Barge rates from Memphis to the Gulf have surged in recent days as exceptionally low water levels continue to hamper barge traffic. River terminals near Memphis are now paying nearly 40 cents per bushel to move grain to the Gulf, up from 25 cents just a week ago.
Grain merchandisers have been reporting that harvest pressure from an early corn crop and loaded barges stuck near Greenville, MS, has made for a shortage of empty barges. Figure 1 shows the seasonality of barge rates during harvest, but the red line from this year makes it clear that barge rates are surging earlier, and with more intensity, than in years past.
Rising barge rates and an early harvest have both been key factors pressuring basis lower especially for markets to the south of Memphis, TN. Figure 2 displays how this year’s basis lows have been more exaggerated and have also occurred earlier than in years past.
We expect basis to continue declining in the short run as harvest continues in the south and as river levels continue to disrupt barge traffic. The Army Corps of Engineers expects water levels to remain very low through harvest. If this is in fact the case, we would expect a strong rebound in basis at the end of the southern harvest, as grain from northern states have a difficult time moving down the river into the export markets.
It’s going to be a tough year for merchandising. Need help sourcing grain outside your region? Give our office a call and ask about the “Platinum Bid”.