Grain export demand to stay strong in first half of 2017

24.03.2017

Transportation demand for export grain 
has been strong in 2017, the U.S. Department of Agriculture said recently. The USDA also reports that there are indications 
that this may continue at least through the first half of the year.

In March, the USDA’s World Agriculture Supply and Demand Estimates projected record grain production and harvest for this marketing year. The USDA reported that December 2016 grain stocks were 10% higher compared to the same period in 2015. This implies that stocks may move during the first half of the year to make room for this year’s harvests, the USDA said. According to the USDA report, outstanding (unshipped) export balances of grain are well above the level for the same period last year.

Recent data for the beginning of this year also indicates that transportation demand for export grain will remain strong. As of March 11, year-to-date (YTD) grain barge movements down the Mississippi River were 34% above last year’s total for the same period. Also, the USDA said, average weekly barge movements in February for the major grain crops on the Mississippi River reached its highest level since 2013. As of March 9, YTD grain vessel loading activity in the Pacific Northwest has doubled compared to 2016, and U.S. Gulf vessel loading was 23% above last year’s level.

Even with the strengthening of the dollar and barring any unforeseen circumstances, 2017 may be a very strong year for transportation demand for export grain. Also, the USDA reported, ocean freight rates for shipping bulk grain have been moderate and there is still excess supply of bulk vessels in the market.

The hope is that 2017 matches or tops 2016, which, the USDA said, was a “remarkable year for U.S. transportation demand for grain exports across all modes.” In addition to an increase in total grain inspected for export at all ports, there were also increases in 2016 (compared to 2015 and the three-year average) for other grain transportation categories, such as barge movements, rail grain carloadings, rail deliveries to ports, and oceangoing grain vessel loading activity in the U.S. Gulf and Pacific Northwest, according to the USDA.

In 2016, 43.18 million tons of grain was transported by barges along the Mississippi River to New Orleans for export, a 22% increase over 2015. In addition, the USDA said, weekly barge grain movements along the river exceeded one million tons in 13 weeks during the year, compared to just one week in 2015 and three weeks in 2014.

In other news, according to the USDA’s March 21 Weekly Weather and Crop Bulletin, a majority of the Midwest experienced a relatively mild winter with occasional periods of record warmth accompanied by brief episodes of rain or snow. The result has been normal navigation conditions on the Mississippi River and its major tributaries. There have been relatively few disruptions due to weather, the USDA said.

As of March 21, barge freight rates were 26% to 35% below the three-year average, but were 5% to 30% above rates at the same time last year. With the mild winter, the USDA said, an early opening of the northern portion of the Upper Mississippi River has expanded the range of navigable river miles compared to the same period last year. It has also kept barge rates above last year’s levels.


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