Rail Delays Rob Farmers03/10/2017
When it rains it pours, and in the Pacific Northwest that means rail transportation isn’t able to efficiently haul grain. From Washington to northern California to parts of Montana, excess snow and rain brought power outages and damaged rail tracks that limited transport to export markets. When transportation issues persist expect a widening basis, says Mike Steenhoek, executive director of the Soy Transport Coalition.
“With no impediments we see railroads doing three turns per month—recently we’re seeing numbers like 2.1 or 2.3 turns per month,” Steenhoek says. A “turn” refers to a train leaving one destination, arriving at another and returning to the original station. For example, if a train leaves western Minnesota and arrives in the west coast five days later and returns to Minnesota after another five days it’s a 10 day turn, or three per month. “We’re also seeing increases in cars delayed to destination and when you’re moving millions of bushels of ag products you depend on timely arrival for storage not to be exhausted.”
Elevators that depend on rail systems to haul grain could be in a challenging situation—storage might be running out which means they have to either find a new destination or the farmer pays.
“A widening basis is the most common response,” Steenhoek says. Since elevators can’t get rid of their grain through rail they want to send farmers the message not to deliver them grain—the easiest way? Offer less money.
Farmers in states with export port flexibility, however, aren’t feeling the burn quite as much.
“When the key corridor (Pacific Northwest) got cut off it allowed exporting companies to flip some business to the Gulf,” says Mitch Dawson, director of grain operations for MFA Incorporated, a Missouri based company.
Washington is experiencing its second wettest year in history, according to several Washington weather reports, combine that with avalanches in Montana and you can understand why railroads are experiencing delays and outages. Rail in the Pacific Northwest links western Iowa, Kansas, western Minnesota, western Missouri, Nebraska, North Dakota and South Dakota to potential export markets.
The issue should resolve itself with the natural progression of the season, Steenhoek says. For soybeans, September to February are the busiest months for railways since that’s when the majority of grain is exported. South America has started harvest and less pressure will be on U.S. rail systems as their soybeans hit the export market.
Source: Sonja Begemann, Farm Journal