CHICAGO Feb 10 Severe winter weather has slowed
rail deliveries of crops to shippers in the U.S. Pacific
Northwest, sending freight rates soaring and prompting Asian
buyers to seek fill-in loads as they wait for the backlog at
ports to clear.
Blizzards, avalanches and heavy rain in recent weeks have
hit transport of corn, soy and wheat to ports where they head
for the lucrative Asian market, adding to the struggles that
have plagued U.S. exporters since harvest.
The setbacks come at a critical time for U.S. exporters, who
are trying to move as much grain as possible before buyers turn
their attention to South America when corn and soybean harvests
in Argentina and Brazil accelerate in the coming weeks.
"There isn't much you can do about awful weather," said John
Crabb, a grain broker at Tradewest Brokerage Co in Hillsboro,
Oregon. "It's just expensive. You can't load in the rain."
BNSF Railway Co shut down rail service between Shelby and
Whitefish, Montana in both directions due to an avalanche. The
company said in a statement on Thursday that it had rerouted
some trains. A spokesman said that the company hoped to restore
service in the area, which is on the way from the Midwest, where
the crops are harvested and stored, to the Pacific Ocean, on
"This is a major pinch point for trains, and could impact an
already awful logistical situation headed west," Tregg Cronin, a
market analyst for Halo Commodity Co, a brokerage and marketing
consulting agency, wrote in a note to clients.
The cost of rail freight on the secondary market has spiked
as shippers scrambled to secure empty space. The average rate in
the secondary market for spot BNSF shuttle railcars has hit
$2,000 above tariff rate per car, up from $1,267 above tariff a
month ago. A year ago, it was $108 below tariff, according to
U.S. Department of Agriculture data.
On the Pacific Northwest coast, rains and snow stopped
loadings of ocean vessels in Oregon and Washington this week.
The National Weather Service this week instituted a flood watch
for much of western Oregon.
A senior official at a major Japanese trading house said his
company was looking into where to buy corn as an emergency
measure if it was not able to source grain from the United
States. Possible countries of origin include China, Australia or
Russia, he added.
Tradewest Brokerage's Crabb said there were few alternatives
for Asian grain buyers, as it would likely take longer to ship
grain to Asia from Brazil, Argentina, or the Gulf of Mexico.
But indications are that the congestion at ports is unlikely
to ease soon, as about 60 ships are in port or waiting offshore,
Cronin added. Monthly loading capacity is about 40 ships.
"We are looking at a delay of about 15 to 20 days from the
Pacific coast," a Singapore-based grains trader with an
international trading company said.
South Korea diverted 40,000 to 50,000 tonnes of its corn
imports to Taiwan in late December and in January because
shipments from the United States were delayed, a Korean trader
said. South Korea imported more than 3 million tonnes of U.S.
corn in the 2015/16 marketing year.
The shipping season since last autumn's harvest has been
among the most challenging for PNW grain shippers. After
excessive rain delayed vessel loading in October, frigid
temperatures and snow have slowed rail deliveries across the
northern Plains since December.
(Reporting by Julie Ingwersen, Michael Hirtzer, Karl Plume and
Mark Weinraub in Chicago, Jane Chung in Seoul, Naveen Thukral in
Singapore and Yuka Obayashi in Tokyo; Writing by Mark Weinraub;
Editing by James Dalgleish)