U.S. farm economy flowing in reverse as drought impacts persist
"As fast as you can move it from the south to the north, we're shipping it north," said Ryan McClanahan, a merchandiser for Commodity Specialists Company, a grain trading and marketing company. "It's the big thing right now."
Jeff Duckworth, a corn buyer for ethanol maker Aventine Renewable Energy in Pekin, Ill., said harvest cannot come soon enough. There is "just barely" any old-crop corn left in local markets, Duckworth said.
Help is on the way. In Louisiana, for example, the harvest was 14 percent complete as of mid-August and is expected to total 122 million bushels, up a third from last year, according to the U.S. Department of Agriculture.
The reverse flow northward is being primed by high bids for corn in the Midwest cash markets. A grain elevator in Lake Village, Ark., along the Mississippi River, was bidding $4.41 for first-week August delivery, while a processor in Cedar Rapids, Iowa, was offering $6.01 - a difference that is more than enough to cover transportation costs form south to north.
Demand on the Mississippi for corn is pushing prices to a point that poultry feeders are switching to wheat, which is less expensive. Corn prices spiked more than wheat prices did after last summer's drought.
"Usually our poultry feeders would be hollering for corn, just clamoring for the stuff, but we just aren't seeing that," said Shep Bickley, owner of a Cain Agra grain elevator in Arkansas.
Despite the high corn price, demand on the river in the Deep South remains strong. "Our local river terminal was bidding up everybody by far - blowing the door off the (poultry) feeders," said Bickley.
American Commercial Lines, an Indiana-based barge company, has orders to ship southern corn through the end of August to locations on the Ohio, Illinois and upper Mississippi rivers, and into St. Louis, spokeswoman Kim Durbin said.
Barge companies are equipped to carry grain north because they usually ship fertilizer from the south to Midwest farms. Grain elevators, which are more accustomed to loading corn than unloading it, are having to adapt.
The Illinois and Ohio rivers, which flow through the areas worst hit by last summer's drought, have already seen increases in upriver barge shipments of food and food products.
Northbound traffic passing through the LaGrange lock, the southernmost on the Illinois River, was up 9.5 percent from a year ago through the end of July.
The U.S. Army Corps of Engineers, which manages the lock system, said the volume moving upriver through the JT Meyers lock on the lower Ohio River, the lock nearest its confluence with the Mississippi, was up 4 percent from a year ago as of the end of July.
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