Low water levels in the US Mississippi waterway are continuing to create problems for the country’s Gulf export hub, which is a key source of soyabean and corn exports, trade sources told AgriCensus.
Water levels were near historic lows for August/September and weather models predicting dry conditions through the coming weeks were increasing concerns and feeding into barge charges that had risen sharply in the week before the 29 August report.
“I suspect freight is the driving factor [for rising barge premiums], with freight sellers perhaps nervous that water levels could continue to drop with the forecast for the first half of September remaining dry for most of the Midwest,” Grain Service Corporation’s vice president Diana Klemme was quoted as saying.
As higher costs are passed downstream, the situation in the Mississippi barge market has the potential to affect the competitiveness of US Gulf’s exports on a FOB and CFR basis, according to the report.
The reported increase in barge charges was similar to the disruption caused by low water levels at the end of last year that had created problems for US exporters during the country’s main export period, AgriCensus wrote.
Concerns around low Mississippi water levels combined with disruption linked to low water levels in the Panama Canal could also hamper exports from the US Gulf, with businesses potentially shifting to Brazil and to the US Pacific Northwest (PNW) hub, the report said.
“If barge freight gets high enough… it could definitely raise the cost of shipping corn and soyabeans from the Gulf,” Advance Trading’s Larry Shonkwiler told AgriCensus.
Low water levels in the Panama Canal, where waiting times had increased to an average of 21 days, were adding to the problems facing the sector and could hamper the US Gulf’s export competitiveness for both corn and soyabeans, Shonkwiler added.