As farmers work to harvest what USDA is calling a near-record corn crop, traffic along the nation’s waterways is a major hurdle. That has compounded issues on the Mississippi and Ohio rivers, causing grain handlers to slash basis, eating into farmers’ bottom line.
Along the Mississippi, the culprit was dry weather. As a lack of rain drained the shipping vein, farmers reported grain handlers such as Archer Daniels Midland were preparing for major shipping issues, even asking farmers to store their own grain until the issue eased. That’s as barge operators were forced to ship at half-tow, taking more time to ship the same amount of goods. As a result, barge rates skyrocketed to three-year highs.
Karl Setzer of MaxYield Grain says the issues along the rivers meant farmers are better off financially to hold on to grain for a while versus selling it at harvest.
“There’s a 500% carry in the market,” Setzer says. “That means the river market is paying merchandisers 80¢ a bushel to hold corn from now until December, resulting in better basis for farmers.”
In addition, grain buyers say record yields in the southern U.S. increased seasonal demand for barges on the lower-Mississippi this year, causing a backlog of corn and soybeans along the upper- and mid-Mississippi pools. An Arkansas farmer told Farm Journal the issue intensified so much, he feared he would have to stop harvesting in the middle of the month.
The Ohio River had two separate issues pop up. The U.S. Waterways Council says Lock and Dam 52, located near the Illinois and Kentucky border in Brookport, Ill., and Lock and Dam 53, 11 miles upstream of Cairo, Ill., are major pain points.
“When I’m asked the proverbial question, ‘What keeps you up awake at night?’ regarding the logistics system that serves agriculture, my predominant response is a lock and dam failure of significant duration during harvest season,” says Mike Steenhoek, executive director of the Soy Transportation Coalition. “These occurrences serve to reinforce how dilapidated and susceptible to failure many of our locks and dams are along the inland waterway system.”
Steenhoek says Lock and Dam 53 is of particular interest, as it’s the last site before the Ohio River intersects with the Mississippi River.
“There are 20 lock and dam sites between Pittsburgh and the Mississippi River near Cairo, Ill. Lock and Dam 53 is one of the busiest links in the logistics chain that serves agriculture and other industries,” he says.
“A failure of greater duration would have had significant consequences. Even the temporary closure resulted in notable delays,” Steenhoek adds.
President Donald Trump also drew attention to the issue in June when he revealed his infrastructure plan using the Ohio River as a backdrop.
“Together, we will fix it,” the president said in his speech. “We will create the first-class infrastructure our country and our people deserve.”
Steenhoek says elected leaders in Washington, D.C., continue to stress the importance of outcompeting the rest of the world; however, he thinks the focus should be to outdeliver.
“Our nation’s inland waterways with our inventory of locks and dams have helped U.S. agriculture achieve the competitive advantage we enjoy,” he says. “This competitive advantage will not persist, however, if we allow these type of closures to become more and more frequent.”
