Hurricane Ida Shutters Ag Exports with No Clear Timeline on How Long Shipping Delays Could Last

Hurricane Ida packed a punch of 150 mph winds this weekend, leaving more than 1 million people in New Orleans without power. In the process, the monster storm crippled some grain shipping facilities in a key export area along the lower Mississippi River, creating concerns over how long export activity could be shuttered.

The shipping issues caused by Hurricane Ida could have a major impact on the overall export picture. The Port of South Louisiana is a major shipping hub, as it's the largest grain port in the United States. Grain elevators within the Port handle more than 50% of all U.S. grain exports annually.

“You have a system that's overall under stress and then you insert a weather event like this, and it kind of just adds insult to injury,” says Mike Steenhoek, executive director of the Soybean Transportation Coalition (STC).

Markets Tumble Over Export Uncertainty 

The initial reaction was part of the spark that sent commodity prices tumbling Sunday night into Monday.  ProFarmer’s Brian Grete says while technical selling spurred a sell-off, the fundamental concerns over Hurricane Ida and the impact on a key shipping area also fueled the price pressure.

“In the Gulf of Mexico, Hurricane Ida really did have an impact there,” says Grete. “But it's going to take some time, and markets don't like uncertainty. We know that at a minimum (the) export situation will be slowed for a little bit. It could be slowed significantly, depending on what kind of damage there is to those loading rigs and those types of things. So, it's kind of a wait and see.”

Corn, Soybean Shipments at Risk 

Fears surfaced in the markets Monday as questions started to circulate over just how long the supply chains and river facilities will be disrupted in the lower Mississippi River area.

As of Saturday night, the U.S. Coast Guard ordered no vessel movement on the lower Mississippi River from the Gulf of Mexico to river mile 303. To put that into perspective, Steenhoek says Baton Rouge is at river mile 232 and New Orleans is at river mile 100.  

According to STC, the lower Mississippi River is by far the largest export region for soybeans (61%) and corn (58%).  Therefore, he says any lengthy disruption to export activity in this key region warrants industry attention and concern. 

“They know that hurricanes are a frequent, unwanted guest in the area, so they build those facilities with resilience in mind to be able to absorb a punch, but 150 mile an hour sustained wind is quite a punch,” he says. “And you can't really experience that kind of sustained wind, that severity of it, without having some degree of damage. And so that's something that we're going to certainly be monitoring, because that can be more long-lasting and have a real detrimental impact on our export program moving forward, particularly as the fall season starts to arrive.”

STC notes that while August isn’t a key time for soybean exports, there’s still a healthy amount of corn typically loaded onto barges this time of year. During the week ending August 19, STC notes 464,138 metric tons (18.3 million bushels) of corn, 141,859 metric tons (5.2 million bushels) of soybeans, and 71,696 metric tons (2.6 million bushels) of wheat were exported from the terminals along the lower Mississippi River. In total, 487 barges of grain were unloaded in the area that week alone.  

Shipping Delays Add "Insult to Injury"

As shippers enter September, the concern for soybeans is over further delays, as any backup could impact soybean exports that start to pick up in September and typically run strong through February.

“The good news is we've got what looks to be a pretty healthy supply that can accommodate that demand. But as we all know, if you can't connect supply with demand the transaction never occurs, and farmers will never be profitable. And so that's something that is a real concern for us moving forward,” says Steenhoek. “When you put it within the broader context of an overly subscribed supply chain that is under stress, not only for like containerized shipping, but for bulk vessels as well, then all of a sudden, you insert a significant weather event like Hurricane Ida, and it can essentially add insult to injury.”

Reuters reported Monday that Hurricane Ida damaged a Louisiana grain export elevator owned by Cargill Inc., with reports the elevator "sustained significant damage."

Flashbacks to Hurricane Katrina

From power outages to barges and ships placed on the sidelines while the area tries to recover, Steenhoek says the longer the system is disrupted, the more impact it could have on U.S. farmers.

“This is something that if the repercussions of this become more long-lasting, you'll see farmer profitability suffer,” says Steenhoek. “We saw this with Hurricane Katrina 16 years ago, where farmers all of a sudden saw the price that they were offered 900 miles from the affected area in New Orleans, their price declined not because the demand fundamental had changed, not because the quality of the crop was compromised, but just simply because the supply chain wasn’t operating. And certainly, we don't want to see something like that repeat itself,” he says.

Runaway Barges

As individuals in the impacted areas assess the total damage from Hurricane Ida, Steenhoek says the course of this week will provide clarity on the extent of shipping issues. But he says it’s more than just power outages that could influence the recovery timeline.

“When you think about these facilities, you know, you have the storage facilities, you have the loading apparatus that connects the storage to the actual vessels. We've heard reports of barges and other maritime vessels becoming unmoored and getting pushed along the river. And that's never a welcomed development. And if it runs into a bridge, that could have an impact on that,” he says.

On Monday, that fear became a reality as officials reported 22 barges on the loose with one hitting a bridge in Laffite, La. Leaders believe the bridge is now structurally unsound, but no word on how that could impact barge traffic moving forward.

 

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