When the Levee Breaks

When the Levee Breaks image

When the Levee Breaks

03/20/2019 | Author: Matt Smith

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Heavy rainfall and above-normal snowfall accumulation across the US have escalated flood risk over the short and medium-term. The flood stage has already been surpassed at the Mississippi River in St. Louis, with water levels now exceeding 30 feet. Through mid-June, the upper half of the Mississippi River could face additional flood risk as snowpack melts. The National Weather Service has warned of “Above to Much Above Normal Flood Risk across southern Minnesota, Wisconsin, Iowa, Illinois, Missouri and extending down the Mississippi River through mid-June.” 

Logistics have become an issue with high water resulting in reduced tow size of 10 to 15 barges on the Lower Mississippi and three areas of “daylight only operations.” High-water regulations in the Gulf of Mexico are estimated to be in place into April. It is difficult to estimate exactly how much these weather issues have negatively impacted corn and soybean loadings, but it seems fair to say that weather has played a role. The number of grain barges unloaded in the New Orleans port region sank to 466 as of March 16, down from 486 in the week prior and down from a 2019 peak of 865. Unloads were also down 18 percent versus the same period last year. 

US NOLA barge unloading

Countervailing this weak trend in barge unloads is a pickup in vessel loading in the US Gulf and Pacific Northwest port region. As of March 7, some 47 boats were loaded in the US Gulf and 28 were loaded in the Pacific Northwest. US Gulf loadings were up from the week prior but down from 54 for the same period a year ago. Pacific Northwest loadings were steady versus both respective time periods. 

US Vessel Loading Activity

ClipperData shows combined corn, soybean and wheat dry bulk loadings year-to-date have totaled just 19 million tonnes, down from 23 million tonnes for the same period last year and 27 million tonnes in 2017. Flooding, compounded by ongoing Avian Influenza and trade war issues with China, will continue to put pressure on the US export outlook in the near-term. 

corn soy wheat loadings ytd-1

About The Author

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Matt is a Director of Commodity Research at ClipperData. Matt specializes in extracting key themes from technical and fundamental analysis of the global energy market, and communicating these through daily and weekly deliverables. He also provides oil and natural gas analysis and commentary to national and international media outlets that include CNBC, Fox Business, Russia 24, the Wall Street Journal, MarketWatch, AFP, Bloomberg, Reuters, and the Oil Daily. Prior to joining ClipperData, he worked for eight years at Schneider Electric / Summit Energy as a Global Commodity Analyst, where he also founded and authored the blog, Energy Burrito. He started his career at the Royal Bank of Canada in the UK, spending eight years with the bank. During that time, he managed $55 million in assets as a portfolio manager and financial analyst.