Mississippi River drought threatens US grain exports

The little rainfall expected until the end of the month suggests that the water level of the Mississippi River may decrease even further, posing a threat to the transportation of US grains to ports.

“As we move into December – when precipitation occurs mostly in the form of snow – it is unlikely that water levels will fully recover,” said Susan Stroud, a grain analyst at No Bull.

This is only the latest threat to the competitiveness of American soy and corn compared to shipments from Brazil, where, at the moment, crops are amid the planting season and do not face much competition.

After a sweltering summer between June and early September, the water level of this critical American waterway dropped to a record low of 12.04 feet (3.67 meters) below the baseline level in mid-October near Memphis. However, it experienced a recovery that aided in the export of the country’s grain.

However, New water level declines could mean more setbacks for American producers who struggle with higher logistics costs than those in Brazil and Argentina. Pending sales for delivery in the current season are among the lowest in the last decade.

“When we have higher transport costs, they are passed on, pushing international buyers to search for cheaper bushels elsewhere,” said Stroud.

Conditions are unlikely to improve in the coming months, when the US typically benefits from reduced competition until the next Brazilian crop season begins.

According to the American Commercial Baggage Line, barges heading to southern US ports are carrying up to 600 tons less grain per vessel to avoid grounding. Last week, the operator suffered a loss equivalent to 14.6 boats due to delays.

Meanwhile, the number of ships awaiting at southern US ports to load grains in the next ten days has dropped to the lowest level since at least 2012 for this time of year, according to the US Department of Agriculture.

The situation is exacerbated by the fact that the Panama Canal, a crucial shortcut between the Atlantic and Pacific Oceans, is also experiencing historically low levels.

Source: MSN

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