Fall Crop Supplies to Exceed Storage Capacity

September 10

Fall grain and soybean supplies should be greater than the capacity to store the crops for the second consecutive year in the eastern and western Corn Belts and for the third straight year in the Central Plains, USDA says. Rail operating problems should ease in time for the busy late September shipping season.

Grain and soybean production should total 15.8 billion bushels, 2% less than 1998-99 but still the third largest crop ever. At the levels now projected for 1999-2000 grain and soybean supplies, USDA says storage capacity "will be extremely tight this fall, especially in the major corn-producing regions."

Since January, grain and soybean exports have been running "well ahead" of year-earlier levels with some of the largest increases occurring in the last few months. That has pushed barge shipments above year-earlier levels on the Mississippi River system since the start of the spring navigation season.

Rail shipments have been on the increase since earlier this year, driven by larger wheat exports, especially in the Texas Gulf. A widening spread between Gulf and Pacific Northwest ocean freight rates has made PNW ports more attractive for exporters.

Large demand for grain exports, particularly corn, is increasing traffic volumes on the western railroads. Weekly grain shipments on the eastern railroads continue to keep pace with year-earlier levels, according to the report. But operating problems associated with the Conrail takeover "persist and have increased the volatility of eastern grain traffic in recent weeks."

Logistic problems faced by eastern grain receivers should ease in the weeks ahead, USDA says. August and early September typically are the slowest months for grain traffic on the eastern railroads as feeders in the Southeast have local wheat and corn available to augment rail-delivered eastern Corn Belt supplies.

"This slack period should help CSX Transportation and Norfolk Southern smooth out operating problems, increase system fluidity and help position them for the busy fall shipping season which begins in late September with the eastern Corn Belt harvest," the report says.

The information was developed by USDA and the Surface Transportation Board and is available on the Internet at http://www.ams.usda.gov/tmd/mta/index.htm