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Barge freight rates surged to a three-year high on Friday as a
key stretch of the Mississippi River fell to near-record lows
and as low water and emergency repair work on a 90-year-old lock
and dam on the Ohio River delayed dozens of barge tows, traders
and shippers said.
Exporters, meanwhile, scrambled for supplies to meet shipping
commitments out of the Gulf Coast amid a growing back-up of bulk
cargo ships waiting to load soybeans, they said.
The shipping woes were heaping more pain upon a U.S. farm sector
already struggling with low commodity prices and a global grains
glut, threatening sales just as rival South American exporters
leave the stage.
"The river's a mess right now and I think it might be getting
worse before it gets any better," said a Minnesota-based soybean
trader who asked not to be named because he was not authorized
to speak with media.
Shippers said they have been ordered to load barges with 9 or
9-1/2 foot drafts, instead of 12 feet or more normally, on the
lower Mississippi River to keep them from grounding. As a
result, each barge holds around 25 percent less grain so
shippers need more barges, they added.
The Mississippi River and its tributaries are a key pipeline for
moving grain from Midwest farms to export terminals along the
Gulf Coast, where about 60 percent of U.S. grain and soybean
exports exit the country.
Spot barges in the Memphis to Cairo, Illinois, market, an
acutely low-water section of the river system, traded at 900
percent of basic tariff on Friday afternoon, up more than 525
points in the week, barge traders said.
Spot rates were up 300 points on the lower Ohio and
mid-Mississippi river and nearly 200 points on the Illinois.
Little rain is expected in the lower Mississippi River valley
over the next week, said MDA Weather Services meteorologist
Kenny Miller.
"They're going to go down, that's near certain at this point,"
he said of river levels.
The latest National Weather Service forecast shows the river at
Memphis could fall next week to just 4-1/2-feet above the
all-time low in 1988.
The shipping woes are also backing up grain supplies at river
elevators, traders said.
The spot basis at a river elevator in Davenport, Iowa, fell on
Friday to 72 cents a bushel below Chicago Board of Trade
November futures, the lowest since at least 2008, according to
Reuters data.
Meanwhile, buyers at Gulf terminals were scrambling for supplies
to meet export commitments, sending spot CIF soybean premiums to
a one-year high as more than 50 bulk vessels are waiting to load
at the port, traders said.
One large shipper paid 80 cents over futures for more than
300,000 bushels of soybeans this week, a three-year high.
(Reporting by Karl Plume in Chicago; Editing by David Gregorio)
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