Report shows lower weekly grain inspections and mixed soybean transportation costs for U.S. and Brazil.
IN the June 26 "Grain Transportation Report" from the U.S. Department of Agriculture's Agricultural Marketing Service (AMS), AMS reported that weekly grain inspections were at their lowest levels since January.
Additionally, the report discussed barge movement in areas currently experiencing high water levels and also provided an update on soy transportation costs for both the U.S. and Brazil.
According to AMS, for the week ending June 19, total grain — corn, wheat and soybeans — inspected for export from all major export regions reached 1.62 million metric tons, down 13% from the prior week and the lowest since Jan. 2; grain inspections were 110% above last year and 15% above the three-year average.
Despite the drop in total grain inspected for export, AMS said inspections increased 20% from the previous week in the Pacific Northwest (PNW) and 11% in the Texas Gulf, primarily due to an increase for wheat. Total wheat inspections were up 16% from the previous week as shipments to Asia increased.
Corn and soybean inspections dropped 15% and 73%, respectively, from the prior week. AMS suggested that inspections could possibly increase in future weeks based on high balances of unshipped corn and recently reported increased barge movements.
The agency also reported that despite high water levels on the Upper Mississippi River, corn shipments by barge remained strong.
For the week ending June 21, Mississippi River Lock 27, near St. Louis, Mo., recorded the highest down-bound tonnages of corn since late November 2011.
However, while barge traffic continued at a brisk pace on the Upper Mississippi River, barge traffic along the Mississippi River in the Minneapolis-St. Paul, Minn., area had been completely halted as a result of recent heavy rains in the region. Barge operators were not offering services there until navigation conditions improved.
Due to the high river flows, the U.S. Army Corps of Engineers anticipated having to open each of its dams from Lock & Dam 2 in Hastings, Minn., to Lock & Dam 10 in Guttenberg, Iowa. The Corps indicated that pulling the dam gates out of the water would increase the water flows at the downstream dams and reduce the flood risk along the northernmost segment of the Upper Mississippi River.
The transportation costs of shipping soybeans from the U.S. or Brazil to Europe and China during the first quarter were mixed, according to AMS. However, the report did reveal that the U.S. exported more soybeans to China during the quarter compared to the same period a year earlier.
The costs of shipping soybeans from Minneapolis and Davenport, Iowa, to Hamburg, Germany, through ports along the Gulf of Mexico increased 40% and 31%, respectively, while the costs of shipping from the same locations and ports to Shanghai, China, increased 30% and 24%.
However, during the quarter, the costs were lower to ship soybeans through PNW ports to China than through the Gulf. The costs of shipping soybeans from Fargo, N.D., and Sioux Falls, S.D., through PNW fell 1% during the quarter, the report noted.
The situation in Brazil was similar. Although it was 4% and 3% more expensive to ship 1 mt of soybeans from North Mato Grosso, Brazil, to Hamburg and Shanghai, respectively, it was 14% and 16% less expensive to ship from South Goias to the same destinations.
AMS said rail, barge and ocean transportation rates in the U.S. fell during the quarter, but trucking rates rose. The decreases in barge and ocean freight rates did not offset the trucking rate increase, though, resulting in higher transportation costs for shipping through Gulf ports, according to the report.
High demand for trucking service led to the trucking rate increase and was due partly to inadequate rail service to some grain-producing areas, which may have prompted some farmers to switch to trucks for delivering grains to river and export elevators.
Also, reduced availability of barges due to limited navigation during harsh winter weather conditions increased the need for trucking services to deliver fertilizers in normally barge-served locations.
As expected during a typical season, barge rates fell during the first quarter after the harvest season wrapped up, while the Upper Mississippi River was closed to navigation.