Record Flood-Stage Days Stymie Mississippi River Barge Traffic

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Movement of grain along the Mississippi River has been hindered all season due to record Midwest precipitation. Now, just as grain movement was picking up, Hurricane Barry shut down movement again at the mouth of the river. The US Coast Guard formally closed the Mississippi to all traffic from the river's mouth as far up as Angola on Friday as Barry approached as a tropical storm. The storm dumped over 23 inches of rain on some parts of Louisiana. The Coast Guard reopened the Port of New Orleans Sunday morning as the remnants of Hurricane Barry made their way inland. The river will stay elevated for another couple of weeks.

The Mississippi River at St. Louis has been at or above flood stage for 122 consecutive days, far exceeding the previous record of 104 days during the Great Flood of 1993. The river gauge at Baton Rouge is at major flood stage and is forecast to stay at a moderate flood level until the end of the month.

Movement on the river picked up in the last week of June and first week of July following four weeks of no vessels passing through lock 27, just north of St. Louis, according to the latest data from the USDA’s Weekly Grain Transportation report from the Agricultural Marketing Service. Year-to-date total grain movement on the river is down 37% from last year. Basis prices were higher at export elevators in the gulf in late June, but came off when the river opened up for a couple of weeks. The latest disruption caused a small rise in basis, with reports of some exporters along the lower Mississippi River declaring force majeure, a provision in an export contract that relieves a party from fulfilling the contract due to events, like weather, that are out of their control.

Ample stocks of grain and weak export demand are the offsetting forces against logistical disruptions and significant loss of planted acreage, preventing a more significant rally in grain prices (corn is currently up 20% from pre-flood levels). The ongoing trade war with China is keeping soybean exports on pace for a five-year low and stocks at a record level. Record corn production from the United States’ main competitors—Brazil, Argentina, and Ukraine—caused the USDA to lower corn export projections several times this season, with another cut of 100 million bushels, to 2,100 million, in the latest WASDE report on July 11. Gro’s corn export pace model points to 2,006 million bushels, suggesting another cut by the USDA is necessary. Logistical disruptions and lower harvested area are likely to bite into earnings for major commodity traders.

The chart on the left below shows corn (green line with markers) and soybean (blue line with markers) movement down the Mississippi River through lock 27 near St. Louis, compared with last year. The last two weeks of data show high points for 2019 following three weeks of zero grain movement. The chart on the right shows 2019’s total grain movement (blue line with markers) along the Mississippi River running well below last year. 

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