In a recent update to the US Soy Transportation Coalition, executive director Mike Steenhoek warnedthat for the second year in succession the Mississippi River was facing the problem of sustained lower water levels caused by a long period of below-average rainfall in the areas that feed the river.
Steenhoek said that as the soybean harvest season started to increase towards its annual peak, it was a matter of concern that the inland waterway system was “not operating from a position of strength”. During the harvest and export season the soybean industry desperately needed the supply chain, of which the Mississippi River was a significant part, to be operating a full capacity.
Not only were water levels already low, but the long-range weather forecast promised little relief. “Moreover, any future rainfall that does occur will be largely absorbed by an increasingly dehydrated farm ground. Abundant and sustained rainfall will need to occur to change the water level trajectory along the inland waterway system”, Steenhoek warned.
Barge companies on the river have already begun imposing restrictions on the volume of freight they will load onto vessels. Steenhoek said that it was likely that these restrictions would become more pronounced on both loading capacity of individual barges and the number of barges able to be connected together.
He noted that according to the US Department of Agriculture’s Grain Transportation Report, for the week ending on August 29th, barge rates originating in St. Louis were $23.34 per ton, which was 42% higher than the same period last year.
For the week ending on August 29th, barge rates originating in the Cairo-Memphis region were $23.71, which was 81% higher than the same period last year. “One of the realities in agriculture is that many of these costs are disproportionately passed onto farmer in the form of a wider (i.e. more negative) basis. This macro issue of low water conditions on the Mississippi River has a local impact on an individual farmer’s wallet”, said Steenhoek.