(Reuters circulated the following story by Karl Plume on November 24, 2009.)
CHICAGO — Millions of dollars worth of grain is clogging up at ports in the Pacific Northwest, slowing exports to lucrative markets in Asia, as rains slow the process of moving cargoes from rail cars to ocean-going vessels.
Industry sources said further loading delays could force some shipments to other ports, but added that the situation was not severe enough to affect the export business.
The Pacific Northwest, which handles about a quarter of all U.S. grain exports, is the shortest sea route to top grain buyers like China, Japan, South Korea and Taiwan.
“Mother Nature is sure not being very cooperative this harvest season. First you couldn’t get the corn and soybeans out and now this,” said Jay O’Neil, senior agricultural economist at IGP at Kansas State University.
He was alluding to what is being dubbed the “harvest from hell” as incessant rains delayed the harvest of corn and soybeans in the United States to the slowest level in decades.
“It’s making an exporter’s life a little miserable at the moment,” he said.
While autumn rains are not uncommon for the Pacific Northwest, the timing of the storms has been particularly frustrating this year because harvest was late and exporters have massive orders to fill.
“It’s one of those difficult years. The system is clogged because we’ve had a much-delayed harvest and that’s compacted everything into a shorter time frame. The wet weather is just clogging it up that much more,” said Bruce Abbe, executive director of the Midwest Shippers Association, which represents specialty grain producers and shippers in the upper Midwest.
KEY ROUTE TO ASIA
PNW port capacity is less than that of the U.S. Gulf, the top outlet for U.S. agricultural exports, but the PNW is an often preferred outlet for shipments to Asia due to its proximity to the continent’s key markets.
A rapidly growing, commodity-hungry China is expected to import about a quarter of U.S. soybean production this season. The world’s top soybean importer has already bought 15.8 million tonnes of U.S. soy for shipment through next August.
South Korea and Taiwan are major buyers of U.S. corn and Japan is the top importer of U.S. corn and wheat.
The United States is expected to export 53.3 million tonnes of corn in the 2009/10 marketing year, which began on Sept. 1, and a record 36.1 million tonnes of soybeans. Wheat exports in the marketing year starting June 1 are forecast at 23.8 million tonnes.
RAIL SHIPMENTS
Grains produced on farms in the central and northern Plains and the Midwest arrive at the PNW mostly via rail. Harvest-time rail delays often occur, especially in adverse weather.
The Burlington Northern Santa Fe Railway on Monday initiated a temporary permit embargo for grain shipments to the PNW. Shippers are required to request a permit, specifying origin and destination, so BNSF can more closely direct rail traffic to minimize congestion.
The move temporarily restricts the supply of rail-delivered grain to the PNW, but grain traders did not expect the permit embargo to last more than a few days.
Competing railroad Union Pacific said it did not currently have a permit embargo in place.
BNSF’s permit embargo does not halt shipments entirely, but it does stem the movement of needed supplies to the PNW, which will likely shift the flow of grains to other ports and may impact prices if the slowdown persists, traders said.
“It may delay some shipments or it may cause some shipments to shift to other load-out points, but I don’t see it chasing any business away,” Kansas State’s O’Neil said.