U.S. grain shippers await El Nino dryness after unseasonable flood

Chicago | Reuters –– The clear Midwestern skies that El Nino cycles typically bring could be a boon to the U.S. heartland this spring, after recent record rain levels soaked the region, swamping farmland and disrupting grain export shipments on swollen rivers.

Farm fields across the Midwest are saturated, according to the U.S. Department of Agriculture. But with fairly limited snow cover, and a history of El Nino bringing drier- and milder-than-normal conditions to the Mississippi River’s watershed in the upper Midwest, grain shippers could see a less severe spring flood season in 2016, said federal and state climatologists.

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Grain and livestock farmers, too, could benefit from a reprieve from the woes of spring flooding, which can sour crop production with delayed plantings and increased fungal or pest problems.

El Nino refers to a series of climatic changes linked to warming of sea-surface temperatures in the Pacific Ocean, which in turn affects weather patterns around the globe. The current event is one of the three strongest in the past 50 years, but appears to have peaked, Australia’s Bureau of Meteorology said Tuesday.

“Should we see the more typical (El Nino) pattern take hold over the next couple of months, that would probably bode well for a quieter spring flood season,” said Mike Halpert, deputy director for the National Oceanic and Atmospheric Administration’s Climate Prediction Center.

NOAA will release its official spring flood outlook in the third week of March.

Grain shipments slowed

The Mississippi River and its tributaries, key shipping waterways used to transport grain from Midwest farm states to the Gulf Coast for export, typically swell to their highest levels between March and July.

Yearly low water levels normally occur in January and December. So some grain shippers were caught off guard by last week’s river surge that forced the closure of the busy Port of St. Louis and sidelined fleets on the Mississippi and Illinois rivers.

One large exporter was forced to divert several soybean trains that were slated for loading onto barges at St. Louis to another river elevator further downriver, traders said.

Spot cash premiums for soybeans delivered by barge to Gulf Coast elevators spiked to a 2-1/2 month high and corn premiums hit a 2-1/2 week high before easing this week amid light export demand.

“The lack of a big export program really softened the blow. If we’d had a normal export program on the books, we could have been hanging around those highs for weeks,” said one grain exporter who asked not to be named.

Barge freight rates and cash premiums for springtime barge shipments were steady with pre-flood levels, indicating little concern that the shipping problems would persist, traders said.

River section closed

An 80-km section of the Illinois River remained closed on Tuesday due to high water but the Port of St. Louis has been reopened to navigation, the U.S. Coast Guard said.

The Mississippi River at St. Louis was at 31.9 feet at midday on Tuesday, well below last Friday’s crest of nearly 42.6 feet that was just seven feet below its historical high in August 1993, according to the National Weather Service.

As Mississippi River floodwaters stream south toward the Gulf of Mexico, the Coast Guard has restricted barge tows on southern sections of the river to just 30 barges, down from 45 or more normally, due to strong currents from Missouri to Louisiana, said Operations Specialist First Class Jonathan Hood.

Southbound barge tows are also restricted to daytime hours only around cities such as Memphis and Vicksburg, where bridge underpasses are more difficult to navigate in high water, Hood said.

Karl Plume reports on agriculture and ag commodity markets for Reuters from Chicago.

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