Grain shipments on the Mississippi River system are being impacted by falling water levels, according to a World Grain report.
Falling levels on the key US waterway were raising the cost and time it took to move grain on the river to the Gulf of Mexico for export, the 26 September report said.
About 60% of US grain exports are shipped on the river system, which has seen levels drop since June, according to the report.
Last year’s drought conditions saw the lowest recorded levels on the waterway, which led to closures and restrictions on the river for more than 40 days that caused price uncertainty throughout the supply chain, World Grain wrote.
Loading drafts and tow sizes have been lower than normal this year, leading to delays of two to three days, according to the United States Department of Agriculture (USDA)’s 22 September Grain Transportation Report.
Quoting from the report, Freightwaves reported the USDA as saying barge movements transporting grain in the week ending 16 September totalled 129,900 tonnes, which was 25% lower than the previous week and 38% down compared to the same period in 2022, when drought conditions also slowed shipping on the river.
In terms of barge movements, that meant 82 barges moved downriver, a decline of 25 in one week, the grain shipment report said.
With a limited outlook for more moisture, conditions are not expected to improve much before the end of the year and river levels could drop close to the record lows seen at the end of last year, according to Drew Lerner, senior agricultural meteorologist with World Weather.
“I think we will be a little bit better, but we will be dealing with low water levels through the fourth quarter,” World Grain quoted Lerner as saying.
Every water gauge on the 644km (400 mile) section of the Mississippi from the Ohio River to Jackson, Mississippi, is at - or below - the low-water threshold, according to the National Oceanic and Atmospheric Administration and US Geological Survey.
Although October was expected to bring a little more rainfall and cooler temperatures – which slows evaporation – the region was unlikely to see a big improvement and water levels were likely to remain as they were or drop lower, Lerner said.
More rainfall was expected in November in the Ohio River basin but would not be as significant in the upper Mississippi or Missouri river basins.
However, as it was an El Niño year, this usually brought above-normal precipitation, the World Grain report said.
In response to lower water levels, barge operators had introduced restrictions on draft and tow sizes and this had put pressure on capacity and increased competition for transportation, which pushed up costs, according to the American Farm Bureau Federation (AFBF).
Between Cairo, Illinois, and the US Gulf, loading drafts for barges were 24% lower than normal while tow sizes were down by 17%-38%, the USDA said.
Down-bound monthly grain barge rates from Cairo-Memphis increased from US$14.33/tonne in August to US$26.66/tonne in September, according to USDA data. However, rates were down compared to last September when they were US$36.95/tonne and significantly lower than the peak of US$71.40/tonne in October 2022.
On the mid-Mississippi River, loading drafts were down 15% and tow size was reduced between St Louis, Missouri, and Cairo. The spot rate at St Louis increased 376% from US$8.06/tonne to US$38.34/tonne, which was slightly higher than last year’s rate of US$38.10/tonne.
Last year, barge rates did not react to lower levels until September and October, when rates hit their own records of more than 2,000% of their underlying benchmark, the AFBF said.
As the harvest season approached, demand for grain transportation had been lower than average, which had reduced the impact of low water levels on prices to date, the AFBF said.
