While the devastation caused by Hurricane Katrina in Louisiana and Mississippi is severe, initial reports indicate that the situation could be worse from the standpoint of resuming grain exports.
The U.S. Army Corps of Engineers has surveyed the Mississippi River from Baton Rouge to the Gulf of Mexico and has not found channel obstructions, Senate Finance Chairman Chuck Grassley, who has Senate jurisdiction over foreign trade.
Randy Gordon, vice president, communications and government relations, National Grain and Feed Association, says the Mississippi River remains open to deep-draft vessels up to 39-foot draft, restricted to daylight-only navigation until aids to navigation signals are reestablished to permit safe night-time operations. "Once these steps have been taken, we've been informed that two-way deep-draft traffic will be allowed to resume 24 hours a day on the river. All three river pilot groups on the lower Mississippi River recommended reopening the river to two-way traffic. Currently, only one-way traffic is permitted," he says.
The Corps informed NGFA that salvagers Tuesday were scheduled to remove two unidentified obstructions in the bar channel at the mouth of Southwest Pass of the Mississippi River that were detected by the National Oceanic and Atmospheric Administration (NOAA) during surveys of the river. Once the obstructions are removed, the Southwest Pass would be restored to maximum drafts for ocean-going vessels. The Southwest Pass is the channel used by ocean-going vessels to load and unloading products, including those transporting U.S. grains and oilseeds; the bar channel is a navigation passage dredged in open water that otherwise would be of insufficient depth to handle ocean-going vessels, Gordon explains.
Limited damage reported on facilities
Export elevators in the Mississippi/Center Gulf region range in storage capacity from 2 million to nearly 8 million bushels each, Gordon says. There are 10 commercially operated grain elevators in the New Orleans area, with a combined storage capacity of approximately 526 million bushels. These facilities have a rated vessel-loading capacity generally ranging from 60,000 to 100,000 bushels per hour.
Gordon reports that each of the companies that operate grain export facilities at the Mississippi/Center Gulf region report that they have been able to access their facilities and perform initial assessments of their condition.
"Reports received thus far on the physical condition of these facilities have been encouraging, with limited damage reported," a statement from Gordon says. "Additional assessments are underway to completely define the overall challenges to recovery."
Bunge North America, the North American operating arm of Bunge Limited, announced operations are underway at its export elevator in Destrehan, La. near New Orleans. The facility was shut down Saturday, August 27, 2005 because of mandatory evacuations ahead of Hurricane Katrina.
Bunge's export elevator and its soybean processing facility in Destrehan sustained minor damage and were without electricity until Friday evening, September 2. Once power was restored, repairs were made to the elevator. Loading of vessels resumed on Sunday, as did the unloading of barges.
At the soybean processing facility, Bunge is testing and repairing equipment in the plant with operations expected to resume shortly.
Several other facilities in the region indicate that a gradual restoration of operations is anticipated once power is restored and housing and other essentials are provided for employees displaced by the hurricane, Gordon says.
"While power remains a problem, most of these facilities have auxiliary power units that could be used for loading and unloading operations at least for the short term. So it appears that terminals might, at least in the near future, begin partial operations," Grassley says. "If it becomes necessary, the ports of Houston and Corpus Christi, as well as other ports, have the capacity to handle commodities that would otherwise be transported through New Orleans."
Facilities located at West Coast, Texas Gulf, Great Lakes, as well as a few other ports, provide a viable alternative outlet for some quantities of export grain, Gordon says. "However, these venues are supplied to a significant degree from different transportation, bulk grain and oilseed origination, and distribution points than those that supply the Mississippi/Center Gulf, and are not capable of assuming surge capacities from the Katrina-affected region," he adds. "Further, the cost structure, as well as the storage/loading capacity and flexibility of these alternative ports are significantly different and in some cases are somewhat more constrained than what exists through the Mississippi River/Center Gulf system."
Gordon says an additional important consideration is to develop acceptable procedures in concert with local government and law enforcement agencies to allow grain elevator employees to gain access to their facilities on a 24/7 basis given curfews in place in the region, while not adversely affecting the restoration of security and law-and-order that are essential to safe operating conditions. Securing adequate fuel to permit resumption of operations also is a consideration.