As river level rises, so too does price of corn
Corn prices, already above $7 a bushel, are jumping even more as the result of flooding that has indefinitely shut down barge traffic on the upper Mississippi River.
One farm economist Tuesday even suggested the possibility that corn might have to be rationed this fall if the flood-damaged Midwest crop falls too far short of expectations.
As of Tuesday, the U.S. Army Corps of Engineers ordered a dozen locks along a 315-mile stretch of the Mississippi closed to commercial traffic. The Illinois River, as well as the Mississippi below Alton, remained open, though a corps spokesman said that could change as the flood crest moves south.
“If the harbor at St. Louis is closed, it ends navigation to the south. It just stops vessels from coming into or moving around the harbor,” said Alan Dooley with the corps in St. Louis.
The U.S. Coast Guard would make that decision, he said, but the St. Louis harbor typically closes when the river level reaches 38 feet. The river at St. Louis is projected to crest at more than 40 feet early next week.
Loss of commercial barge traffic comes while Midwest farmers are still trying to move last year’s crops to market, said Jeffrey Adkisson, executive vice president of the Grain and Feed Association of Illinois.
“We had a big crop last year, and there’s a lot of grain to get moved out, period,” said Adkisson.
“They are essentially in the logistics business of moving commodities from Point A to Point B, and when you can’t do that, it causes a severe disruption in business patterns. If you can’t load a barge, you’re not going to use a truck to get it to New Orleans. You basically have to wait until the river goes down.”
Record corn prices already had clogged up the shipping system as farmers, shippers and traders rushed to take advantage of an unprecedented profit opportunity, said Gerald Jenkins, general manager of the Ursa Farmers Coop on the Mississippi River about 125 miles northwest of Springfield.
“The system is basically chucked full of grain,” said Jenkins.
Corn for July delivery on the Chicago Board of Trade rose more than 9 cents to $7.42 a bushel Tuesday, while corn for delivery in July 2009 went as high as $7.95 before closing at $7.85.
The Ursa cooperative has been closed for more than a week by high water, but grain continues to come in, said Jenkins.
“Grain is moving off the farm much faster than in the past,” said Jenkins. “The elevators filled back up and had nowhere to go with it. It’s just been a backlogged system since January or February, and the icing on the cake is these last two river rises.”
University of Illinois Extension farm economist Darrel Good said some form of crop rationing appears inevitable this fall as demand for corn as both food and fuel remains strong even as flood damage promises lower yields.
“The government can and has acted in the past. The most direct way is to restrict exports, though I don’t think there’s any support for that kind of action,” said Good. “The other tool is easing mandates and subsidies for ethanol production.”
The Corps of Engineers suggested some locks on the upper Mississippi could reopen as early as today, while others probably will remain closed for at least two weeks.
Even after the water drops, it takes time to reopen the locks, Dooley said.
“There’s some cleanup involved and checking them to make sure they weren’t damaged. We’ll go back in business as quickly as we can,” he said.
Tim Landis can be reached at (217) 788-1536 or firstname.lastname@example.org.
Moving on the Mississippi
More than 28.5 billion tons of commodities passed through Lock & Dam 21 at Quincy in 2007. The top five were:
-Farm products (primarily grain), 18 billion
-Coal, 3.9 billion
-Chemicals, 3.2 billion
-Crude materials (gravel, rock), 2 billion
-Manufactured goods, 765 million
Source: U.S. Army Corps of Engineers