Over the past couple weeks, I’ve been watching our export numbers on corn and beans for the year. The marketing year, for those that aren’t sure, is September 2022 – August 2023. But before I get into actual numbers, I wanted to share some very relevant information that I came across in a newsletter I subscribe to that I feel has very good, unbiased information. As you can see below our biggest months for soybean exports are Oct/Nov/Dec…and the biggest export channel for those beans during that time is the U.S. Gulf. Below is a seasonal chart I pulled from nobullag.substack.com this shows that beans are exported heavily in Oct/Nov/Dec and then corn takes over and is exported in Dec/Jan/Feb/Mar.

So, as you can imagine the MS River situation slowing our bean exports to an absolute crawl right now is very detrimental to getting beans out of the country. And not only is the bean export situation hampered by logistics, but price is also another very prominent factor. The fact is the beans that are trying to move were already sold, and vessels were scheduled to be in place months and months ago so once those vessels are loaded and gone, what happens? I don’t know this for a fact, but common sense would say that as shippers watched this MS River situation unfold starting 2 months ago, they were probably not too eager to have their cargo ships end up at the Gulf awaiting loadout if they even thought that getting product would be a problem. And the thing about a vessel, is you don’t move them unless they’re loaded. So, it’s not so easy as a ship unloaded in say the port of Miami and then someone calling and saying “hey, the river got a little better, and we have 1.8 million bushels of beans coming down on barges, can you send a ship over here to load?” I believe on these cargos there is a 48-hour day grace period (possibly less) and if you are a loader and you don’t have the product to load or you are just behind, and that vessel can’t be on your dock the day you originally scheduled (months in advance) then it’s over $100,000 day demurrage for every day that vessels sits.

Managing a barge loadout program from the origination point (river loading grain terminal) to the travel time it takes to get from point of origin to arrival at your port loadout facility in the gulf, takes a TEAM of people. I used to be a member of one of those teams and sometimes it’s a beautiful symphony of communication and coordination and other times (probably like right about now) it’s a heavy metal concert in a foreign country, you’re in the mosh pit, bleeding, and no one speaks English, but you can tell everyone is mad and no one cares about anything but their own survival.

Why can’t we just rail the grain to the Gulf?

Well, in years past that’s been done in small amounts but the fact is those facilities are old and today’s unit trains are 100-110 cars. So, most of the facilities cannot handle all of those cars unbroken and without multiple switches which is extremely time consuming. The other side is most of those facilities have very slow rail receiving pits if they have one at all, and even if they do have a rail receiving pit, it’s likely it’s on a separate leg than their barge unloader so they can’t hit their unload scales, which means they would have to rely on origin weights to know how much grain was in the train and 80% of train loaders don’t have certified loadout scales. They rely on destination weights for final settlement.

And last but not least the RR is in complete disarray right now and we might be striking in November, we might not. But the fact remains they’ve been an inefficient, unreliable, oligopoly for decades and now they have all the leverage they need to continue to operate that way. Truck freight is historically tight, barge freight is functioning about ½ – ¾ capacity and it couldn’t have happened at a worse time.

Why is barge freight so high?

Well as I’ve mentioned before barges south of STL are being light loaded. Usually, they can run at a depth (draft) of 12’6” …and as of today they are restricted to 9’ drafts but even them have been running aground in various spots on the MS and now a new problem area, where the OH River dumps into the MS has been the site of many groundings in the past 72 hours. Some barges lines are taking extra precaution and rightfully so to only allow their barges to be loaded to 8ft drafts. Because while most of the MS is a soft, muddy bottom, there’s still some pretty big rocks and old cars and who knows what other junk lurking on the bottom that could damage their barges if they were to impact.

Here’s another fun fact, typically even when the river is normal and we are running max drafts, most everyone wants to push the amount of tonnage to the max, and there are areas of the river where, and this is not an exaggeration, barges are riding 6” off the bottom. Get a ruler out and remind yourself what six inches looks like. There’s 14,000 horsepower pushing 25,000 tons of product in a bunch of big metal boxes that’s that ranges from 5’ off the bottom to 6”. Think about that.

Here’s another cool graphic I pulled from nobullag.com. This gives you an idea of why river transportation is so efficient and hence why this problem isn’t going to be solved by two good weeks of rain. The past 10 days we’ve gotten way behind on shipping beans, corn harvest will be in peak next week. All of this g rain that can’t move now is being stored, put on the ground, put in machine sheds, guys are filling their hard hats and boots, anywhere they can store grain! BUT will there be enough logistics/barge freight when the water levels normalize and more importantly, with the strength of the dollar will we even have much of an export market for beans? If the SA crop is planted and looks good, we might see very minimal bean export business whenever the water levels return to normal as China and other beans buyers will got “hand to mouth” to get them March/April/May when SA harvest will fulfill their import needs