Volumes of flood-delayed crops picking up in Midwest

Upcoming Grain Production

The USDA anticipates some effects on agricultural production in marketing year (MY) 2019/20 as a result of the flooding and planting issues, particularly for corn. According to the latest (June) World Agricultural Supply and Demand Estimates (WASDE) report, USDA forecasts U.S. farmers will produce 13.68 billion bushels (bbu) of corn in MY2019/20, down 1.35 bbu (9 percent) from its previous projection in May. If realized, this would be the lowest volume of corn production since MY2015/16, down 7 percent from the three-year average.

The report explains, “Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects.” This could translate into lower transportation demand for domestic and export-destined corn movements, as USDA projects use for feed and exports to decline 3 percent from last year and 6 percent from its previous forecast.

In the June WASDE, USDA indicated little change to soybean production, stating: “Although adverse weather has significantly slowed soybean planting progress this year, area and production forecasts are unchanged with several weeks remaining in the planting season.” The next WASDE will be released on July 11.

Impact on Freight Movement

Charley Dehoney, CEO of Manning’s Truck Brokerage in Omaha, Nebraska, and a FreightWaves contributor, said thousands of acres of land in Nebraska and Iowa are still unplantable. The recent reopening of I-29 has highlighted the extent of the devastation in the Missouri Valley.

“Now you can drive right through the flooded areas and actually see how many farms are still underwater,” said Dehoney. “Many of the southern Nebraska and Missouri farms have swapped out their plans to grow corn this year in favor of beans, which have a shorter season. Still, many others can’t even plant beans because their farms are still underwater or haven’t been processed by FEMA [Federal Emergency Management Agency] yet.”

Dehoney said that the volume of unplanted seed corn returned to manufacturers this year has been extremely high. It started around early June, Dehoney added, picking up in the last two weeks as the corn planting season came to a close.

“The loads were originating from farms throughout the Corn Belt and go back to warehouses to be resold or unfortunately to landfills if the seed is no longer plantable due to exposure to water, sun, etc.” Dehoney explained. “This has been soaking up trucking capacity and increasing rates in the truckload market.”

However, not all fields were washed away in the floods and some farmers finally played catch up. Because of its location in the nation’s heartland, much of the freight shipped from Omaha in any given year is typically agricultural.The SONAR chart above shows an average month-over-month increase of nearly 19 percent in outbound volume (OTVI.OMA) from the Omaha market, from  61.92 in May to 73.48 in June. This index value move is in proportion to the total observable outbound tender volume (the amount of loads leaving the market). The June spike represents the late push to ship harvested crops that survived the flooding, which delayed planting. Unplanted seed corn that was returned to warehouses or hauled to landfills may have also contributed to the surge.

Additionally, volumes for emergency soybean seed deliveries late in this season have been very high as farmers rush to plant in newly dried ground before missing their window of opportunity. Dehoney said that, overall, optimism is growing as more and more farmers sow their seeds, whatever type they may be. The recent hotter weather is helping dry the fields, and farmers are all back to work in some capacity.