USDA shares grain transportation outlook

WASHINGTON – USDA has reported its assessment of the grain transportation situation in the United States and prospects for the next few months.

USDA provides this information to help producers, shippers, receivers, railroads, and other transportation providers prepare for changes that occur in agricultural transportation needs and service levels throughout the year.

Projections for U.S. grain and soybean production are down 5 percent from the 2000-01 marketing year. Total use is projected up slightly from last year.

The numbers. Exports have increased by 91 million bushels, up 2.14 percent from last year. Ending stocks are down 22 percent from a year ago.

Grain and soybeans stored in all positions on June 1 are up 2 percent from a year ago. On-farm stocks are up 6 percent from last year. Ocean freight rates decreased at the beginning of the third quarter.

The Baltic Exchange, as of Aug. 9, reported the daily average rates for the Gulf to Japan and Pacific Northwest to Japan to be $17.78 per metric ton and $10.39 per metric ton, respectively.

Lowest since 1999. Both of these rates were at their lowest since July 1999 (for the Gulf) and September 1999 (for the PNW), which was before the recent increase in fuel prices.

Ocean rates peaked at different times for the two key grain routes. For the U.S. Gulf to Japan, the average ocean freight rates reached a high of $24.04 per metric ton in mid-May; the rate from the PNW peaked at $17.68 per metric ton in mid-March.

Since then, the average ocean freight rates for both routes have been falling.

Barge grain. Barge grain movements for July-August were 1.1 million tons per week, a 21-percent increase over the five-year average for the third quarter. Although barge traffic on the Mississippi River slowed at Locks and Dam 15, grain movements increased at locks below that point.

L&D 27, the last lock on the Mississippi, reported several weeks of over 1 million tons moving weekly during June into August.

Corn, soybean exports. USDA projections for U.S. corn exports increased because of increased global demand.

Soybean exports have been strong throughout the year, and with a forecast of a record crop, there could be the potential for increased soybean barge movements on the Mississippi River.

However, favorable ocean rates from the PNW to Asian markets may divert some soybeans that would have been shipped on the Mississippi.

The availability of grain cars, though plentiful during the summer months, is expected to tighten considerably during the next few months.

Wheat crop. Since the wheat crop for 2001-2002 is projected to be sharply lower than last year’s crop, the need to relocate grain in the Plains States has been less than normal.

Prior to and during the fall harvest, however, the demand for grain transportation is expected to increase.

The bidding activity for guaranteed railcars has been weak so far, and prices in the secondary railcar market have been moderate.

Trucks remain the dominant mode of choice for transporting agricultural products to market.

The weaker U.S. economy, high fuel costs, expensive liability insurance rates, and changing asset valuations have lowered profits.

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