Drought disrupts US corn trade via Mississippi river

Dec 04, 2023

The U.S. corn market is experiencing the ripple effects of drought conditions that have plagued the Mississippi River for two consecutive years. This vital transportation route for U.S. grains, including corn, has seen significant disruptions due to shallower river levels, resulting in increased shipping costs and altered market dynamics. 

Grain barge movements on the Mississippi, critical for corn transport, have decreased notably in 2022 and 2023. Over 80% of the U.S. experienced drought conditions in late 2022, severely impacting river transportation. While the drought's extent lessened in 2023, its concentration around the Mississippi River watershed continued to hinder grain barge traffic. 

Corn shipments have been particularly affected, with movements through key locks like Lock 27 falling well below the 3-year average. This reduction in efficient transport capacity not only increases shipping costs but also impacts the competitiveness of U.S. corn in the global market. Higher transportation costs elevate the price of U.S. corn at ports, making it less attractive to international buyers. 

Barge spot rates, a key indicator of shipping costs, have seen significant fluctuations. In fall 2022, rates more than doubled compared to the previous two years. Although rates in fall 2023 were not as high, they remained elevated, especially closer to the river’s mouth, indicating ongoing transport challenges. 

This situation has affected the competitiveness of U.S. corn globally. The price for U.S. corn at Gulf ports has been consistently higher than Brazil's port prices since mid-2022, reflecting the added transportation costs. However, recent developments, including the alignment of U.S. and Brazil corn prices and a normalization of barge spot rates, suggest an improving outlook for U.S. corn exports. 

These developments provide a glimmer of hope for U.S. corn farmers who have faced tough market conditions due to these transportation challenges. As the industry adapts to these fluctuations, the focus remains on maintaining the U.S.'s position in the competitive global corn market. 

Source : wisconsinagconnection
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