River Rises, Hampering Midwest Grain Shipments

Heavy rainfall in the Midwest continues to cause headaches for farmers, with rising river levels making it difficult to send grain downriver.

Particularly hard-hit is the Illinois River, where high water has rendered many ports unusable for grain shipments. But the problem also has been felt on the Mississippi River, where barge traffic is being more tightly restricted.

“The river has been pretty fouled up for about a month,” said Rick Calhoun, president of Cargill’s barge line, which operates 1,300 barges.

Persistent rain through the spring and early summer has already forced many farmers in Missouri and Illinois to shift planting choices and leave some fields empty.

Rising waters last week prompted the CME Group, which operates the Chicago Board of Trade, to reinstate a force majeure declaration on the Illinois just a week after ending a previous declaration. Under the exchange rules, the declaration allows shipments to be delayed while the problem persists.

The problem is that the barges can’t take on their cargo.

“If the water is too high, they can’t fit the barge underneath the spout,” said Fred Seamon, an economist with CME.

But even where loading is possible, operations are still being affected.

The U.S. Coast Guard has reduced limits on the number of barges a towboat can pull down the river and is requiring daylight-only travel in some areas.

“It’s just taking more boats to do the same work,” said Calhoun. “The cost of navigation has gone up.”

While shipments on the Illinois have been hampered, other Midwestern rivers have been largely unaffected, according to the U.S. Department of Agriculture in its weekly report.

The overall output in the region also remains strong.

For the year, 17.5 million tons of grain were shipped down the Mississippi, Illinois, Ohio and Arkansas rivers, compared with 17.9 million during the same period of 2014.

For now, the issue is more of an inconvenience than a crisis. The grain being moved now is largely left over from last year’s harvest.

“Largely, farmers are in downtime right now, just scouting their fields and dealing with weeds,” said Scott Sigman, Transportation and Export Infrastructure Lead for the Illinois Soybean Association. “Those who have held their crop up until this point are generally able to wait another couple of weeks.”

But when August hits, farmers are going to start preparing for this year’s harvest, while looking to tap into the lucrative export market.

Nearly two-thirds of the soybeans that go into that market do it by way of river, Sigman said.

And without access to it, farmers would be looking at less-attractive options, including rail or sales to soybean crushing plants or, in the case of corn farmers, ethanol plants.