Market Matters Blog

The attached graph, courtesy of the Army Corps of Engineers, shows average river levels in St. Louis, Mo., below the 10-year average for the entire 12 months of 2012. In its weekly Grain Transportation Report, USDA reported that levels for the first two months of 2013 were also below the 10-year average and were lower than levels in the same months in 2012. The dangerously low water levels in key areas of the river due to severe drought conditions forced barges to carry lighter loads, even with constant dredging from the Corps. The accidents caused by the low water levels created traffic snarls, resulting in slow traffic and/or closures that lasted one to two days and up to seven days at one time. The most successful undertaking by the U.S Army Corps of Engineers to ensure safe river navigation was the removal of underwater rock formations near Thebes, Ill. The protruding rocks had not only become dangerous to moving barges, but also had the potential to seriously affect the depth of the Mississippi River between St. Louis, Mo., and Cairo, Ill.

Mother Nature also lent a hand in late December with snow and rain gradually adding water to the low levels that threatened to halt all barge traffic in early January. In mid-March, storms in eastern Missouri and southwestern Illinois provided runoff from 4 inches of rain, causing water levels in St. Louis to move from -3 feet in mid-January to 18 feet as of March 21. As of March 28, levels were at 9.7 feet with projections to rise to 11.7 feet by the end of the month due to spring snow run off into the river. The Mississippi River will need continued rain throughout the spring and summer to keep levels from dropping to low levels again this season.

The navigation problems on the river caused less grain to move downriver and at times created dramatic swings in barge freight and even soybean basis levels last fall. USDA reported that in 2012, total tonnage was down 9.5% from the five-year average. "Total tonnages are measured by summing the tons moved at strategically selected locks; Mississippi River Locks 27, Ohio Locks 52, and Arkansas Lock 1." The total tonnage was affected by a decrease in corn export demand from the prior year, lower supplies of corn and soybeans due to the drought and the navigation problems on the river due to the low water levels. The most significant decrease in tonnage reported by USDA was in the Illinois River Lock 8, which was down 22% in tonnage moving downriver. In 2012, grain tonnage on the Arkansas River was up 13.2% and tonnage on the Ohio River was about the same as average for 2012.

As the soybean harvest in Brazil continues, soybean exports from the Gulf have been slow the past few weeks, resulting in less soybean movement down river. According to USDA, barge grain movement was 16% lower during the week ending on March 23 than the previous week and 52% lower than the same time last year. During the week ending March 23, 248 grain barges moved down river, which was down 14.5% from last week, and 397 barges unloaded in New Orleans, which was down 11.4% from the previous week.

As the spring shipping gets under way, the St. Paul corridor has been unable to open due to ice issues in Lake Pepin. As of March 28, barges heading up river have not been able to go any further than Dubuque, Iowa, because of ice creating a hazard further north. The Army Corps of Engineers reported that the ice in Lake Pepin is still 25 inches thick, which is too thick for ice cutters to begin clearing a path for barges heading to St. Paul. Also experiencing ice problems is the Port of La Crosse, Wisc., which reported 15 inches of ice in the harbor as of mid-week. As of March 29, the opening of shipping season up north is about one week late, and with colder weather returning next week to Minnesota and Wisconsin, the delay could continue for at least another week or longer.