Market Matters Blog

Sudden Closure, Dredging Slow Lower Mississippi Traffic

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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Grain barges moving downriver increased 13.6% from the previous week. (Chart courtesy of U.S. Army Corps of Engineers)

OMAHA (DTN) -- Daylight closing of a section of the lower Mississippi River for approximately two weeks could not have come at a worse time.

Ingram Marine Group reported on their website that the Mississippi River will be closed from mile 632 to mile 635, near Memphis, during daylight hours for potentially 14 days for mat-laying operations starting Friday, Nov. 7. The mats, made of concrete blocks that are strung together to hold them in place, are designed to prevent erosion of the river's banks and to protect key features of the submerged riverbank, according to the U.S. Army Corps of Engineers (USACE).

The problem is many shippers were unaware this was going to happen and the work could greatly impact grain moving down-river and other commodities moving up-river during a busy harvest season and ahead of the looming winter closure of the Upper Mississippi River. The winter season normally begins in the Twin Cities and Mid-Mississippi River Districts by mid-December, but most barges will be moving south by late November so as not to get stuck if early ice becomes a problem.

The National Corn Growers Association sent a letter to the Army Corps requesting they delay the project. "We fear the closure will result in significant delays of grain shipments with potential to create backups as long as 75 miles," the letter stated. "A delay of this magnitude will have a significant financial impact on farmers, who already face prices below the cost of production." (You can read NCGA's statement here: http://bit.ly/…)

As far as basis levels being affected by the slowdowns, the Gulf corn basis has been weaker mostly due to lack of nearby demand, and the Gulf soybean basis has been steady. Lower barge freight costs have been a factor, but any delay in shipping barges headed for waiting vessels at the Gulf could be costly for shippers and barge lines in the long run.

Soybeans account for much of the barge traffic moving down-river to the Gulf on both the Ohio and Mississippi rivers, according to the USDA Grain Transportation report. "Data provided by the U.S. Army Corps of Engineers show that for the week ending November 1, soybeans represented about 82% of downbound grain tonnages; corn was 15%. Based on the five-year average, soybeans are 50% and corn is 47% of the total downbound tonnages during the fourth quarter. Barge operators have indicated that corn shipments are expected to pick up early next year."

This latest slowdown on the river is in addition to the current dredging near Lock 27 around St. Louis, which is causing limited passage during dredging operations. The dredging is done at night and may be completed by November 9. According to the USACE, "the dredging is an annual activity that ensures the navigation channel is clear from sediment buildup left by the natural flow of the Mississippi and rainfall runoff." Here is a link to the USACE news release about the dredging operation: http://goo.gl/…

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USDA also reported that as of November 1, year-to-date grain barge tonnages are 13% higher than the five-year average and the highest since 2010. "Current river conditions are adequate for navigation but a drop in levels may cause shoaling situations where dredging is needed. Barge rates remain above average in early November, with the highest rates in the Mississippi River Locks 15 area, near Davenport, Iowa, where rates are about $46.71 per ton for export bound grain (70% higher than the five-year average)," said USDA.

The Ingram Marine Group website reported the following river levels as of November 7:

Upper Mississippi River:

- Saint Paul: 3.42 feet, steady.

- Dubuque: 8.48 feet, steady.

- Burlington: 8.7 feet, steady.

- Louisiana: 11.97 feet, steady.

- St. Louis: 7.68 feet, falling.

- Cape Girardeau: 15.8 feet, falling.

- Thebes: 14.63 feet.

Lower Mississippi River:

- Memphis: 3.36 feet, falling.

- Vicksburg: 14.98 feet, steady.

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

Follow Mary Kennedy on Twitter @MaryCKenn

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