybeans, which many fear?

It might be, but there may also be a better explanation. It is difficult to compare this year's pace of soybean sales to a year ago simply because expectations are much different. A year ago at this time, the U.S. market was at risk of running out of soybeans before harvest. The pipeline was short of supplies, so there was plenty of incentive to get your new-crop orders in early.

This year, there has been no threat of running out of soybeans and the market has been concerned about a big harvest adding to the soybean surplus, pushing prices lower. As a potential buyer, why would you secure soybean supplies early for 2015-16, especially when prices are looking lower at harvest time? That does not necessarily mean you won't be buying soybeans in 2015-16, just that the urgency has not been there.

China's economy bears watching, but so far, this year's bullish soybean demand remains intact. As far as China's stock market goes, it turns out the tumble in July took the Shanghai Composite Index down to the support of its 200-day average, but prices have held above that support since. As Mr. Buffett counsels, "... you are free to either ignore (Mr. Market) or take advantage of him, but it will be disastrous if you fall under his influence."

* Warren Buffett's explanation of Mr. Market found at:…

** USDA export sales report for soybeans as of July 23, 2015 found at:…

Todd Hultman can be reached at

Follow Todd on Twitter @ToddHultman1


Posted at 10:40AM CDT 08/05/15 by Todd Hultman

Monday 07/27/15

Shipper Groups, Railroads at Odds Over Rules Regarding Railroads' Revenue-Adequate Status

MINNEAPOLIS, Minn. (DTN) -- Testimony presented during a hearing last week on whether railroads should be able to continue to differentially price rail service to captive shippers once they reach revenue-adequate status showed a wide divide between railroads and shipper groups on the issue.

A BNSF train heads east through Randall, Minnesota, on the Northern Transcon. (DTN photo by Mary Kennedy)

The hearing was conducted July 22-23 by the federal Surface Transportation Board. DTN listened to the hearing online.

Newly reinstated Surface Transportation Board Chairman, Dan Elliot, opened the two-day public hearing by stating, "We are in the midst of a rail renaissance." In his opening remarks, Elliot said that the railroad industry carries a "vast range of commodities, with traffic accounting for 1.7 billion tons of freight each year."

"Now that the industry is both financially healthier and restructured with fewer large railroads, the STB needs to examine core practices to meet the goals Congress has laid out for the agency," Elliot said. "The board's reexamination of its economic regulatory policies does not mean that significant changes to these policies are in order."

"Assessing the effects of any proposed regulatory actions in these proceedings is a consideration of the utmost importance. The goal is that the board policies reflect thoughtful, balanced decision-making that takes into account a modernized railroad industry and sound economic principles," said Elliot.

Vice Chairman Ann Begeman said that while she had definite views on the subject, she would remain "open minded" and stated she was not looking "to turn the clock back on the rail industry."

Progressive Railroad reported that, "The STB annually determines whether Class I railroads are revenue adequate, a concept that describes whether a railroad is earning sufficient revenue to cover its costs and earn a reasonable return sufficient to attract capital. The hearing explored how the board should regulate railroads that are revenue adequate, and how such an adequacy finding should impact the regulation of rail rates, among other issues."

A group representing concerned shippers presented their arguments for change, stating, "The four major railroads consistently carried fewer carloads between 2005 and 2014, and during that time, operations have not improved." They also presented graphs showing that rail industry earnings were above revenue adequate level between 2011 through 2014. (For the full testimony of the shipper associations, visit:…)

Consumers United for Rail Equity (CURE) President David Sauer, in his written comments to the STB said, "CURE has long been concerned that the STB's annual determinations of the 'revenue adequacy' for Class I carriers does not reflect the true health of the industry and its members. Further, CURE believes that the carriers' falsely perceived lack of adequate revenues has served to shield the railroads' exercise of their monopoly pricing power from STB scrutiny and prevented shippers from obtaining appropriate relief. This should change, especially as the carriers have achieved revenue adequacy."…

During their presentation to the STB, the BNSF stated that, "BNSF's investment is unprecedented; investment is driving improved service and efficiency for customers and customers are responding with investment and volumes on our railroad. Regulatory changes that disrupt the current balance will have unintended consequences and lower capital investment. Any board consideration of long-term revenue adequacy should only occur within individualized rate review process."…

The Association of American Railroads (AAR) leaders from its member railroads and economic experts urged the STB during the hearing to "beware of upending numerous national economic goals if they choose to pursue re-instituting revenue caps on freight rail companies."

AAR President and CEO Edward R. Hamberger told the board that "misapplying regulations would have far-reaching impacts on the freight rail industry's ability to sustain the billions of private funds spent by railroads each year to build, maintain and upgrade the nation's 140,000-mile rail network," according to the AAR press release of their testimony on July 22.

"Now comes a handful of interest groups that want you to cut their transportation costs by direct government intervention at the expense of the greater good. Let's call it what it is: They want you to institute a regime of wide-ranging price controls on freight railroads," Hamberger testified.

"Regulation of railroads' overall revenue levels would run counter to Congress' goals in the Staggers Act of 1980 that partially deregulated the freight rail industry to allow railroads to earn sufficient revenue to meet their long-term needs without having to rely on the federal government. As Dr. Roger Brinner, chief economist with SandPointe LLC testified, the concept of revenue adequacy should be a goal, and not a directive to constrain revenues; railroads should not be penalized for improved financial performance."

NGFA Chief Operating Officer Randy Gordy said in a press release on July 24 that, "Under the Staggers Rail Act, rail users are authorized to challenge rates for revenue-adequate railroads that have market dominance and whose rates exceed 180% of the variable cost of providing the service."

Gordon wrote that STB member Debra Miller stated that it was "time to give meaning to the concept of revenue adequacy" and reiterated her earlier statements made at the June 10 STB hearing, at which the NGFA testified on the agency's grain rail rate proceeding. At that meeting, the NGFA said that it was time to review revenue adequacy and rail rate policy in the context of other ongoing STB proceedings, including one on competitive switching.…

Gordon said that the STB commissioners, while reserving judgment, did appear to indicate that a review was necessary.

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 2:01PM CDT 07/27/15 by Mary Kennedy

Tuesday 07/21/15

Sorghum's GMO Question

This week, reporter Emily Unglesbee and I take broader look at what it will take for grain sorghum to increase its share of farmers' crop mixes and become a 1 billion bushel crop. There are some important hurdles sorghum will have to face if it's going to get there, with maintaining profitability and strong markets at the top of that list, followed by better weed and insect management. Its drought tolerance and ability to perform on marginal land helps it out, too.

Kind granola bars trumpet their non-GMO status and use of popped kernels of sorghum, which is enjoying new consumer interest in part thanks to its lack of genetic engineering. (DTN photo by Emily Unglesbee)

One thing we don't dive into in detail in this week's series is that sorghum is a non-genetically engineered crop. Why? Sorghum's reaping market advantages right now due to its non-GE status, and until annual production achieves a critical mass, it's not likely to be a profitable endeavor for technology companies ora contentious issue. Few farmers are pushing for change now, butthey are keenly aware of the advantages GE sorghum could bring to sorghumproduction.

Emily took a deeper look at the questions around GE sorghum while attending the Export Sorghum meeting in Houston last month. We feel the story she wrote then adds important context to our series, so we're including it here for reference.

Sorghum's GMO Question

Industry Reaps Advantages of Non-GMO Markets ... For Now

Between domestic and international markets, sorghum's status as an ancient grain with no genetic engineering is paying off, but how long will that last?

By Emily Unglesbee

DTN Staff Reporter

HOUSTON (DTN) -- Doug Bice chooses his words carefully when he talks about sorghum's status as a non-genetically engineered (GE) crop.

As director of high-value markets for the Sorghum Checkoff, Bice is well aware that the grain's history of traditional breeding has worked wonders for the industry recently. After continued rejections of GE corn shipments, China started a major switch in 2013 to U.S. grain sorghum to feed its poultry, cattle and hogs. This unprecedented demand has sent sorghum prices soaring above King Corn in some parts of the country.

Stateside, sorghum's status as an ancient grain, untouched by genetic engineering, has made it increasingly attractive to the growing number of consumers who don't want to eat food with GE ingredients. As a result, the Sorghum Checkoff's marketing efforts for food-grade sorghum have included this aspect of the grain, alongside other attributes, such as being gluten-free and being packed with antioxidants.

Yet the sorghum industry is leery of taking too strong a stance against GE sorghum, which could speed up important crop traits such as pest and weed resistance in the future, farmers and industry experts told DTN.

"The industry will have to make a judgment call on this in the next few years," Bice admitted. "But at this point, we don't have a strong commercial reason to become GMO."

"I wouldn't want to close the door on it," agreed Spence Pennington, a sorghum producer from Raymondville, Texas. "We might need it down the line."

But for now, Pennington likes growing a crop without any GE history. "It gives us diversity in our technology and markets," he explained.

Both Pennington and Bice were in Houston this week for the second-annual Export Sorghum conference, hosted by the Sorghum Checkoff and the Texas Grain Sorghum Producers. The event brought domestic and international grain buyers together with sorghum producers and experts for three days, in the hopes of generating new sorghum markets and improving existing ones.

This year, the event's 74 attendees included a dozen grain buyers from China, eager to learn about sorghum's feed qualities and availability in light of the country's robust new appetite for the non-GE grain. China's sorghum imports have skyrocketed from a mere 100,000 bushels in the 2012-13 marketing year to 313.7 million bushels for 2014-15, according to the Sorghum Checkoff.

Farmers have little desire to disrupt that trend, Pennington noted.

"In the U.S., we could probably feed GMO sorghum to livestock without a problem," he said. "But in Europe and China, that's not the case. So we can either try to overcome that with education, or we can just let the customer dictate the market."

On the human side of the equation, Bice believes sorghum holds serious potential. The grain's gluten-free, non-GE nature could make it a serious competitor to newly popular grains such as quinoa, as well as an ingredient in organic and gluten-free breads or beers. Pet food is another prospective market, as well as restaurants and food-service companies, he said.

Staking out even a small percentage of these markets could be a boon to the small but growing sorghum industry, he pointed out. "In a 500-million-bushel industry, to increase demand by 10, 20, or 30 million bushels per year would be very significant," he said. "And that's clearly in our sights between human consumption and pet food."

Theoretically, non-GE food-grade sorghum could co-exist with GE sorghum grown for livestock and fuel, but it would be risky, Bice noted. "We would need a lot of education to make that work," he said.

As far as crop breeding and advancements go, there are practical benefits to sticking with traditional breeding in sorghum, USDA Agricultural Research Service plant physiologist John Burke told Export Sorghum attendees.

"There's a huge amount of genetic diversity and natural variation within the sorghum germplasm collection," he said. As a result, breeders can almost always use traditional breeding to incorporate the traits they want into sorghum varieties without resorting to genetic engineering techniques that pull genes from other species, he explained.

Moreover, Burke and his team of sorghum breeders can turn over their discoveries -- sorghum lines with improved cold tolerance, for example -- to private companies that can quickly incorporate them and sell them to farmers without the slow and expensive regulatory process facing GE crops.

Nonetheless, sorghum is facing rising pest problems that could benefit from GE traits such as herbicide-tolerance and insect-resistance in the future, Pennington conceded.

Herbicide-tolerant weeds are beginning to surface in his region, and controlling grasses has always been historically difficult for sorghum growers, since the grain is itself a grass species.

The sugarcane aphid arrived in the southern U.S. abruptly two years ago and required multiple insecticide applications last year. Josh Birdwell, a sorghum farmer from Malone, Texas, told DTN that controlling the aphid last year added $60 to $70 per acre to his operation's expenses.

Other sorghum pests, such as the stink bug, midge and headworm have become significantly more problematic in recent years, adding to his workload and expenses, Pennington said.

In contrast, the availability of Bt cotton has simplified pest control in that crop dramatically on his farm, Pennington noted.

Pennington believes that future water scarcity could eventually make sorghum a sizeable enough crop to draw serious biotechnology investments from agricultural companies. By then, pest issues and global attitudes may have shifted enough to make GE sorghum worthwhile, but until then, he's content without it, he said.

Bice agreed. "If sorghum becomes a billion-bushel crop, then GMO sorghum might become a real possibility," he said. "But as long as production is where it is, I see no need to insert sorghum into that conflict."

Emily Unglesbee can be reached at

Follow Emily Unglesbee on Twitter @Emily_Unglesbee


Posted at 2:40PM CDT 07/21/15 by Katie Micik
Comments (2)
"we don't want to close the door on GE". Smart! Take a look at cassava and Hawaiian papaya. Then inform the customer that broadcast applications of pesticides to protect their food are not necessarily good for the environment.
Posted by Curt Zingula at 7:16AM CDT 07/23/15
Sorghum is an excellent choice right in line with wheat as far as crops go on the southern high plains and right behind native grass. When the wells yield to little water-that is the now for some, and the future for many! Sorghum is a big deal and without question down here a tough crop to beat in terms of yield per inch of rain, cost of production, and genetic diversity. Economics of sorghum generally matches or beats wheat, and beats native grasses. Sorghum, Wheat, native pasture, and cattle is a great combination game in the Texas panhandle.
Posted by Chris Grotegut at 6:05PM CDT 07/26/15

Monday 07/20/15

More Heavy Rains Cause Major Headaches, Weak Basis

MINNEAPOLIS, Minn. (DTN) -- Illinois River levels rose again after the area was hit by more heavy rains recently, said Tom Russell, co-owner of the Russell Marine Group.

Barges on the Mississippi River near Quincy, Illinois. (DTN file photo by Chris Clayton)

"That rain runoff was sufficient enough to cause the Illinois River to close again at mile 30 to 89," Russell told DTN by email July 7. "Navigation on the Illinois River will be touch-and-go until weather has an extended dry period. The situation will have to be monitored on a daily basis." (For current Illinois River level forecasts, see…)

On July 15, the CME announced in a special executive report that, effective immediately and until further notice, CBOT is reinstating a condition of force majeure "due to load-out impossibility at a majority of corn and soybean regular shipping stations on the Illinois River. Such shipping stations are unable to load due to high water levels and/or flooding." This came five days after the CME had lifted a June 17 force majeure on the same river. (To read the full report, see…)

On July 16, the U.S. Coast guard reopened the 50-mile stretch of the Illinois River that had been closed, but high-water restrictions remained in place, slowing barges that had been stalled trying to make their way to the Gulf of Mexico. As of that date, the force majeure remained in place.

"High water in the other main problem area from St. Louis to Cairo on the Upper Mississippi is still showing improvement," Russell told DTN. "The water off the Illinois River accounts for only about 10% of flows through the St. Louis Harbor. This stretch of river is open and traffic is moving with safety restrictions in place. The St. Louis Harbor is still extremely congested and will take some time for tows to get in front of the backlog of barges waiting to be picked up and towed south." (To view the current Upper Mississippi River level forecast, see…)


The Lower Mississippi from Cairo to New Orleans is rising and some areas will now reach flood stage. Barge traffic is moving, but some barge terminals have been forced to shut down due to high water. On July 17, the U.S. Army Corps of Engineers reported on its website that the Mississippi River at the Carrollton gage has risen to 15.0 feet, prompting the Corps to "activate the second phase of flood fight procedures to monitor levees along the Mississippi River. Closely coordinating efforts with the local levee authorities, the New Orleans District will begin daily patrolling of levees along the Mississippi River from Baton Rouge to Venice." (The current Lower Mississippi River level forecast can be seen at…)

"Increased patrols help ensure our ability to respond quickly to any problem areas that may develop along the levee system because of the elevated water levels," the Corps added. "Also, construction projects within 1,500 feet of the levee system that were previously permitted must be shut down."


River flooding caused corn basis bids to drop for barge movement. On July 1, Gulf barge basis bids were at plus 60. As of July 17, Gulf corn basis barge bids were at plus 44. Barge freight was not quoted on the Illinois River most of the month because the flooding hampered movement up and down the river.

River terminal basis has been weak to no quotes as terminals were unable to receive barges at their facilities or were unable to load barges already there. Barge freight in St. Louis to Cairo is down 15% since July 1, down 30% in the Cairo-to-Memphis corridor and down 25% in the lower Ohio corridor.

Rail basis was also affected, as bids to St. Louis ended the week lower because congestion in the St. Louis harbor slowed down barge traffic due to high water. Freight that would have been unloaded from rail in St. Louis to move south on barges would have ended up sitting on the tracks, costing the end user demurrage.

"River levels in the New Orleans and Baton Rouge Harbors are still high with safety protocols in place," Russell said. "Baton Rouge will now reach flood stage, but New Orleans is expected to stay just under flood stage for now. Barge and ocean vessel traffic is moving, but a little slower than usual."

Mary Kennedy can be reached at

Follow Mary Kennedy on Twitter @MaryCKenn


Posted at 10:45AM CDT 07/20/15 by Mary Kennedy
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Recent Blog Posts
  • Legislation Introduced to Extend PTC Deadline
  • CFTC Fines Two Grain Trading Operations
  • Low Water, Lock Repairs Cause Shipping Delays
  • Perspective on China's Big Soybean Buy
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