By Reuters Low river levels and rising barge cargo drag on U.S. grain exports

By Carl Bloom and BJ Huffstutter

CHICAGO (Reuters) – Grain rock loading rates hit an all-time high this week as countless barges ran aground on the lower Mississippi River and drought has reduced inland waterways to levels not seen in decades.

With little rain in the forecast, low water levels are affecting already sluggish grain exports to the US Gulf Coast, where about 60% of exports and departures from the US leave the country.

The logistics problems come as the Midwest’s harvest progresses and a busy crop export season begins, in a year where tight global supplies and strong demand for food and fuel have helped push inflation higher.

“The projections for water levels are coming down, which means this situation is going to get worse,” said Mike Steenhoek, executive director of the Soy Transport Alliance. Unless there is significant rainfall soon, this season will be challenging.

Barge travel is one of the most cost-effective ways to bring commodity crops to world markets.

But problems arise. Shipping lines have greatly reduced the draft of boats, so ships are higher up the river, reducing tonnage per boat by a quarter or more, shippers and traders said.

They said trawlers on the lower Mississippi have been forced to reduce the number of trawlers by nearly 40% to squeeze through dry shipping lanes.

Faced with this situation, some grain elevators are struggling to find alternative ways to transport their crops for export, sources at three river elevators said. They said some grain dealers were looking at rail freight or exploring ports outside of New Orleans.

The Mississippi River in Memphis, Tennessee, was the eighth lowest on Thursday and is likely to challenge the all-time record set during the drought in mid-October 1988, according to the National Weather Service forecast.

A freighter said at least 10 boats ran aground south of Cairo, Illinois last week, and others were carrying less cargo.

“People who thought they would load 12-foot drafts are now loading 9-1/2 or less, so you’ve lost at least 500 tons per boat,” he said.

This loss of volume and the slowdown in shipping increased freight costs and made U.S. crops less competitive globally. Further reducing US demand to a 20-year low.

Brazil, the world’s biggest soybean supplier, has overtaken the United States as the most competitive exporter of oilseeds to China, railway company Rumo (PVMF: ) said on Thursday.

The busiest American port of St. Lewis reached $49.88 a ton this week, up 58% from a year earlier, according to the US Department of Agriculture (USDA).

Since the start of this month, USDA data show that grain ship discharges at export terminals along the Louisiana Gulf Coast are 39% below the five-year average.

(Carl Bloom and PJ Huffstutter, with additional reporting by Roberto Zamora in Sao Paulo)