Report: Feed, agri-community supply logistics to be hit by Illinois River closureView Source
Report: Feed, agri-commodity supply logistics to be hit by Illinois River closure
Feed Navigator – Broadfield Park, Crawley, United Kingdom – 6/25/20 – Jane Byrne
Upcoming lock and dam closures along the Illinois River are set to hamper deliveries of corn, soybeans, animal feed and ethanol for export staging and consumption on the Gulf Coast, according to a S&P Global Platts report.
A plan by the US Army Corps of Engineers (COE) has been put in motion, closing seven locks on the Illinois River, essentially shutting down the waterway from July 1, 2020 through to October 29, 2020.
The Illinois River system connects the supply of goods with domestic and international markets; it provides a navigable connection between Lake Michigan and the Mississippi River, and includes eight lock and dam sites that are long overdue for significant repairs.
"The closure of the Illinois River was timed to coincide with the growing season as fertilizers already made their way up river while the export season will start after harvest," said Pete Meyer, head of grain and oilseed analytics at Platts Analytics. "That said, the lack of a viable corn export market, along with continuing concern over ethanol demand, should result in price pressure for some Eastern areas throughout the shutdown."
In terms of impact on trade flows, Platts outlines how grain exports from the US Gulf Coast rely on supply that originates on the Illinois River.
Animal feed and grains distributors are considering trucking supply to the Mississippi River to load on barges, if Gulf Coast demand justifies the cost, said the analysts.
Grain barge volumes have spiked ahead of the closure.
A total of 999,000 tons of food and farm products have barged through the La Grange lock through June 24, up from 406,000 tons in June 2019, as per data from the COE.
Investment required in US waterway infrastructure
A study commissioned by the USDA last year showed the inland waterway infrastructure in the US is aging and needs major rehabilitation and construction to restore its full capability, forestall major disruptions and provide opportunities for growth.
That study “showed the benefit of the inland waterways to the agricultural community for various commodities [and] more importantly, really quantified the economic damage that’s caused delays of investment in the inland waterways – particularly along the Upper Mississippi and Illinois waterways,” Randy Gordon, president of the National Grain and Feed Association (NGFA), told us in January 2020.
The USDA commissioned research found most locks on the Upper Mississippi and Illinois River system have far exceeded their projected 50-year lifespan. Delays can cost operators and shippers more than US$44m annually. For corn, delays on the Mississippi River could have up to a $0.24 per bushel negative impact, noted the NGFA in August 2019.