Low water levels on the Mississippi river in the USA due to recent droughts have led to a surge in barge rates, World Grain reported.

Water levels on the Mississippi have dropped to record lows in many places in the south, such as in Baton Rouge, Louisiana, the 26 October report said.

Barges were loaded with reduced capacities in October in a bid to avoid grounding on sandbars, the report said. However, groundings had still taken place, causing commercial traffic south of Illinois to be halted for more than a week.

In some places, such as just north of Vicksburg, barges had to wait along the shore awaiting sufficient water levels to move safely south and for water to rise high enough to unload at ports and docks.

The river reopened on 10 October following dredging work by the US Army Corps of Engineers to deepen the shipping channel near Memphis and Stack Island, Mississippi.

However, low water levels had continued and, in some places such as New Madrid in Missouri, devices that the US Geological Survey used to measure gauge height had registered zero, World Grain wrote.

According to the Department of Agriculture (USDA)’s latest Grain Transportation report, barge rates peaked in early October, but dropped in the middle of the month. The St Louis barge spot rate hit a peak of US$105.85/tonne in the week of 10 October before dropping to US$72.58/tonne the following week. After the dip, the spot rate remained up 130% compared to last year and 260% higher than the recent three-year average.

“Amid uncertainty about when barge traffic will normalise, some grain shippers have delayed deliveries until later in the year, which has softened demand for barges,” the USDA said.

“Although spot rates have fallen, water levels on the Lower Mississippi River (LMR) continue to be an issue, with the river gauge at Memphis dropping to a record low on 18 October. On the Ohio River (which feeds a significant portion of the LMR’s water), low water levels have delayed barge traffic because of groundings and closures for dredging work.”

At 3,765km, the Mississippi is the second-longest river in the USA (after the Missouri), but feeds from the largest drainage basin in the country. It drains all or parts of 31 states and two Canadian provinces situated between the Rocky Mountains and the Appalachian Mountains. It is also a vital southbound route to the Gulf for US exporters, carrying 92% of US agricultural exports and 78% of global exports of feed grains and soyabeans, World Grain wrote.