Grain Transportation Demand for the Pacific Northwest 2008-09

8/2/2019 Grain Transportation Demand for the Pacific Northwest 2008-09

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Grain Transportation Demand for the PacificNorthwest 2008-2009

By John R. Kruse, PhD

Managing Director, Agriculture Service

Global Insight

Email: [email protected]

Phone: 573-442-8165

November 13, 2008


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Copyright 2008 IHS Global Insight 2

Factors Affecting Grain Exports

US corn and soybean crops are being harvested later thanusual due to late plantings.

Freight rates

Foreign demand

Better production in 2008 Increased supply of feed wheat in Europe Economic slowdown


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Grain Deliveries to the Pacific Northwest via Rail

-

100

200

300

400

500

600

700

800

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

May-07

Jul-07

Sep-07

Nov-07

Jan-08

Mar-08

May-08

Jul-08

Sep-08

1000ShortTon

s

Raildeliveriesdown 11% in

the lastmonthcomparedwith thesame monthlast year


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Trade in Markets Affecting PNW Exports(1000 metric tons)

Wheat Imports in Markets Affecting PNW Exports

2007/08 2008/09

Percentage

Change

China 0.05 0.03 -40%

Southeast Asia 9.86 11.05 12%

Pakistan 1.49 2.5 68%

Total 11.4 13.58 19%

Corn Imports in Markets Affecting PNW Exports

2007/08 2008/09

Percentage

Change

Japan 16.61 16.5 -1%

Southeast Asia 3.15 3.8 21%

South Korea 9.32 7.2 -23%Total 29.08 27.5 -5%

Soybean Imports in Markets Affecting PNW Exports

2007/08 2008/09

Percentage

Change

China 37.81 36 -5%

Japan 4.01 4.05 1%

Total 41.82 40.05 -4%

PNW Wheat trade volumesexpected higher in 2008/09

Overall - US Wheat exportsdecline

08-09 PNW Corn exports decline

may decline further

Size of Chinas corn crop could result in

moreChina to Korea and southeast Asia

than expected.

Strong export demand so far

Total PNW soybean exports expectedlower in 2008/09.


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US Corn Exports to Date

0

500

1000

1500

2000

2500

9/6

9/20

10/4

10/18

11/1

11/15

11/29

12/13

12/27

1/10

1/24

2/7

2/21

3/6

3/20

4/3

4/17

5/1

5/15

5/29

6/12

6/26

7/10

7/24

8/7

8/21

9/4

MillionBushels

2004/05 2005/06 2006/07 2007/08 2008/09

Export pace isconsiderably slower than

last year reflecting weakerdemand from Europe


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Accumulated Corn Exports and Outstanding Sales

0

500

1000

1500

2000

2500

3000

9/6

9/20

10/4

10/18

11/1

11/15

11/29

12/13

12/27

1/10

1/24

2/7

2/21

3/6

3/20

4/3

4/17

5/1

5/15

5/29

6/12

6/26

7/10

7/24

8/7

8/21

9/4

MillionBushels

2004/05 2005/06 2006/07 2007/08 2008/09

Outstanding sales areconsiderably below last

years levels with amplefeed wheat supplies inEurope


7/16Copyright 2008 IHS Global Insight 7

US Soybean Exports to Date

0

200

400

600

800

1000

1200

9/7

9/21

10/5

10/19

11/2

11/16

11/30

12/14

12/28

1/11

1/25

2/8

2/22

3/8

3/22

4/5

4/19

5/3

5/17

5/31

6/14

6/28

7/12

7/26

8/9

8/23

9/6

2004/05 2005/06 2006/07 2007/08 2008/09

Export pace is slower than

last year reflecting the lateharvest.



Accumulated Soybean Exports and Outstanding Sales

0

200

400

600

800

1000

1200

9/6

9/20

10/4

10/18

11/1

11/15

11/29

12/13

12/27

1/10

1/24

2/7

2/21

3/6

3/20

4/3

4/17

5/1

5/15

5/29

6/12

6/26

7/10

7/24

8/7

8/21

9/4

MillionBushels

2004/05 2005/06 2006/07 2007/08 2008/09

Sales continue to bestrong reflectinguncertainty over the SouthAmerican crop size andthe US crop size estimatesthat continue to fall.



US Soybeans Percent Harvested

Source: USDA/AMS



US Wheat Exports to Date

0

200

400

600

800

1000

1200

1400

6/1

6/15

6/29

7/13

7/27

8/10

8/24

9/7

9/21

10/5

10/19

11/2

11/16

11/30

12/14

12/28

1/11

1/25

2/8

2/22

3/8

3/22

4/5

4/19

5/3

5/17

5/31

MillionBush

els

2004/05 2005/06 2006/07 2007/08 2008/09

Export pace is slightlyweaker than last year.



Accumulated Wheat Exports and Outstanding Sales

0

200

400

600

800

1000

1200

1400

6/1

6/15

6/29

7/13

7/27

8/10

8/24

9/7

9/21

10/5

10/19

11/2

11/16

11/30

12/14

12/28

1/11

1/25

2/8

2/22

3/8

3/22

4/5

4/19

5/3

5/17

5/31

MillionBush

els

2004/05 2005/06 2006/07 2007/08 2008/09

Outstanding sales aresignificantly weakerthan last year



Transportation Cost of Moving Grainfrom Minnesota to Japan

0

20

40

60

80

100

120

140

160

180

Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

DollarsPerMetric

Ton

From MN By Rail to PNW to Japan From MN By Barge to Gulf to Japan

Data Source: Weekly Grain Transportation Reports , USDA/AMS

Oct 2008



Transportation Cost of Moving Cornfrom Minnesota to Japan via Rail

0

20

40

60

80

100

120

140

Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08

DollarsPerMetricTon

Rail Cost MN to Portland,OR Ocean Rate PNW to Japan From MN By Rail to PNW to Japan

Data Source: Weekly Grain Transportation Reports, USDA/AMS

Oct 2008



Transportation Cost of Moving Cornfrom Minnesota to Japan via Barge to Gulf

0

20

40

60

80100

120

140

160

180

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

DollarsPerMetricTon

Barge Rate - MN to Gulf Ocean Rate - Gulf to Japan From MN By Barge to Gulf to Japan

Data Source: Weekly Grain Transportation Reports, USDA/AMS

Oct 2008



US Ending Stocks Still Low(million bushels)

2007/08 2008/09

Percentage

Change

Wheat 456 603 32%Corn 1624 1124 -31%

Soybeans 205 205 0%



Summary: Weaker PNW Grain Exports Expected

Dramatically lower ocean shipping rates making the gulf morecompetitive despite higher barge rates

Large corn crop in China could further reduce the US exportpotential to Southeast Asia. However, the gulf ports will takethe brunt of US corn export reductions due to declines inexports to Europe.

South America soybean production could be larger thanexpected in future, reducing US soybean exports

Weaker global economic growth may further weaken importdemand

Documents

Grain Transportation Demand for the Pacific Northwest 2008-09