Supply

River Conditions Impact the Movement of U.S. Soybeans

The inland Mississippi River system plays a major role in transporting commodities, especially soybeans. The inland Mississippi River system is comprised of navigable waterways that extend along the Gulf of Mexico from Houston, Texas to New Orleans, Louisiana, up to Tulsa, Oklahoma; Kansas City, Missouri; Minneapolis, Minnesota; Chicago, Illinois; Louisville, Kentucky; Charleston, West Virginia; and Pittsburgh, Pennsylvania. The importance of a well-functioning waterways system for U.S. soybean farmers, and the international buyers of those soybeans, cannot be overstated. Although weather events are unavoidable, the impacts can be minimized with proper maintenance of the waterways. Proper maintenance includes funds for dredging, dike building, flood control, lock repairs, wetland creation, and much more.

For example, current high-water levels have resulted in the U.S. Coast Guard restricting barge operators to daylight hours and reduced the size of tow configurations on sections of the inland Mississippi River system. Furthermore, cold weather combined with ice flows is causing major delays on the Illinois River. The impact of poor river conditions is fewer round trips for barges, which reduces the effective barge capacity and ultimately results in higher barge tariffs. The increase in transportation cost is two-fold as it forces country buyers to offer the farmer lower cash price bids and often leads to temporary spikes in export Free on Board (FOB) basis levels.

Source: Army Corps of Engineers

There have been some isolated instances this year that have resulted in temporary movement delays throughout the U.S. waterways this winter. This is not abnormal as cold temperatures have historically resulted in delaying barge movement particularly in northern stretches of the system that typically see colder weather. However, the work of the U.S. soybean industry and its proponents has helped to improve the waterway which has helped to improve the speed of product movement along the system while coming at a lower cost to international buyers.

Alan Barrett
Alan Barrett

Director of Consulting

Farm Journal

Alan Barrett is Doane’s project consultant and accomplished commodity economist with more than 25 years of experience in futures and cash markets with a focus on cotton, commodity projects, non-traditional agricultural products, transportation and supply chain studies. Alan spent six years as a commodity futures broker. His expertise encompasses feasibility studies of oilseed crushing plants (soybean canola, and cottonseed), grain elevators, export elevators, shuttle elevators, grain container operations, flourmills and other processing facilities. Alan also has conducted transportation supply chain studies for grains, oilseeds, fertilizer, coal, natural gas, crude oil, and petroleum products. Alan has considerable experience in non-traditional agricultural products such as coal, coke, natural gas, chemicals, hydraulic fracturing fluid, hydraulic fracturing proppants, glycerin, fertilizer, micronutrients, salt, limestone, cement, iron ore, pig iron, and steel, especially feed ingredients. Mr. Barrett has a BS and MS in Agricultural Economics from the University of Tennessee.