As of September 8, several Louisiana port export elevators were beginning to handle grain and the basis (price difference vs. futures markets) was beginning to strengthen along the lower Mississippi River.
A number of the elevators are north of New Orleans and were beyond the worst part of the storm. Reports on September 8 indicated the shipping capacity was up to about 50 to 63 percent of full capacity. After the large number of barges tied up in the Memphis area are moved down and unloaded, Iowa river elevators may begin loading out some grain. However, it appears likely that capacity will be somewhat restricted for at least another month, and possibly longer.
So far, we have not seen any reports of serious structural damage to elevators in the New Orleans area and there are no reports of sunken barges blocking the channel. Several vessels are moving into the area with supplies for the city and are restricting potential grain movement. Another factor restraining movement is the storm-related loss of navigation aids on the river that will restrict shipping to daylight hours only.
The New Orleans area ports in recent months were handling about 68 percent of the nation's corn exports, 80 percent of its soybean exports, and 27 percent of the U.S. wheat exports. Their annual shares of corn and soybean exports would be somewhat less because the Upper Mississippi River is closed to navigation during the winter. Other areas that can handle some additional volume include the Houston-Galveston ports, the Pacific Northwest, the South Atlantic, and the Great Lakes. Other exports go by rail to Mexico and Canada.
River shipping problems will complicate the job of moving grain out of the western Corn Belt. (Iowa State University)
River shipping problems will complicate the job of moving grain out of the western Corn Belt to free up storage space for the upcoming harvest, especially in central and northern Iowa. Part, but not all, of the lost export capacity can be offset by rerouting grain to the Pacific Northwest, Houston, the Great Lakes, and Atlantic ports.
Hurricane Katrina and soybean losses
Heavy rains from Katrina occurred some distance into Mississippi, eastern Louisiana, and parts of Alabama, as well as in western Tennessee and Kentucky.
If half of the unharvested soybean crop in the states of Louisiana, Mississippi, Alabama, Georgia, Florida, and South Carolina were lost, U.S. soybean production would be reduced by about 1.4 percent. That is assuming no increase or decrease in the soybean crop north of those states.
With the usual relationship between changes in supplies and changes in price, that would boost the season average price by about 3.5 percent. That in turn would translate into an expected rise of about 20 cents per bushel in the marketing year average Iowa soybean price. Losing half of the crop in that area would substantially exceed past experiences with this kind of storm.
Rain as far north as the eastern Corn Belt may have a slight positive effect on pod filling, but could have caused some damage in parts of Tennessee and Kentucky. These two states in the August crop report were forecast to produce 3.5 percent of U.S. production (98 million bushels).
This article originally appeared on pages 177-178 of the IC-494(23) -- September 19, 2005 issue.