The Louisiana Farm Bureau News reported in May that 65% of US agricultural exports go through the Port of New Orleans, so saying the Mississippi River is important to the US seems an understatement.
The data implies that nearly two thirds of US agricultural exports depart through this one port, so the near-record low water levels being seen in the river now mean agricultural exports and imports are being restricted and could get worse.
On an ecological level, National Public Radio reported Thursday that saltwater was moving upstream, no longer held at bay by river’s current.
AG TRADE RESTRICTED
Ships and barges are running aground, news reports say.
And a storm or two in the Midwest or Plains may not be enough to reverse the trend any time soon, a market analyst said. What’s more, the US is about to enter the winter season when a large part of what precipitation that falls comes in the form of ice or snow, which won’t help river levels much until it melts in the spring.
The low water in Mississippi River tributaries like the Illinois and Ohio rivers will spell their own kind of wintertime problems as well, the analyst said. Ice will build up on the steel-hulled barges, causing them to float at unnatural angles and even hamper, or prevent loading unless the ice is chipped off by hand.
Some barges may not reach elevator grain chutes because of the shallow water, he said.
All that backs up grain and soybeans at terminal elevators, dropping basis bids to farmers and slowing the flow of commodities from farm to elevator to terminal to the Gulf to export, the analyst said.
MORE FOR DOMESTIC USE?
So, if grain and oilseeds can’t be exported expeditiously, it stands to reason that more would be available for domestic use, including feed.
However, this year’s modest Midwest yields may not allow more generous prices to cattle, hog and poultry growers, the analyst said.
Lower prices could result if the harvest strains the infrastructure more, the analyst said.
In the 1988 drought, rivers reached similar lows, virtually closing the Port of Memphis and restricting movement up and down the rivers. Other Gulf ports took on added duties as exporters were willing to pay the extra cost, and railroads picked up extra duties supplying Gulf ports with exports, including grain.
Mobile, Ala., picked up some extra business, but barging through the Tombigbee River system was a tedious process. Rail traffic to New Orleans also picked up as grain shippers tried to mimic the Mississippi’s movements.
All in all, this is not a temporary thing.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $145.28 to $153.00 per cwt, compared with last week’s range of $143.40 to $149.70. FOB dressed steers, and heifers went for $228.72 to $239.18 per cwt, versus $227.15 to $232.51.
The USDA choice cutout Thursday was up $1.63 per cwt at $262.49 while select was up $3.31 at $231.91. The choice/select spread narrowed to $30.58 from $32.26 with 95 loads of fabricated product and 34 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $2.20 to $2.30 a bushel over the Dec futures and for southwest Kansas were steady at $1.00 over Dec, which settled at $6.82 1/4, down 2 3/4.
Six heifer contracts were tendered for delivery Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $174.78 per cwt down $0.18. This compares with Thursday’s Oct contract settlement of $175.97, down $0.45, and Nov’s $178.12, down $0.70.