Another Week or Two Needed to Assess Hurricane Katrina Shipping Situation

Loss of soybean crops in the south could boost soybean prices by 3.5% this fall. Compiled by staff


Published on: Sep 6, 2005

As efforts to save lives and bring order to the New Orleans region continue to be the priority, the U.S. grain trade also awaits news on U.S. feed grain export capability. Only minor damage continues to be reported at those grain terminals that have been inspected by employees. Power has also been sporadically available at some of the facilities, but almost all have auxiliary power units that can be used to operate ship loading and barge unloading operations.

"It may take a week or more to get full assessment of the impact of Katrina on export elevators. One problem is the loss of electric power. Another is great difficulty in getting employees in and out of the area," says Robert Wisner, Iowa State University Extension economist.

Other ports could pick up New Orleans' port slowdown

The U.S. Army Corps of Engineers announced Friday that surveys show the river channels to be open and the U.S. Coast Guard will soon open the river to deep draft navigation on a limited basis. "While not the best news, these reports continue to be encouraging regarding the resumption of grain export operations through the New Orleans area export terminals," says Ken Hobbie, U.S. Grains Council president and CEO.

Recently, New Orleans area ports were handling about 68% of the nation's corn exports, 80% of its soybean exports, and 27% of the U.S. wheat exports according to Wisner. He says their annual shares of corn and soybean exports would be somewhat less
because the upper Mississippi River is closed to navigation during the winter.

The Council has learned that should it become necessary to reposition grain for exports, the ports of Corpus Christi and Houston are running at approximately 20% of their rated capacity at the present time and could increase output in light of this disaster if called upon. Other areas that can handle some additional volume include the Pacific Northwest, the south Atlantic and the Great Lakes. Other exports go by rail to Mexico and Canada.

Likewise, representatives at Burlington Northern Santa Fe and Union Pacific railroads state that there is some additional capacity available within the rail system west of the Mississippi River should demand for grain movement to that area become necessary.

Wisner says currently railroad shipments into the port facilities are embargoed. As of the afternoon of Aug. 30, some barges were reported missing and many others were tied up near Memphis.

"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. Reports on Sept. 2 indicated some elevators in the area are ready to operate as soon as ocean vessels
come upstream," he adds.

Hurricane Katrina and soybean crops

Heavy rains from Katrina occurred some distance into Mississippi, eastern Louisiana, and parts of Louisiana, 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%," says Wisner. He says 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%," he says.  "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% of U.S. production (98 million bushels).