Elevators Full; Grains Get Grounded
By Mary Kennedy
DTN Cash Grains Analyst
OMAHA (DTN) — As the row-crop harvest in the Northern Plains moves ever closer, worries are mounting among producers and grain elevator operators about continued transportation delays and whether there will be enough room to store what are expected to be large corn and soybean crops.
Tim Luken, elevator manager at Oahe Grain, Onida, S.D., told DTN in an email that one of his producers asked, "How am I going to get cash to pay bills if no one will take any grain because they’re full?"
Luken said that as it stands now, he will have no room to bin soybeans this fall. He said he will have room for corn and some sunflowers, but space will be tight. "This will put more burden on those elevators that are going to be taking beans this year, and their space is limited also. We will see piles like never before. FYI: We don’t pile anything on the ground at Oahe grain. It doesn’t pay at all. 2014 harvest will be one for the record books along with one to forget about; can’t wait until it’s over." Oahe Grain has storage capacity of 5.7 million bushels and is located on the RCPE line which is serviced by the Canadian Pacific.
Luken said the rail cars he does get are still past-due orders from midsummer and shuttles have priority over smaller units, which puts him in a bind to load out grain owed to others in smaller quantities. "I have buyers screaming for product; mainly ethanol plants. The corn I owe was sold for delivery in August, and here it is almost the end of September. They are running out of corn and need mine now because the harvest hasn’t started there."
On a different short line served by the CP, the DMVW in western North Dakota, an elevator is still waiting for 23 small units (25 cars each unit) ordered for placement earlier this summer. CP shippers have said the railroad is still pushing elevators to cancel past-due orders, but many refuse to do so. In their Sept. 22 service update to the STB, the CP said they would have older grain car orders cleared by Oct. 1, "with the possible exception of some remaining North Dakota grain orders." Many CP shippers in North Dakota have said in the past that appearances of the CP clearing backlogs is "deceiving" when they have actually cancelled many of those open orders.
In their Sept. 26 filing to the STB, the CP said, "The number of open grain car requests is 3,943. Of these requests, 3,243 will be serviced through our existing car request program. The remaining 700 of these requests represent cars that will move in train service. The number of open requests will continue to come down over the coming weeks." Here is the link to the CP filing to the STB: http://goo.gl/…
BNSF REPORTS CAR PLACEMENTS SLIGHTLY BEHIND FROM PRIOR WEEK
According to the BNSF website on Sept. 26, the railroad said their maintenance program remains ongoing, particularly across the North Region prior to winter’s arrival. "The major maintenance work taking place along our main line between Chicago and Minneapolis-St. Paul continues as planned, resulting in limitations on capacity and re-routing of some traffic onto alternate routes." The service update also reported the BNSF is "aggressively ramping up our capabilities in anticipation of harvest-related volume."
In his weekly podcast, John Miller, group vice president for agriculture, said "our goal is to have all needed resources in place to handle the soybean harvest in the north as efficiently as we can for our customers." Here is a link to his full podcast: http://goo.gl/…
Miller also reported on the status of past-due cars and said as of Sept. 25, the total number of cars owed was 2,921 versus 2,581 the week prior and days late on average were 8.6. Cars owed in North Dakota increased to 2,072 versus 1,646 the prior week and the average days late were at 9.2.
A shipper in western North Dakota said his car orders, small units and singles, are 45 days late and on top of that, secondary freight costs were "ridiculous." The last reported cost for secondary freight on the BNSF was at $5,000 to $6,000 per car, an added cost over and above the tariff rate and fuel surcharge. Some of that extra cost is passed on to the farmer in the form of cheaper basis, but there are many elevators who just don’t have the cash flow needed to pay that kind of money for guaranteed freight.
As the corn and soybean harvest continues to pick up steam, shippers on all rail lines are concerned that the demand for cars will increase even more than last year’s harvest and that railroads may have a hard time keeping up with that demand, even though they have made progress on past-due orders. There is growing concern that much of the corn harvest could end up on the ground if elevators fill up and the possibility of that happening is becoming more real as the large corn harvest is hand in hand with a near-record soybean harvest.
Mary Kennedy can be reached at email@example.com
Follow Mary Kennedy on Twitter @MaryCKenn
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