Year-over-year Mississippi River levels at St. Louis and Memphis are currently measuring above last year. But, without significant rain in the forecast and concerns for the volume of water coming from the Ohio River valley into the lower Mississippi, this could elevate levels of concern, particularly in the next few weeks.
“We continue to see evidence that we may once again experience some low water conditions on the lower Mississippi River this fall,” writes Mike Steenhoek, executive director of the soy transportation coalition, in a weekly update. “River levels at St. Louis are approximately 8 higher now than the same date last year. In Memphis, the reading is approximately 4.5 higher. Unfortunately, the trend line continues to decrease.”
What does this mean for grain flow this harvest?
Low levels for the major inland waterway have become a bit of a norm at harvest time.
“For the past three years, we’ve been dealing with low water conditions with three harvests in a row that have somewhat been a nightmare,” says Susan Stroud of No Bull Ag. “It looks like we’re heading into what could potentially be the fourth, but the biggest difference is that right now we’re not nearly as bad as we were before at this point in the past few years where we had major issues.”
Fall into winter is the heaviest time for barge traffic carrying recently harvested crops for export market. Projected high volume crops alongside uncertain trade policies and international markets add to the dynamics instigated by the weather.
“This year is a much different setup than we’re used to seeing in the past,” Stroud says. “We have to first keep in mind that we still have the trade war going on with China, and because of that, we’re here at the end of August getting ready to start the 25/26 marketing year with a record low amount of new crop soybeans with commitments on the books.”
Steenhoek says particularly in soybeans, trade dynamics add a layer of concern on top of infrastructure.
“It is frustrating for the soybean industry given the additional headwinds the industry is facing from anemic export sales — particularly to China,” he says. “One always wants a supply chain to facilitate profitability, not be an obstacle to it. It is particularly important for supply chains to not add insult to injury when export markets are under stress. Low water levels on the Mississippi River may do so as we transition into the fall.”
If water levels dictate draft reductions, barge limits could mean slower and more expensive movement down the inland waterways.
Stroud highlights recent corn trade trends have led to roughly 50% of corn production moving by rail to Pacific Northwest ports and 50% moving down the Mississippi River system to New Orleans.
“We can find, I guess, a little bit of comfort in knowing that some of those [corn] bushels won’t be hitting the river system anyway, and so hopefully any low water issues won’t be impacting corn exports as much,” she says.
With some smaller draft reductions, for example down to 11.6 versus 12, Stroud says the barge industry is monitoring the situation.
“The small draft reductions, are not incredibly prohibitive,” she says. “At this point, it seems like the industry, from a barge perspective, is just on alert, but it’s not like we’ve seen the past few years where we’ve had major challenges.”
Relief in sight?
Steenhoek and Stroud agree it’s important for precipitation to come back into the long range forecast; however, right now there isn’t any widespread rainfall that could bring certainty to river levels.
“If it lingers, it will eventually become a problem, but right now, we want to be cautious in how we move forward from here,” Stroud says. “We like a dry harvest because that’s great for harvest progression. No one wants to be rained on when they’re trying to get beans out of the field. But at the same time, we really don’t have great chances for moisture, in any of the areas that would feed the inland waterway system, or especially the lower Mississippi right now for a few weeks, and so that’s something that we’re going to have to keep an eye on.”
If issues develop, where could the pinch point in the major waterway be?
Stroud is most closely watching river levels at Memphis.
“The Upper Mississippi and the Ohio [River], they come together at Cairo, and then you have Memphis on downstream from that. And so, the biggest challenge there is whatever restrictions you might have in place in Memphis,” she says. “It doesn’t matter if you can load a full draft in St. Louis or in Cincinnati on the Ohio, it’s about the weakest link — the link that has the lowest water condition that would restrict drafts the most.”
Steenhoek says this discussion over river levels may surprise many as the Corn Belt received high levels of rain through July.
“The spigot has mostly been turned off throughout August, particularly in states that feed into the Ohio River,” Steenhoek says. “According to the U.S. Army Corps of Engineers, 60% of the water volume on the Mississippi River south of Cairo, Ill., (where the Ohio River merges into the Mississippi River), is provided by the Ohio River. As a result, low water volumes on the Ohio River will often translate to low water volumes on the lower Mississippi River.”
Does domestic demand offset the risks of river levels?
While soybean crush capacity has brought new domestic markets for soybeans, Stroud highlights those processing facilities still end up relying on the river system.
“We’ve had this tremendous increase in soy processing here in the U.S. The thing about that is you have crush plants generally located in the interior of the U.S.; they rely heavily on rail infrastructure,” she says. “A lot of ag doesn’t realize how important rail can be for meal exports, because if you’re crushing a lot of beans and making meal in the middle of Iowa, you don’t have enough local demand, so we have to rely on exports. And in a lot of cases, we see meal cars or meal trains railed into the St. Louis area and then transloaded onto barges and then shipped via the Mississippi for export out of the Gulf.”
She says the U.S. is in its fourth year of record soybean meal export shipments, and the industry can expect those volumes to continue to grow.
