Market Matters Blog
Mary Kennedy DTN Basis Analyst

Friday 04/04/14

Baseball Season Opens, But River, Head of Lakes Grain Season Still on Break

OMAHA (DTN) -- Shuttle rail cars seem to be finding their way to elevators in the Northern Plains and some rail is beginning to move in Canada to ports full of waiting ships. However, one railroad official said rail car shortages will continue through winter wheat harvest.

Rail car movement is improving slowly, but problems probably will still exist when winter wheat harvest rolls around. (DTN photo by Elaine Shein)

"Gradual improvement" has occurred across the BNSF system due to grain loadings increasing over the past few weeks, BNSF Vice President John Miller said in a March 28 podcast. However, North Dakota users are probably not convinced as they wait for 7,541 cars versus 7,472 cars the prior week. That number is 46.8% of the total number of cars the BNSF owes in the United States.

Regarding the upcoming winter wheat crop, Miller said, "As we know, winter wheat harvest is fast approaching. In past years when there was plenty of available freight, the BNSF has been able to strategically preposition covered hopper cars to meet harvest demand. Due to the car order backlog we are currently experiencing this year, we will have limited availability to preposition cars."

Miller said the total number of cars the railroad was behind as of March 28 was at 16,112 versus the prior week at 15,343. North Dakota and three other states account for 87% of those late cars; South Dakota is behind 1,372; Minnesota is behind 1,599; and Montana is behind 3,468 cars. Since the middle of February, the total number of cars late has increased by 4,277 and cars behind in North Dakota have increased by 2,480.

Velocity has increased from 155.6 miles per day to 159, Miller said, but shuttle turns per month (TPM) to the PNW was slightly lower at 1.9 TPM. The only improvement reported for shuttle TPM was at the Texas Gulf which went from 2.5 TPM to 2.8 TPM in one week. The trip from the Northern Plains to the PNW has experienced severe conditions most of this year in part due to the extreme cold weather. On top of that, there were derailments of oil and grain cars, there was an avalanche affecting traffic through Montana and recently, there was a mudslide in Washington affecting service there. According to the BNSF, service was restored to one main track in Washington late on April 1 with the second main track expected to open April 2. However, the BNSF stated on their website that, "Customers may experience delays of 24 to 36 hours on shipments moving through this corridor."

The entire BNSF podcast can be heard here: http://goo.gl/…

CANADA'S RAIL BACKUP CONTINUES

The CN Railway will soon start to place the weekly minimum car requirement set by the government, CEO Claude Mongeau told news organizations this week. But CN is concerned added car volume may overwhelm grain facilities and create further problems.

"A war of words has broken out between the grain industry and the railways," said DTN Canadian Grains Analyst Cliff Jamieson. "The railways point towards the potential for the grain industry to fail in meeting the targeted volume of one million tonnes per week, while the grain industry claims they can handle even more if the railways were to only maximize movement into each of the five freight corridors -- the west coast, Thunder Bay, eastern Canada, the U.S. and the domestic industry.

"CN hit approximately 5,100 cars in week 34, with the goal to soon reach 5,500 weekly in the coming weeks, while CP will be doing the same. Small shippers have expressed frustrations over warnings from the railways over the potential detrimental impacts of the pending legislation," Jamieson said.

"Farm groups presented to the House of Commons Agriculture Committee this week on the concerns surrounding the proposed government legislation to address the grain shipping backlog. Many point to the need for clarity around the definition of acceptable service, while are concerned about the need for equitable treatment as railways are placed in a position to determine which regions see shipping, which grains move along with what direction the movement will take place as they ramp up movement to meet the government mandate."

ICE STILL TOO THICK ON LAKE PEPIN

Ice thickness on Lake Pepin has improved a little, but most of the lake is showing ice depth of 19 to 26 inches, according to the latest ice measurements by the USACE, St. Paul District. Barges are unable to break through ice that is deeper than 12 to 15 feet without risking damage to their vessels. The other part of the equation is the amount of blue ice versus white ice and currently there is more blue than white. The USACE describes the difference as: "Blue ice, sometimes called black ice, is clear and solid. White ice or snow ice has air bubbles. Together they equal the total ice thickness." Basically, blue ice is harder to get through.

See the entire report and graphs here: http://goo.gl/…

LAKE SUPERIOR STILL FIGHTING ICE; CUTTERS LIMP HOME FROM THUNDER BAY

While progress has been made in Duluth in handling the extreme ice cover this winter in the Great Lakes, some areas are still battling thick ice. Ice cutters have been traversing the Great Lakes from Duluth to Thunder Bay to the Straits of Mackinac in order to clear the way for ships.

Adding to the time consuming task was damage to two ice cutters last weekend while trying to cut ice in Thunder Bay and along the Canadian shoreline, downbound to Whitefish Bay and eventually through the Soo Locks. Both ships had to be helped back to port in Duluth for repairs.

Mark Dobson, Coast Guard vessel traffic controller in Sault Ste. Marie told news organizations early this week, "The ice thickness the cutters are encountering was at least three feet in some places, four feet in others. In the middle of Lake Superior, ice rubble fields six feet thick were being encountered."

See an update here: http://duluthshippingnews.com

SPRING THAW MAY BE NEAR

Help may soon arrive from Mother Nature, according to DTN Senior Ag Meteorologist Bryce Anderson. "Temperature trends next week should offer some thawing in northern crop areas," he said. "The core of the latest cold-air pattern will migrate from the Canadian Prairies into Ontario and Quebec, and this will allow for a more westerly air flow and a more moderate pattern. Overnight lows will be around the 28-33 degree F mark with most daytime highs ranging in the low 50s F."

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

Mary Kennedy can be followed on Twitter @MaryCKenn

(ES/CZ)

Posted at 1:47PM CDT 04/04/14 by Mary Kennedy
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