CHICAGO (Reuters) – High waters in the Mississippi and Ohio rivers are slowing the movement of grain barges to the U.S. Gulf export hub, grain traders said, adding another headache to a sector struggling with rising soy stockpiles and slowed exports due to a trade row with China.
A Cargill grain elevator at Hales Point, Tennessee, closed this week, a casualty of rising waters from the Mississippi River that flooded a highway next to the facility, a Cargill website said.
The Mississippi River is the primary artery for moving grain from the Midwest to terminals in the U.S. Gulf that ship about 60 percent of all U.S. corn and soybean exports. The United States is the world’s top corn exporter and the No. 2 soy supplier.
“High water on the Ohio and the lower Mississippi is causing problems all down the river system,” a Kentucky-based grain trader said, adding, “Even down at the Gulf, the high water is restricting vessels coming in, and they can’t get the barges unloaded.”
Because of high river levels, barge operators have reduced the size of their tows and are operating only during daylight hours in a few stretches.
“All of this results in longer transit times with fewer barges moving. It is tough on carriers’ economics but necessary to maintain safe operations,” said Joe Tyson, senior vice president of operations with New Orleans-based Canal Barge Co.
Barge freight costs have climbed in the last week, reflecting a shortage of empty barges due to traffic slowdowns into the Gulf. Prompt barges were offered on Thursday in the Mississippi River at St. Louis at 400 percent of tariff, up from 310 percent on Jan. 2.
“You have put a floor under the market for a couple weeks, until that slug of empties can get back up north,” said Mark Fletcher, co-owner of Ceres Barge Line, based near St. Louis.
Commercial grain handlers pay for barge freight but the costs are indirectly passed on to growers as the grain handlers reduce their bids for farmers’ grain.
Farmers have already grappled with unusually high expenses for grain storage since harvesting the largest-ever U.S. soybean crop and the second-largest corn crop last autumn.
The latest rise in river levels followed dense fog last week around New Orleans that slowed the loading of outgoing ships from Gulf grain elevators.
Traffic was restricted on the Ohio River at Louisville, Kentucky, following a Dec. 25 incident in which a tow pushing 15 coal barges hit a bridge, leaving nine barges pinned against a dam. The U.S. Army Corps of Engineers planned to begin salvage operations this week.
Forecasts called for storms this weekend across the U.S. southern tier that could prevent rivers from falling much, said Kyle Tapley, meteorologist with Radiant Solutions.
“Over the next 15 days we’ll see things probably slowly receding overall, but I still think they are going to remain above normal,” Tapley said.
“Really persistent rainfall has led to the high river levels,” he said, “particularly right now across the lower Mississippi Valley and parts of the Ohio Valley.”