Low river equals low grain prices

Farmers faced with high fuel and fertilizer costs this growing season could at least look for consolation in relatively high commodity prices. However, even that right spot may be slipping away as low water on the Mississippi River slows shipping and keeps grain backing up at local elevators.

On Monday the U.S. Coast Guard reopened two stretches of the Mississippi River near Memphis, Tennessee, and Stack Island, Mississippi, to one-way commercial traffic after dredging the channel. The closures had stopped some 100 towboats and 2,000 barges last week. By Tuesday morning, there were no queues, the Coast Guard said.

“There’s only so much storage at the elevators; only so much space,” said Hunter Biram, extension economist with the University of Arkansas System Division of Agriculture. “Elevators will turn farmers away when they don’t have anywhere to put it.”

Harvest is underway in Arkansas. According to the National Agricultural Statistics Service, 8 percent of the state’s soybeans have been harvested as of Oct. 11. That compared to 20 percent at this time last year and the 19 percent five-year average. Harvest for corn was at 97 percent and 90 percent for rice.

On Monday, soybeans with nowhere to go were being piled high at the terminal at Helena-West Helena, with trucks lined up waiting to unload. Forty-eight percent of Arkansas’ soybeans are exported.

The growing stockpile, coupled with uncertainty about when the traffic will be able to move down the Mississippi through New Orleans, begins to erode prices farmers would get at the elevator. “In these instances, basis weakens when there’s a lot of grain on hand,” Biram said. “With rising barge rates, it’s more expensive to ship grain downriver. Grain elevators will bid lower and offer
less for grain to account for the higher cost of shipping grain down the river.”

Biram said that basis last week was down $1.30 for soybeans and was about the same for corn. Basis is the difference between a local cash price and the futures market price. There was a little bit of a rally as dredging of the river began to free up some traffic, but basis was still down 75 cents. Last year, basis was down 25 cents at the same time.

“With lower prices at the elevator, if farmers have storage, they should store their rain and sell it later when they might be able to get a better price,” he said.

Harvest aside, the other worry with the low river is that while crops are headed toward New Orleans for export, this is the time when fertilizer typically makes its way upriver for next season’s crops.

The biggest issue is planning for next year,” he said. With fertilizer, “that cost is already high and we don’t know yet how much higher that could go. There could be a big rain next week and alleviate all that.”

The Climate Prediction Center is showing a near-normal precipitation outlook for the next eight to 14 days. The seasonal precipitation outlook is less optimistic, showing Arkansas with a below-average chance for precipitation through December.

Leave a comment

All comments are moderated before being published

Top-notch Support

Answer any question?
Our team is just One click away!

Featured products

DW IMPACT SOCKET - 33MM DR X 3/4" - Quality Farm Supply
MECHANICAL FUEL METER - 4 WHEEL - 1-1/2" NPT - Quality Farm Supply
FillRite MECHANICAL FUEL METER - 4 WHEEL - 1-1/2" NPT SKU: 916-901112
Only 1 unit left
1/8 INCH NPT TANK VALVE, 2 PER CARD - Quality Farm Supply
Milton 1/8 INCH NPT TANK VALVE, 2 PER CARD SKU: 574-S684
1/8 inch Male NPT2 per card. Milton Industries S-684 Air Tank Valve
In stock, 39 units