October 20, 2010

US grain flow hits snags amid record harvest pace

The record harvest pace of the corn and soy crops in the US Midwest was causing pockets of snags along the supply chain, backing up the movement of grains on barges and by rail, trade sources said.

There were concerns that the bottlenecks in grain flow could worsen over the next two weeks as the US harvest comes to an end.

Heavy deliveries of freshly-harvested soy are also causing bottlenecks at grain elevators along some Midwestern rivers because of tight supplies of empty barges.

"There is a clog situation," said Bruce Abbe, executive director the Midwest Shippers Association, in Eden Prairie, Minnesota. With two main railroads in the upper Midwest one to two weeks behind schedule and cars sitting on the rails, things are taking a little more time to move, Abbe said.

The US is forecast to harvest a record large soy crop and the third biggest corn crop this year. Early spring planting has led to the fastest harvest on record.

Abbe said the speedy harvest and heavy rains in Wisconsin and Minnesota earlier in the month hampered barge transport and elevators were finding it difficult to get rail cars.

The grain loading pace along the Mississippi River was also hampered earlier in October by high river levels, even flooding, in some areas along the Illinois and Iowa border. As a result, spot barge freight rates on the upper Mississippi River have spiked to the highest level in nearly a year, barge freight brokers said.

The corn harvest was 68% complete as of Sunday (Oct 17), up from 51% last week and the five-year average pace of 39%, the USDA said on Monday.

Soy was 83% harvested, compared with 67% last week and the average pace of 62%.