Mississippi River water levels are at historic lows – dropping even below where they were last year when barge transport came to a complete halt – and that means increased costs and slower delivery for farmers that need to get their crops to the Gulf.
For soybean farmers, who are in the midst of this year’s harvest, it’s the worst time of the year to have transportation problems, but that’s exactly what’s happening, said Mike Steenhoek, executive director of the Soy Transportation Coalition.
Mike Steenhoek, Soy Transportation CoalitionWhile the soybean harvest is only about 12% complete, southern states like Mississippi, Arkansas and Louisiana are much further along, according to USDA’s latest Crop Progress report.
River transportation companies, fearing their barges will scrape the river bed or even become grounded, are already restricting the amounts that can be loaded by as much as 25%, Steenhoek told Agri-Pulse. A barge that could normally take on 55,000 bushels might now only be able to load 41,000 bushels.
U.S. Geological Survey data shows that on Monday the gage height – the height of the water surface above a set reference point – at Memphis, Tenn., was negative 9.4 feet. Just six months ago the gage height was nearly 30 feet.
And to make matters worse, a low water level means a narrower river and that in turn means fewer barges can travel the Mississippi at the same time. It essentially takes more barges to transport the same amount of grain.
The Mississippi River, said Steenhoek, “goes from being a six lane, interstate or freeway down to say three lanes.”
And that becomes even more pronounced of a problem below St. Louis, where there are no locks and dams and barges can be attached together in larger groupings. Under normal circumstances, companies can unite as many as 40 barges all the way down to New Orleans.
With water levels as low as they are, Steenhoek said, “you're limiting that 20% to 30%, so it really has a pretty substantial impact. Essentially, the supply of barge transportation has gone down, not because you're just removing barges from operation, but just simply because the loading capacity has been diminished.”
Data from the American Commercial Barge Line, shows that loading draughts for barges are down 24% on the river between Cairo, Illinois, and the Gulf.
Barges carried 129,900 tons of grain down the Mississippi River during the week ending Sept. 16, 25% less than the week before, 38% less than during the same period last year, and 76% less than the three-year average, according to USDA data.
And all of that translates into higher prices for barge transportation.
The freight rate, calculated in dollars per ton, reached $38.34 for transport from St. Louis to the Gulf as of Sept. 19, according to USDA data in its latest Grain Transportation Report, published by USDA's Agricultural Marketing Service. That’s about the same as it was a year ago, but it’s a 92% increase over the three-year average. The price increase for transport from Memphis to the Gulf was a 97% increase.
And as river levels drop and barge freight prices rise, crop basis widens, according to an analysis published Monday by Southern Ag Today that focused on corn. Basis is the difference between the local cash price and the futures price for a given commodity. Basis typically can widen as shipping costs rise.
“When barge rates increase, crop basis weakens … at grain elevators near the Mississippi River,” according to the analysis. “The impacts vary drastically by region; however, as of September 12th, the average weekly basis is between 3 and 21 cents under the 5-year average, which contains basis for marketing years 2017-18 through 2021-22.”
Bobby Hanks, Supreme RiceBut Bobby Hanks, CEO of Supreme Rice with its mills in Arkansas and Louisiana, is focused on just getting the company’s milled grain on to barges.
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“We’re challenged right now with low Mississippi River levels,” he told Agri-Pulse. “A lot of the rice we export … moves on barges. Right now it’s a challenge.”
The company’s Arkansas mill is down, he said, “because we don’t have a loading site. Where we normally load, we can’t access because it’s too dry and the barges can’t make it to the loading site.”
There are some terminals nearby that can load grain on to barges, but those are congested as farmers are fighting to use them for corn and soybeans and that’s created a severe backlog.
“It’s making it very difficult,” Hanks said.
Rice mills aren’t the only operations in a hurry to get their product to New Orleans. Soybean exporters are also on a tight time frame.
About 80% of the roughly 1.8 billion bushels of soybeans that will be exported in the 2023-24 marketing year will be shipped from September through February in order to take advantage of market conditions.
Brazil, the South American agricultural powerhouse and main U.S. competitor for soybean exports, has just begun planting its fields, but it won’t be long before trucks, trains and barges will be taking that crop to ports like Paranagua, where they’ll be sent to China and destinations around the globe. The Brazilian harvest really picks up steam in January and February.
Delays will persist on the Mississippi River so long as the water levels remain low, and Steenhoek says recent rains haven’t been enough to boost the depth of the river.
“The ground is so dehydrated, that the overwhelming majority of the rainfall that occurs is getting absorbed into the ground because the ground is like one big dry sponge right now,” he said. “As far as what additional rains will do to help river levels? We're not very optimistic about that.”
