Despite some improvement from a week ago, low water levels are continuing to hinder grain transportation on the Mississippi River, leaving farmers with fewer alternatives for getting their crops onto barges to export.
The river gauge at Memphis, Tennessee, reached minus-10.76 feet on Oct. 17, the lowest level that point has seen since 1988. The level then sank to minus-10.81 feet on Saturday before rising to minus-9.33 feet on Tuesday.
Tuesday's level was still almost 11 feet lower than one year ago, when the gauge was at 1.46 feet. Soy Transportation Coalition Executive Director Mike Steenhoek says current levels continue to impede barge transportation, despite the increase over the last week.
Barge companies placed 9-foot barge restrictions on the lower Mississippi River on Oct. 17, according to American Commercial Barge Line's weekly newsletter. Barges typically are loaded to 11 or 12 feet in the fall. Steenhoek estimates that the reduction will result in 10,000 to 15,000 fewer bushels being transported by each barge.
Barge freight rates have also fallen, a trend that the U.S. Department of Agriculture attributes to delayed deliveries by grain shippers. The agency's weekly grain transportation report put the cost of transportation a ton of soybeans loaded at St. Louis at $72.58 per ton for the week of October 18. It calculated costs of $105.85 per ton in the week prior.
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The river slowdowns are forcing the major grain and oilseed traders to supply customers from Pacific ports and South America.
"With what's happening in the Black Sea and now with the logistical problems with the river here in North America, our strong South American footprint, which is always really important to us, but it's never been more important," Greg Heckman, CEO of Bunge Ltd., told analysts on the company's annual earnings call Wednesday.
Archer Daniels Midland Co. CEO Juan Ricardo Luciano said Tuesday the low water levels on the Mississippi River would likely reduce soy exports from North America, though it would be offset by increased South American exports.
