|
|
|
|
12 Jun 2008 09:01 EDT =DJ Floods, Looming Lock Closures On Miss River Roil Cash Grain Mkt
By Gary Wulf
Of DOW JONES NEWSWIRES
CENTRAL CITY, Neb. (Dow Jones)--Cash basis bids for corn, wheat and soybeans weakened across the U.S. interior - but strengthened by some 10 cents a bushel in New Orleans Wednesday - on deepening concern that spring floods will restrict the movement of landlocked grain to Gulf ports.
Torrential spring rains currently have water levels on much of the Mid-Mississippi River now approaching record highs set in "The 500-Year Flood" of 1993, following additional rises of 1.0 foot to 1.5 feet seen during just the past 24 hours.
With heavy rains again falling from Missouri to Minnesota, and floods now threatening to overtop lock walls, a status report issued late Wednesday by the U.S. Army Corps of Engineers warned that Mississippi River Locks numbers 16-18 - located from Illinois City, Ill. to Gladstone, Ill. - are likely to close for an indefinite period of time, beginning Thursday.
The move will isolate upriver grain terminals on more than 400 miles of that key transportation corridor from New Orleans area ports and lucrative world export markets. With treacherous navigation conditions already hampering river barge traffic, many grain terminals on the Upper Mississippi have already become plugged with grain.
"The rivers are shut down due to high water, so if you have beans or corn moving to river terminals, don't plan on it for a couple of weeks," Washington, Iowa cash grain dealer Katy Greiner advised her farmer-customers.
The National Weather Service Tuesday predicted crests of at least 10 feet above flood stage along the Mississippi River during the next two weeks
Prospects for a protracted stoppage in river shipping, which would effectively limit demand for grain to local end-users like livestock operations and processing plants, had an immediate damping effect on interior cash grain basis Wednesday. Price-premiums plunged by an average of 1-3 cents for corn/soybeans/spring wheat, and a whopping 12 cents per bushel for soft red winter wheat throughout the U.S. interior.
"Basis" is a general term denoting premiums or discounts which are applied to futures, to arrive at local cash market prices. That difference between local cash prices and futures prices is a function of many local factors which can affect grain trade, such as near-term demand, pipeline supply, transportation costs and the availability of storage,
In contrast to weakness in interior grain basis, Gulf grain exporters pushed up their basis bids dramatically Wednesday, attempting to immediately secure title to any available supplies of grain that could be sourced prior to the closure of the Mississippi River locks - a closure which is also expected to expand to Locks numbers 19-22 - located between Keokuk, Iowa and Saverton, Mo. - on Friday and Saturday, as the water-crest surges further downstream.
"Barge logistics are becoming a nightmare," said an Illinois grain shipper. "The Mississippi River above St. Louis is not in good shape, and I think the lower (Mississippi) is beginning to have high water problems."
Although water levels are also very high, no lock closures are currently anticipated on the Illinois and Ohio Rivers, although both tributaries would also be affected by any halt to navigation on lower reaches of the Mississippi River.
Consequently, barge freight rates have exploded on all interior river systems during recent days.
"Along the Illinois, Mississippi and Ohio River terminals, rates moved up about 3 cents a bushel, causing basis bids paid to farmers to slip," said Kevin McNew of CashGrainBids.com.
Tariffs charged for river barge rentals currently range from 440-565% of historic par value, having risen by 60-125 basis points during just the past week.
|
| |
|