Market Matters Blog

OMAHA (DTN) -- Last month, heavy rains moved across Texas and Oklahoma then through the center of the Midwestern states. The result was flooding and high water on the Missouri, Arkansas, Illinois and Upper Mississippi rivers between St. Louis and Cairo, Illinois. As Tropical Storm Bill came up from the Texas coast last weekend and became a tropical depression, it moved through most of the same waterlogged states, adding more water to the already high rivers.

Tom Russell of Russell Marine Group told DTN via email that, "Waters were in the process of flushing through the system when heavy weather concentrated rains in those central areas again, giving rise to the same rivers."

Russell said that the Illinois River and Upper Mississippi between St. Louis and Cairo are now at flood stage. "Two locks on the Illinois River have been closed to all navigation due to high water, resulting in the CME declaring force majeure at loading locations on the Illinois River." http://goo.gl/…

On June 17, the CME released this statement: "Effective immediately and until further notice, pursuant to CBOT Rule 701 ("Declaration of Force Majeure"), The Board of Trade of the City of Chicago, Inc. ("CBOT" or "Exchange") is hereby declaring a condition of force majeure for corn and soybean shipping stations as a majority of the facilities on the Illinois River are unable to load due to high water levels and/or flooding. As a result, CBOT Rule 703.C.G(8) is in effect for ALL corn and soybean shipping stations." http://goo.gl/…

"St. Louis Harbor has become extremely congested as a result of high water over the past weeks," Russell said. "Heavy drift debris is reported throughout the harbor. Barge traffic is moving, but slowly, and in a bit of gridlock. High-water safety protocols have been put in place."

On June 21, the U.S. Army Corps of Engineers said on their website that, "Flood fight teams have been deployed across the area and are providing technical assistance to levee districts. The Jerry Costello Lock and Dam and the Lock 27 Auxiliary Lock remains closed."

The USDA Grain Transportation Report noted on Thursday that since early June, the St. Louis gauge has been above 25 feet, "a threshold where the Coast Guard restricts tows of barges greater than 600 feet to daylight-only transit in the St. Louis Harbor." With the additional rains from Tropical Depression Bill, the river level is not expected to drop to 25 feet until possibly June 27, when the daylight-only restrictions could be lifted, according to USDA. http://goo.gl/…

Oklahoma news sources reported that The Port of Catoosa was experiencing high water along the port's entire waterway system, which shut down barge traffic late in the week. Russell noted that while navigation just resumed on the Arkansas River, the remnants of Bill may stop traffic again as waters are expected to approach flood stage again.

"The Lower Mississippi is high and will remain high at least for another three to four weeks as the upper rivers run off," said Russell. "The northern part of Upper Mississippi and Ohio Rivers are at normal levels and traffic is moving. The Baton Rouge and New Orleans Harbor are in high-water protocols with safety advisory for barge tows passing through Baton Rouge. Barge and ocean vessel traffic are moving, but count on delays over the next three to four weeks."

SOYBEAN BASIS RISES WITH THE RIVERS

High water can not only stall empty barges from arriving at river terminals, but it can also cause the inability of a barge to "fit" under the loading spout. The spot CIF barge basis was reported to have traded 10 cents higher on Wednesday, June 17, from Tuesday's spot price. By the end of the week, CIF basis was 5 cents weaker, but the bid/ask spread at +80 versus +97 over the Chicago July futures. CIF basis offers were 16 cents higher on Friday June 19 than from the prior week. Farmers have been selling soybeans on the futures rallies, but the logistics of getting them to the Gulf have been tedious and will likely be that way for the next week.

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

Follow Mary Kennedy on Twitter @MaryCKenn

(SK/AG)

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