Corn prices high, but low river remains huge concern
by MBJ Staff
Published: August 27,2012
ACROSS MISSISSIPPI — The drought across the nation’s Corn Belt is contributing to record high grain prices and near-record low river levels, both of which are impacting Mississippi’s corn.
Corn prices are at $8 per bushel and have been trading in that range for the past couple of weeks. This is compared to about $5.20 per bushel at the start of June before the drought really took hold.
“Mississippi is expected to harvest a new record-yielding corn crop this season, so the volume of corn handled and shipped will be high,” said Erick Larson, small grains specialist with Mississippi State University’s Extension Service.
“The state’s previous record yield was 148 bushels per acre in 2007. Growers have harvested much of the irrigated crop in the Delta and yields are exceptional, often running significantly more than 200 bushels per acre. Dryland yields are going to be more hit or miss, particularly in north Mississippi counties, which received little rainfall during June. There is a lot of non-irrigated corn yet to be harvested, but I am hopeful the state dryland crop will average about 130,” he said. “Grains in the Delta, where irrigated yields generally have been exceptional and consistent, usually go to the river for transportation.”
Despite several weeks of drought in June and early July, the state’s corn benefited tremendously from below-normal temperatures during key reproductive periods.
“Corn is garnering the brunt of river level issues because harvest is in full swing and is earlier than other crops,” he said. “The river may become an issue for soybeans later, particularly if water levels drop farther.”
Speaking at the recent North Mississippi Row Crops Field Day in Verona, Mississippi Commissioner of Agriculture and Commerce Cindy Hyde-Smith said corn and soybeans are the primary crops impacted by the nation’s growing drought.
Although most of the state’s crops are unhurt by the drought gripping 80 percent of the nation’s farmland, the commissioner said Mississippi River levels directly impact transportation costs of harvested crops, primarily those on the western side of the state.
“The loss of one foot of water results in the loss of 204 tons of cargo capacity per barge. With tows in the lower Mississippi River consisting of 30 to 45 barges each, the reduction in size loads can result in a reduction of 9,000 tons,” she said. “This would be the equivalent of adding 130 tractor-trailer trucks to the highways or 570 rail cars on the rail system for just one large tow. This can hinder our commodities from getting where they need to be, and we know what that does to prices.”
John Michael Riley, Extension agricultural economist, said barge transportation for crops is significantly less expensive than other transportation methods.
“Based on current data from the U.S. Department of Agriculture’s Agricultural Marketing Service, transportation rates are $1.88 per bushel for semi-trucks, 91 cents per bushel for rail cars, and 35 cents per bushel for barges,” he said. “Shipping via the river achieves savings of about 80 percent and 60 percent compared to truck and rail, respectively.”
Drew Smith with the U.S. Army Corps of Engineers said the river gauge in Vicksburg is approaching the zero mark. This year’s levels compare to 1988’s, when the level hit minus 1.6 and the mid-1960s, when it reached minus 3 and minus 4 levels. He said the main river channel will have the 9 feet needed for navigation, but in some areas it will not be wide enough for towboats to pass each other.
“The bigger challenge comes at the ports, especially at the mouths, and at channel crossings,” Smith said. “Barges are compensating by carrying lighter loads.”
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