Dive Brief:
- Shrinking water levels are pushing barge operators to restrict shipments on the Mississippi River for a third consecutive year, pushing up transportation prices as grain harvests get underway.
- Operators have reduced tow size, or the amount of barges that can be towed, by up to 34% as of Sept. 12, according to the American Commercial Barge Line. Southbound freight rates at multiple points along the river are up by double-digit percentages compared to the three-year average, according to the U.S. Department of Agriculture.
- Rain from Hurricane Francine brought some temporary relief over the weekend, with areas like Mississippi exiting the National Water Prediction Service's low water threshold. However, levels are expected to dip back below the threshold later this month.
Dive Insight:
Just as farmers kick off corn and soybean harvests, operational and pricing disruptions are pressuring shippers along the Mississippi River, one of the most important transportation channels for Midwest grain exporters.
Southbound freight rates at St. Louis are 15% higher than last year's elevated rates and 53% above the three-year average, according to the U.S. Department of Agriculture's grain transportation report.
Roughly two-thirds of grain exports are transported on the Mississippi River, and low water levels have created delays of up to two days, per ACBL.
Volatile conditions along the Mississippi have become a new normal for shippers. This is the third year of dry conditions, and comes just months after the river was flooded from excessive rainfall across the Upper Midwest.
Shipping restrictions along the Mississippi could be more of a headache for exporters than last year, when farmers were moving less grain. Around that time, lower commodity prices pushed farms to store their grain for longer, a trend unlikely to take place this year as growers expect a depressed financial environment to continue.
Shipments have already been on the rise compared to last year. Barged grain movements the week of Sept. 7 were 128% above the same period in 2023.
