Ice accumulation impedes grain transport

by | Jan 22, 2018 | 5 Ag Stories, News

AUDIO: Mike Steenhoek, Soy Transportation Coalition

AUDIO: Brian Grossman, Zaner Group

The past month brought cold temperatures, freezing over parts of the Illinois, Ohio and Mississippi Rivers. The inland waterway systems, used for grain transport, remain constricted.

One organization is closely monitoring ice accumulations on inland waterways. The organization?s executive director shares how congested waterways impact farmers.

Mike Steenhoek serves as executive director of the Soy Transportation Coalition (STC). Steenhoek says agricultural products, especially soy products, significantly rely on barge as a means of transport.

?This is a key time for our U.S. soybean exports,? Steenhoek said. ?Eighty-percent of our exports leave the country between the months of September and February. We?re now the key supplier for the global marketplace. Anytime we have an encumbrance to our ability to get product to export terminals near New Orleans and as a result, satisfy international demand, it?s a reason for concern.?

The United States Department of Agriculture (USDA) reports weekly grain tonnages along inland waterway systems has seen significant reductions. Grain barge tonnages, throughout the first two weeks of January, came in at 496,000 ton, 63% lower than this time last year.

Steenhoek says supply chain disruption and logjam along the river, prevents soybean and grain shippers who utilize inland waterway systems from moving product through their back door. Soybean shippers then accept less product via their front door.

Brian Grossman, market specialist with Zaner Group, piggybacks off of Steenhoek?s statement by adding farmers will see a dramatic hit to basis prices.

?It is going to be affecting the cash side, in the form of basis,?Grossman said. ?Those rivers are a key way of moving grain out of the heartland, especially in the Ohio area. Without being able to keep those barges moving, elevators are stuck with it unless they can find another alternative such as rail, but that has been quite challenging as well. Basis is likely going to struggle until we can get some of that backlog cleared up.?

Grossman suggests farmers store grain until basis prices improve.

?I think we?ll see an improvement in basis, especially as long as we have the South American weather stories still on a front burner. Argentina is looking at another hot and dry week, and they are the world?s largest exporter of soymeal. So, a good concern for the market to be paying attention too. Until we can get those rivers cleared up, farmers don?t have a lot of options,? Grossman said.