eNews • February 2011
Promoting a Cost-Effective, Reliable and Competitive Transportation System

U.S. storm cripples cash grain markets

A winter storm sweeping across the central United States wreaked havoc on agricultural operations on February 2, threatening the dormant winter wheat crop and livestock, slowing the processing and transportation of agricultural commodities, and delaying future markets.

The storm, touching some 30 states, stretched from New Mexico to Maine as it moved toward the northeast. Chicago was set to get its biggest snowfall in more than 40 years. Grain exports from the United States, the world's top supplier of corn, soybeans and wheat, remained largely unhindered at the Gulf of Mexico and Pacific Northwest. Here are some of the ramifications on commodities markets due to the storm:

GRAIN DELIVERIES

  • Deliveries of grain from farms to river elevators slowed to a crawl, while major grain companies shut down operations in Oklahoma, Kansas and Illinois as ice and snow made travel difficult for employees and customers. Frigid conditions made equipment difficult to operate.

WHEAT

  • High winds of 30-40 miles per hour or more, coupled with subzero temperatures, raised the threat of winterkill for winter wheat fields where snow cover and soil moisture is lacking. Winterkill can sharply reduce yields, but the extent of damage will not be known for weeks.

LIVESTOCK/MEAT

  • At least eight Midwestern pork plants were shuttered in Illinois, Indiana, Ohio and Missouri as the storm prevented hog delivery and made it difficult for employees to get to work.
  • Cattle herds were endangered by the harsh weather, and agricultural officials warned that hypothermia and dehydration were chief concerns for the animals.
  • Weight gain for cattle and hogs erodes in cold weather, raising production costs as they eat more feed but do not produce more beef or pork.

BARGES/RAIL

  • Ice, snow and high winds slowed grain barge traffic on Midwest rivers, which supported nearby CIF (“Cost, Insurance, and Freight”) basis levels in the face of rising futures markets.
  • Railroads, including Burlington Northern Santa Fe and Norfolk Southern, warned customers of delays due to heavy snow, ice, extreme cold and even "possible tornadoes".

CHICAGO MARKETS

  • The opening of Chicago Board of Trade open-outcry trading was delayed by 30 minutes due to difficult travel conditions for traders.

FRUIT

  • Grapefruit and orange crops in Texas could be severely damaged by the bitter cold temperatures that accompanied this week's snowstorm and were persisting even as the snow moved east. Some estimates predicted half of normal production from the Rio Grande Valley could be lost. Texas is the second-largest producer of grapefruit in the United States, behind Florida, and the third-largest producer of Valencia oranges in the country, behind Florida and California.

Source: Reuters

 


The Soy Transportation Coalition is comprised of thirteen state soybean boards, the American Soybean Association, and the United Soybean Board. The National Grain and Feed Association and the National Oilseed Processors Association serve as ex-officio members of the organization.

Soy Transportation Coalition
1255 SW Prairie Trail Pkwy., Ankeny, Iowa 50023
Phone: (515) 727-0665 Fax (515) 251-8657
Email msteenhoek@soytransportation.org
Web www.soytransportation.org

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