Written by Jerry Engler Tuesday, 18 December 2012 14:35
Weather can have both negative and positive effects for grain marketing just as it does for grain production.
Drought-inhibited water depth for navigation on the Mississippi River may cause higher fertilizer costs and more expensive grain shipping, but that could be offset with even stronger prices for soybeans.
Chad Arnold, agronomist for Cooperative Grain & Supply based in Hillsboro, said low rainfall on the Mississippi River basin is causing “a lot of problems” as navigable water level has decreased from 9 feet to 7 feet.
Arnold said river barges can’t carry as much weight to stay sufficiently buoyant in shallow water as they can in deeper water. So a barge that normally can carry 1,500 tons of fertilizer bound for delivery in Hillsboro may be carrying 1,200 tons instead, but the shipping cost is the same.
That makes the cost of each ton of fertilizer higher.
According to current news on Mississippi conditions, there are additional concerns that parts of the river may have to be closed to navigation because of low water, or even for a prolonged time for removal of rock that causes problems as water becomes more shallow.
But by a curious bend in the way things benefit or take away, Ted Schultz of Team Marketing representing the co-op from Moundridge, said the situation may make demand for soybeans out of this area stronger for higher-priced export sales because shippers, from say Illinois, may have higher expense marketing by rail and truck than by water barge.
Arnold said that when fertilizer is shipped for use in this area, it can come from anywhere in the world. He confirmed it may be manufactured in a state such as Illinois where river closures might make it more expensive.
The fertilizer can arrive and exported grain can leave through the Port of Catoosa by way of the canal system to the Mississippi using the Arkansas to the Verdigris and White River systems to canals at Tulsa, Okla., he said.
Rain received now can be highly beneficial, both men said, but they noted it will take major rains to create sufficient run-off to raise the level of the Mississippi.
They said soybeans can leave Marion County—and fertilizer can arrive from Tulsa and the river system—through a variety of truck lines and routes.
“We don’t have the luxury of railroad service here (for delivery and shipping) any more,” Arnold said. “So we have to rely on trucks. The situation (on the Mississippi) hasn’t affected us too much yet. But that’s not to say it won’t.
“We have a chance of rain in the forecast here. We need it bad. Then we need it to freeze up to slow the wheat down.”
Schultz said the timing of the Mississippi shallow-water problem, plus the normal arrival of cold weather, can halt navigation with ice on parts of the Mississippi-Missouri river systems. That means this is the normal time of year for Mississippi navigation to affect farmers less.
He said problems because of low water for barge navigation will increase if the rivers stay low for fertilizer shipments in the spring, and then for grain shipments through the summer and fall.
“It’s not really a big deal yet, but it’s having an effect. It could hurt somebody else worse, or it could hurt us,” Schultz said.
He said TMA does use railroads for shipping from this area, but it is more expensive than the canal-river system, and the railroads have problems given their other commitments in making rail cars available.
“It’s hard to beat the barge system,” Schultz said. “It’s pretty efficient, the lowest cost.”
Press reports from around the central region of the United States are noting that the Missouri-Mississippi system has effectively served American agriculture since before the days of Mark Twain. They say shipping grain and supplies through cities such as Chicago and St. Louis can be adversely affected.
They also say the main focus of the problem is the 180-mile portion of the Mississippi from St. Louis to Cairo, Ill., where the water level is as much as 15 to 20 feet below normal.
The river flow also is affected, they said, by U.S. Army Corps of Engineers actions to close water supply for conservation on the upper Missouri system in South Dakota.
They said Americans may find a great many other products affected by Mississippi shut-downs if the situation continues.
Schultz said barge operators don’t want to bring a barge to Tulsa that will return the other way empty. They want it full both ways.
The co-op spokesmen said consumers may find a number of other products affected if the situation continues.