Bloomberg News

U.S. Drought May Curtail Mississippi River Grain-Barge Shipping

November 19, 2012

Water levels on the Mississippi River may drop to historic lows next month in the Midwest, delaying barges carrying everything from grains and coal to steel and petroleum, after the worst U.S. drought in 56 years.

The waterway, the busiest in the U.S., may be too shallow to navigate by Dec. 10 from St. Louis south about 180 miles (290 kilometers) to Cairo, Illinois, where the Mississippi meets the Ohio River, the American Waterways Operators and Waterways Council Inc. said in a Nov. 16 statement.

The drought that dried out farmland from Ohio to Nebraska is expected to persist at least through February in most areas and spread to Texas, according to the U.S. Climate Prediction Center in College Park, Maryland. Barges on the Mississippi handle about 60 percent of grain exports that enter the Gulf of Mexico through New Orleans. The U.S. is the world’s largest shipper of corn, wheat and soybeans.

“The Mississippi River is especially critical for the agricultural community,” George Foster, the president of JB Marine Service Inc. in St. Louis, said in a Nov. 16 statement. “Closure of the Mississippi next month would mean that about 300 million bushels of agricultural product worth $2.3 billion will be delayed reaching its destination.”

The number of barges moving south on the Mississippi fell to 660 in the week ended Oct. 10, down from 691 a year earlier, data from the U.S. Army Corp of Engineers show. A total of 488 barges moved north, down 26 percent from a year earlier.

Slow Movements

“The water from the Missouri will slow starting at the end of this week, but there will be an increased flow from the upper Mississippi that will alleviate it some,” Roy Huckabay, an executive vice president for the Linn Group in Chicago, said in an e-mail. “Look for slow movement with draft and tow restrictions, but not total closure. There will be a heavier tug of grain off the Ohio to the Gulf.”

Grain and oilseed inspected for export rose 0.9 percent to 87.982 million bushels in the week ended Nov. 15 from a week earlier and down 6 percent from a year earlier, U.S. Department of Agriculture data show.

Farmers, who will finish harvesting this month, will produce 10.725 billion bushels of corn, 13 percent less than last year, even after farmers planted the most acres since 1937, the USDA said Aug. 10. The soybean crop may fall 4 percent to 2.971 billion bushels, the smallest in four years.

Rail-car deliveries to export terminals in the U.S. dropped 14 percent in the week ended Nov. 14, compared with the same period a year earlier, USDA data show. Shipments in the last four weeks are up 12 percent from the same period in 2011, the government said.

More Trains

Cargill Inc., the largest closely held U.S. company, will invest $6.4 million to build additional railroad tracks at its grain elevator in Tuscola, Illinois. The company said Nov. 16 that it wants to expand access to the CSX Corp. (CSX:US) railroad by the spring of 2013 to allow for corn and soybean shipments to terminals near New Orleans and to livestock and poultry producers in the East and Southeast.

The Tuscola elevator has the capacity to store 7.5 million bushels and already has access to rail lines operated by the Union Pacific Corp. (UNP:US) and the Canadian National Railway Co. (CNR)

“Having access to load trains on the CSX gives the local farmer customers additional access to the eastern livestock markets, Cargill’s soybean processing plants in the southeast, and the Gulf export markets,” Doug Childers, farm service group leader for Cargill AgHorizon’s Central Illinois region, said in the release.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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