Grain flow hits roadblocks in the Mississippi and Ukraine
The flow of grain is facing setbacks both domestically and on the international scene.
Grain flow is hitting some serious roadblocks, both domestically and internationally.
There are currently two big factors impacting the flow of grain due to the dangerously low river levels of the Mississippi . To make the tug boats maneuver better in the low river water, they have been shortened. In addition, they are not able to load the barges as heavily, so they don’t sit as low in the water. They are loaded to about 50% normal capacity.
There is no quick fix for the issue, but dredging has been taking place in the Mississippi to help alleviate some of those obstructions in the river.
“This is really a long term fix. We really need some additional rainfall, not just in the lower Mississippi, but also in the upper Mississippi to be able to get that water level up again,” Frayne Olson, North Dakota State University Extension crops economist and marketing specialist, said.
According to Olson, some of the grain is being redirected to railroads and being offloaded into vessels. Some of the trains are being diverted to the Texas region where there are some ports that can load ocean vessels. However, there is a big rise in movement of grain in the Pacific Northwest, which has a large impact on what is happening in the parts of the upper Midwest that typically ship their grain out that direction.
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"So even though the cost of transportation is increasing, not only barge traffic but also rail freight, we're not really seeing big changes or shifts in the basis levels, which is, again, fortunate for the farmers up here," Olson said.
There are still plenty of rail cars available and power, but Olson says the issue will be finding enough man power and crews. It takes several months to be able to retrain the crews and get them certified to run the locomotives.
On an international scale, wheat prices spiked, which spilled over into the corn market, when a grain deal to continue allow grain exports to leave Ukraine through the Black Sea corridor appeared to have fallen through. Russia claimed drones that came through the corridor attacked a naval base and initially backed out of a deal, only to come back into the deal after intense negotiations .
The markets remain sensitive to news of the Ukraine-Russia conflict because of tight global supplies, Olson said. However, he sees less impact in spring wheat exports.
"Again, the entire global wheat complex is at a higher level right now because of limited supply," he said. "However, longer term, I'm not sure that it's going to have a big impact on U.S. spring wheat exports. The countries that we export spring, we too are primarily in South Asia, the Asian countries, and we also had a very large Canadian crop."