For the week ending July 17, total inspections of grain (corn, wheat, and soybeans) from all major export regions reached 1.54 million metric tons (mmt), up 6 percent from the past week, up 54 percent from last year, and 9 percent above the 3-year average.
Increased demand for wheat from Asia and Latin America helped boost total inspections of wheat by 34 percent. Inspections of corn and soybeans decreased 2 and 19 percent from the previous week. Total inspections increased 72 percent in the Pacific Northwest as demand from Asia increased, but inspections dropped 12 percent in the Mississippi Gulf.
During the last 4 weeks, grain inspections were 44 percent above last year and 7 percent above the 3-year average. Outstanding (unshipped) export sales continued below the previous week for each of the major grains.
River Reopening Continues With Substantial Rate Increases
After 3 weeks of flood-related river closures, barge traffic on the Mississippi River System resumed with substantial rate increases. As of July 22, barge rates for export grain from St. Louis and the Lower Illinois River were $15.76 and $25.38 per ton, respectively. Since July 1, the St. Louis rates rose 52 percent and the Lower Illinois River rate increased 44 percent.
More significantly, barge operators are anticipating above-average demand for October barge services during the active harvest of an expected extremely large crop of corn and soybeans. October rates for barge delivery to St. Louis and the Lower Illinois River are $25.86 and $34.66 per ton, respectively.
Primary Railcar Auction Results at Historic High
Bids in the primary railcar market have been trading at historic highs since late May for guaranteed railcar placement for grain shipments in August, September, and October. Bids for the week ending July 17 ranged between $2,700 and $3,200 per car for BNS F Railway’s guaranteed graincar placement in September and between $2,800 and $3,000 per car for placement in October.
This is a stark contrast to the previous 10 years, which have had very little monthly trading and bids that rarely exceeded $700. Most trading occurs in the secondary railcar market where shippers reallocate previously reserved space among themselves as market condition s change. However, shippers are worried about a repeat of last year’s rail service problems during the upcoming harvest and are securing space directly from rail carriers this year.
Unlike premiums paid in the secondary railcar market, which are transfer red between shippers and do not affect railroad profits, premiums paid in the primary market accrue directly to the rail carrier.
ILWU and PMA Schedule Two Breaks in Negotiations
On Friday, July 18, the International Longshore and Warehouse Union (ILWU) and and the Pacific Maritime Association (PMA) issued a joint statement informing the public that both parties have agreed to take a break from negotiations July 21 and 22. In addition, negotiators will take the week of July 28 off from bargaining while the ILWU “resumes unrelated contract negotiations in the Pacific Northwest.” Cargo continues to move through West Coast ports without disruption.
The previous labor contract covering nearly 20,000 longshore workers at 29 West Coast ports expired July 1. While there is no contract extension in place, both parties have pledged to keep cargo moving.
Snapshots by Sector
- Rail U.S. railroads originated 17,124 carloads of grain during the week ending July 12, down 6 percent from last week, up 6 percent from last year and up 1 percent from the 3-year average. During the week ending July 17, average August non-shuttle secondary railcar bids/offers per car were $750 above tariff, up $50 from last week and $750 higher than last year. Average shuttle secondary railcar bids/offers per car were $1,769 above tariff, up $619 from last week and $1,915 higher than last year.
- Barge During the week ending July 19 barge grain movements totaled 423,234 tons, 13.8 percent lower than the previous week but 22.8 percent higher than the same period last year. During the week ending July 19, 267 grain barges moved down river , down 17 percent from last week; 461 grain barges were unloaded in New Orleans , down 23.2 percent from the previous week.
- Ocean During the week ending July 17, 31 ocean-going grain vessels were loaded in the Gulf, 15 percent more than the same period last year. Thirty-three vessels are expected to be loaded within the next 10 days, 18 percent less than the same period last year. During the week ending July 18, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $42.50 per mt, down 1 percent from the previous week. The cost of shipping from the PNW to Japan was $23.50 per mt, down 2 percent from the previous week.
- Fuel During the week ending July 21, U.S. average diesel fuel prices decreased 2 cents from the previous week to $3.87 per gallon–down 3 cents from the same week last year.
