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Market Matters Blog           01/26 11:35
Industry Facing Shortage Up to 30,000 Drivers 
West Coast Ports Suffering Slowdowns, Work Stoppages 
Proposal Would Make Weekly Reporting Permanent
Railroads Getting Better Grades for Service
Railroads Pick Up Steam 
Railroads Performing Better Due to Mild Weather, More Locomotives
Informa: Beans Acres Exceed Corn Acres
Logistic, PNW Labor Issues Hurting Business
Milder Weather, Lower Freight Volumes Allow Railroads to Boost Performance 
Everyone Needs a (Marketing) Code They Can Live By

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Industry Facing Shortage Up to 30,000 Drivers 

   OMAHA (DTN) -- The U.S. trucking industry is seeing a shortage of 30,000 
drivers nationwide, said Truckload Carriers Association Safety and Policy 
Director David Heller in a recent interview with Wisconsin Public Radio.

   "It's an epidemic at this point," Heller told WPR. "Carriers aren't hauling 
freight not because they don't have equipment, not because they don't have 
freight; it's because they don't have the drivers to haul them." Heller went on 
to say that "the average driver is getting older, and that more technology and 
regulation is causing some of them to leave."

   The Federal Beige Book, a consolidated economic report from the 12 Federal 
Reserve Districts released on Jan. 14, 2015, reported that many districts are 
concerned about the freight transportation industry, particularly the trucking 
sector. The report is based on information collected on or before Jan. 5, 2015.

   The Atlanta District transportation contacts reported "slightly higher 
activity from late November through December compared with year-earlier levels. 
Trucking and logistics contacts noted significant increases in demand; however, 
capacity constraints due to a lack of drivers continued to hinder growth."

   The Richmond, Va., contacts throughout the district continued to cite 
difficulties finding skilled workers, specifically in truck driving. In the New 
York City area, a trucking industry expert reported that "while business 
conditions have improved substantially in late 2014, reflecting both strong 
demand and falling diesel prices, truck drivers are in high demand."

   The Cleveland District reported, "Freight volume increased since our last 
report, with demand being described as broad based. Profit margins improved due 
to lower diesel fuel prices. Hiring drivers is an ongoing process, and industry 
executives agree that their ability to attract and retain truck drivers is 
critical to their ability to expand capacity. Although capacity constraints 
remain an issue industry-wide, carriers are encouraged by amendments to the 
hours-of-service rules that were included in the recently passed federal 
omnibus bill."

   The hours-of-service rule required a restart of a 60-to-70-hour limit, which 
drivers were required to comply with beginning July 1, 2013. According to an 
article published by Bulk Transporter on Jan. 23, "The Federal Motor Carrier 
Safety Administration (FMCSA) announced in December that it had suspended 
enforcement of certain sections of the hours-of-service (HOS) rules, 
specifically the 60- or 70-hour rule, as required by the Consolidated and 
Further Continuing Appropriations Act, 2015, (also known as Cromnibus) enacted 
Dec.16, 2014."

   Sen. Susan Collins, R-Maine, is responsible for the Collins Amendment 
language, which, according to the article, "suspends restrictions on the use of 
the so-called 34-hour restart that requires drivers to take two consecutive 
periods of 1 a.m. to 5 a.m. off during the restart, thus pushing them into 
riskier daytime driving and then lifts the restriction on using the restart 
more than once every 168 hours, or one week."

   ATA President and CEO Bill Graves told the trade publication Bulk 
Transporter, "One of our members told us several of his drivers took four days 
off for the recent Thanksgiving holiday, yet when they returned to work, their 
hours were limited because that 96-hour break could not count as a 34-hour 
restart. That's just one of the impacts FMCSA failed to research that we hope 
they fully examine as a result of this congressional mandate."

   According to Bulk Transporter, the suspension of the restart rules will 
continue until the end of Fiscal Year 2015 (Sept. 30) or until the final report 
on the naturalistic study has been submitted to the House and Senate Committees 
on Appropriations, whichever is later.

   PROPOSED NEW RULES COULD PROVE COSTLY FOR INDUSTRY

   The National Grain and Feed Association reported that 2015 is poised to be a 
big year on the trucking front for the grain, feed and processing industry. On 
tap for the trucking industry this year is potential rulemaking at the FMCSA 
and Congress' need to pass a new highway bill before the old one expires May 31.

   The NGFA said, "The rulemaking under consideration at FMCSA would increase 
the minimum levels of financial responsibility for motor carriers (liability 
coverage for bodily injury or property damage), and would increase financial 
responsibility for freight brokers and freight forwarders. Currently, there is 
a minimum of $750,000 in financial responsibility for each for-hire interstate 
general freight carrier. FMCSA's research report on Financial Responsibility 
Requirements for Commercial Motor Vehicles estimates an insurance premium cost 
of $5,000 per truck per year for $750,000 to $1 million in coverage."

   In comments, which are due by Feb. 26, NGFA plans to ask FMCSA to consider 
the effect of any increase in financial responsibility on freight rates and 
prices received by sellers of agricultural commodities.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

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West Coast Ports Suffering Slowdowns, Work Stoppages 

   OMAHA (DTN) -- The Pacific Maritime Association (PMA) and the International 
Longshore and Warehouse Union (ILWU) are still at odds over labor contracts, 
and the ongoing dispute is affecting service at several West Coast ports, 
according to trade sources. 

   A trade source told DTN via email that both sides are still blaming the 
other for the failure to reach an agreement. The source said the ports having 
the most problems are Oakland, Portland and Seattle/Tacoma. "LA/Long Beach is 
apparently better; Oakland is the worst and has been closed completely off and 
on."

   The PMA stated on their website in December that, "ILWU slowdown tactics 
have reduced productivity at Pacific Northwest ports for more than a month and 
a half, with drop-offs of 30-40% now the norm, according to PMA analyses of 
terminal operations. Intermittent walk-offs have also occurred in Oakland. At 
the ports of Los Angeles and Long Beach, the nation's busiest, the ILWU 
restricted dispatching skilled crane operators to operate yard cranes, among 
the most important jobs to relieve congestion on the docks."

   According to the PMA, the union actions are tied to the ongoing negotiations 
for a new coast-wide labor contract between container terminal operators and 
the ILWU. Negotiations began in May for the contract that expired July 1, and 
talks have been occurring almost constantly for the past six months. The 
contract being negotiated covers nearly 20,000 longshore workers at 29 West 
Coast ports. 

   In a press release on their website Jan. 15, the Federal Maritime Commission 
said that Chairman Mario Cordero announced to staff on Jan. 13 that his 
priority for the commission in 2015 is addressing congestion issues that are 
plaguing the nation's ports.

   Chairman Cordero stated, "Among the commission's statutory goals is the 
assurance of an efficient ocean transportation system. The efficient operation 
of the nation's ports is squarely within that mandate and paramount to the 
commission's responsibilities. As we move forward, I look forward to a thorough 
review of the issues and views that have been provided from various maritime 
industry stakeholders. The FMC will continue its role in protecting the 
shipping public and addressing unreasonable or unjust practices by carriers or 
marine terminal operators."

   On Jan. 5, Allison Beck, acting director of the U.S. Federal Mediation and 
Conciliation Service (FMCS), issued the following statement on the FMCS 
website: "In response to a joint request for assistance from the parties, 
collective bargaining between ILWU and PMA representatives will continue as 
soon as possible under the auspices of the Federal Mediation and Conciliation 
Service (FMCS). We are prepared and ready to render prompt assistance. Deputy 
Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective 
bargaining experience in this industry, has been assigned to help the parties 
bring these important negotiations to a mutually acceptable resolution."

   The press release went on to say the FMCS will not release information 
regarding future meeting dates and locations. "In addition, the FMCS will have 
no further comment at this time regarding the status or substance of the 
negotiations."

   Earlier this month, the BNSF said on their website that the marine terminal 
operators at the ports of Oakland, Los Angeles and Long Beach had advised BNSF 
of their intentions to limit marine terminal labor calls to support their 
marine terminal operations. A similar action had also been done at Pacific 
Northwest marine terminals. 

   "In anticipation of further slow-downs and marine terminal congestion," the 
BNSF said, "we are issuing an embargo to be effective Monday, Jan. 5, 2015, for 
westbound traffic received at interchange points destined for all marine 
terminals served on the West Coast. The embargo was lifted Jan. 7, but the BNSF 
continues to monitor the ongoing labor issues at the West Coast terminals and 
has stated that they are encouraged by the participation of the FMCS.

   A container broker told DTN, "From what we hear, the main issue is 
maintenance of chassis. ILWU wants to have that job and income and work from it 
for their mechanics. The problem is that the shipping lines and terminals no 
longer own the chassis, so they have no say or legal right to give the 
maintenance to the ILWU. The contract is left to another union off the terminal 
site. It's a catch 22."

   "We are doing some business, but we easily passed on over 2 million in sales 
over the past 60 days. Some of that is lost, but some may come back to us. A 
lockout or strike keeps being rumored." 

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

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Proposal Would Make Weekly Reporting Permanent

   OMAHA (DTN) -- Weekly service performance reports from railroads may become 
a permanent requirement following a recent decision by the Surface 
Transportation Board (STB). 

   On Dec. 30, the STB issued a proposal of new regulations for permanent 
weekly reporting by all Class I railroads and by the Chicago Transportation 
Coordination Office (CTCO). The current order requiring weekly service updates 
was on a temporary basis and had no expiration date.

   The weekly filings have allowed the board and rail stakeholders to monitor 
performance and have allowed the board to begin to develop baseline performance 
data. "Based on the board's experience with the reporting to date, the board is 
now moving forward with a rulemaking to determine whether to establish new 
regulations for permanent reporting by the members of the Class I railroad 
industry, the Class I carriers operating in the Chicago gateway, and the CTCO 
through its Class I members," the STB said.

   The permanent collection of weekly performance data would improve the STB's 
ability to "identify and help resolve future regional or national service 
disruptions more quickly, should they occur," the board said. "Transparency 
would also benefit rail shippers and other stakeholders by helping them to 
better plan operations and make informed decisions based on publicly available, 
near real-time data, and their own analysis of performance trends over time." 

   The entire STB decision can be found here: http://goo.gl/oY9DG8

   A second Dec. 30 proposal directs BNSF Railway Company to "submit a detailed 
description of the contingency plans the carrier would use to help mitigate an 
acute coal inventory shortage at one or more generating stations in a region." 

   With respect to BNSF and coal specifically, the STB stated, "Totality of the 
information collected to date suggests that BNSF's coal service has struggled, 
although there has been some progress in recent weeks." The board stated it is 
critical they continue to closely monitor BNSF's performance for indications of 
improving or deteriorating service.

   "In addition to monitoring BNSF's coal service performance via the data we 
collect," said the STB, "we will continue to hold regular meetings with BNSF 
senior management so that we can receive first-hand information about the 
challenges and progress BNSF is experiencing with respect to all service 
issues, including coal." 

   Here is the link to the entire decision by the STB concerning this issue: 
http://goo.gl/m5pGr7

   Comments and replies on both decisions may be submitted either with the 
board's e-filing format or in the traditional paper format. Comments are due by 
March 2, 2015. Reply comments are due by April 29, 2015.

   BNSF REPORTS COLD, SNOW, PNW LABOR DISPUTE HAVE SLOWED TRAFFIC

   Below-zero temperatures and blizzard conditions in the Midwest and Northern 
Plains required reduction of train lengths across the northern portion of the 
network last week, according to the BNSF website. The restrictions were 
expected to remain in place through the past weekend until temperatures return 
to more normal levels early this week.

   "Despite the harsh conditions, our team of over 300 rapid responders has 
helped keep the network running strong with just some minor weather-related 
delays," said BNSF. "In addition, we continue to experience strong performance 
gains due to additional locomotive availability and reduced post-holiday season 
volumes."

   The railroad also said it is continuing to manage service inconsistencies at 
ports in the PNW and California because of the ongoing labor dispute. Because 
of work slowdowns causing some disruptions, "temporary restrictions on 
export/import traffic were briefly instituted and subsequently withdrawn as 
volumes proved manageable," the BNSF website said. The U.S. Federal Mediation 
and Conciliation Service announced on Monday, Jan. 5 that it was "prepared and 
ready to render prompt assistance." The AP reported last week that pressure, 
both political and financial, has been mounting while each party faults the 
other for the sluggish movement of billions of dollars of cargo across the 
docks at 29 seaports that form a vital trade link with Asia.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary Kennedy on Twitter @MaryCKenn

    

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Railroads Getting Better Grades for Service

   OMAHA (DTN) -- Freight customers are giving railroads better ratings on 
service, compared to a year ago, and observers report a slight decrease in oil 
cars spotted in the northern corridor.

   In the Soy Transportation Coalition's third bi-weekly rail service survey, 
78% of respondents said cycle times for railroads are faster than they were a 
year ago, according to USDA's weekly Grain Transportation Report. In 
comparison, the first survey showed 67% and the second survey showed 70%. 

   Although fewer rail customers reported past due orders, USDA said the survey 
showed "the average number of days past due for those that are experiencing 
delays increased from 13.4 days in the second survey to 30 days in the third 
survey."

   Besides good weather allowing faster speeds and more locomotives available 
to pull loaded cars, there has been a slight decrease in oil cars seen in the 
northern corridor. Up until just recently, most trains one would see moving 
along northern routes consisted of at least 75% or more 100-car oil trains. In 
the past few weeks, observers say oil cars are still moving, but there is more 
of a mix of grain, container, coal and oil cars in 100-car-units lately.

   It is unlikely there will be a significant falloff in volumes shipped out of 
North Dakota's Bakken oil field in the near term, a source who works for an oil 
and gas exploration service told DTN. The first reason is most large producers 
have hedged a majority of their production at prices close to or above $90.00 
and they need to make delivery on those contracted barrels, he explained. 
Second, numerous wells remain that have been drilled and cased, but are waiting 
on completion. From a cost-forward basis, these wells will meet economic 
hurdles and they will be completed over the next few or more months, the source 
said.

   "My guess is train-shipped oil volumes will not begin to decline until 
mid-year," he said, "unless Saudi Arabia allows oil prices to rebound before 
then. Even then, there will still be a lag as companies drop rigs, hence well 
count and oil volumes to ship also drop."

   RAILROAD REPORTS

   In its weekly update to the Surface Transportation Board (STB), The Canadian 
Pacific (CP) said, "Our U.S. network continues to be in good operating 
condition. Average dwell at origin for unit grain trains has improved, and 
grain loadings remain steady. Train speed has increased. With respect to the 
Rapid City, Pierre & Eastern Railroad (RCP&E), locomotives are in overall 
balance this reporting week, understanding that the number varies from day to 
day. We fulfilled 237 of 300 RCP&E grain car requests, which is an improvement 
over last week." Here is a link to the full Dec. 31 service update: 
http://goo.gl/VDz6He

   On Jan. 5, the Burlington Northern Santa Fe (BNSF) reported on its website 
that the shuttle turns per month for the PNW were slightly lower from one week 
ago at 2.4 TPM vs. the desired turn time of 2.5. Here is the weekly update by 
the BNSF to the STB on Dec. 31: http://goo.gl/yxd6Ve

   WEST COAST PORT ISSUES

   "We continue to monitor the ongoing labor situation at the West Coast 
ports," BNSF said on its website. "While negotiations between port operators 
and dockworkers continue, we are actively responding to changing conditions 
affecting both inbound and outbound shipments."

   The Pacific Maritime Association (PMA) released a statement on Jan. 2 citing 
current issues affecting operations and asking the International Longshore and 
Warehouse Union (ILWU) to stop withholding skilled longshore workers from their 
shifts on the docks, especially in Southern California ports. Here is the full 
press release from the PMA: http://goo.gl/3Msu3x .

   On Jan. 5, the Federal Mediation and Conciliation Service released a 
statement on its website announcing they will step in and help mediate 
negotiations. "In response to a joint request for assistance from the parties, 
collective bargaining between ILWU and PMA representatives will continue as 
soon as possible under the auspices of the Federal Mediation and Conciliation 
Service (FMCS). We are prepared and ready to render prompt assistance. Deputy 
Director Scot Beckenbaugh, a senior FMCS mediator with extensive collective 
bargaining experience in this industry, has been assigned to help the parties 
bring these important negotiations to a mutually acceptable resolution."

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary on Twitter @MaryCKenn

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Railroads Pick Up Steam 

   OMAHA (DTN) -- With improved service and fewer customer complaints, the 
holiday season has been a merrier time for U.S. railroads than at other times 
throughout the year. 

   The Canadian Pacific Railway (CP) told the Surface Transportation Board in a 
letter on Dec. 24 that, "Overall, our U.S. network is in good operating 
condition. Terminal dwell is down. Grain loadings have improved week over week, 
and dedicated grain cycle times are in line with plan."

   The CP went on to report that with respect to the Rapid City, Pierre & 
Eastern Railroad (RCP&E), the locomotive balance varies from day to day but 
approaches equilibrium. "We fulfilled 194 of 300 RCP&E grain car requests this 
reporting week. The episodic flow of returning empty grain cars from the east 
affects our ability to satisfy these requests. We will continue to work with 
our interchange carriers and the other components of the supply chain to 
balance these flows."

   Bob Zelenka, executive director of the Minnesota Grain and Feed Association, 
told the Grand Forks Herald that service complaints about the railroads have 
been "fairly quiet." 

   "Unit train loaders have been getting pretty good service and less-than 
shuttles are experiencing delays -- but it's been two to three weeks rather 
than four to eight weeks," Zelenka said. But many farmers have slowed selling 
as they wait for the new tax year, or better prices, which leaves less grain to 
ship right now. Zelenka said that because of farmers keeping grain home, 
elevators that bought freight for January and February might not be able to use 
it and might have to sell it in the secondary freight market.

   The BNSF reported Monday that shuttle turns per month to the Pacific 
Northwest were at 2.5 TPM. While this is slightly lower than the previous week, 
the desired shuttle turnaround time for the BNSF is being met. In their service 
update prior to Christmas, the BNSF said, "Total volume was heavy with a robust 
210,998 units in Week 50. This represents our second-highest weekly total of 
the year, and our 20th week in 2014 that total volume has exceeded 200,000 
units. System-wide on-time performance held steady at 74% for the week. 
Intermodal on-time performance was slightly below the system-wide result at 
72.3%." 

   WEST COAST LABOR DISPUTE STILL UNRESOLVED

   The intermodal performance is still affected by the ongoing labor dispute on 
the West Coast. The container ports involved in the current contract talks are 
Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma. Meetings prior 
to Christmas between the International Longshoremen and Warehouse Union and the 
Pacific Maritime Association (PMA) did not provide any solutions in the 
contract negotiations. 

   The PMA asked for federal mediation on Dec. 22 and in a statement posted on 
their website said, "After seven months of negotiations, we remain far apart on 
many issues. At the same time, the union continues its slowdowns, walk-offs and 
other actions that are having impacts on shippers, truck drivers and other 
local workers -- with no end in sight." 

   On Dec. 29, the PMA released this statement on their website: "The ILWU's 
press release today underscores the need for federal mediation in these 
negotiations. Unfortunately, the characterization that the PMA and ILWU have 
only a 'few issues' left to resolve is inaccurate. Significant issues remain 
unresolved, including wages, pensions, jurisdiction and work rules. Further, 
the ILWU's escalating rhetoric on congestion is nothing more than a smokescreen 
for its slowdown activities."

   "Given the lack of progress at the table, the ILWU's continuation of 
debilitating work slowdowns and the impact those actions are having on 
businesses throughout America, it's clear that mediation is required to resolve 
the many issues that remain at the bargaining table." Here is the link to the 
full Dec. 29 press release by the PMA: http://goo.gl/KOOJVh

   In response to the ongoing labor issues on the PNW, Zelenka agrees that 
should that stay unresolved and tensions rise, delays could return, especially 
with traffic in and out of the West Coast. "If you slow down anything in this 
tight system, it backs up and affects everything," Zelenka said.

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary Kennedy on Twitter @MaryCKenn

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Railroads Performing Better Due to Mild Weather, More Locomotives

   OMAHA (DTN) -- On Dec. 16, the Senate approved a 9-cent-per-gallon increase 
in the barge diesel fuel user fee, which will take effect April 1, 2015. This 
addition to the current barge fuel tax of 20 cents, paid by barge and tow-boat 
operators, is expected to generate approximately $40 million in additional 
revenues annually, which will be deposited into the Inland Waterways Trust Fund 
for the benefit of priority navigation project construction and major 
rehabilitation.

   NGFA President Randy Gordon said in a press release on Dec. 17, "America's 
inland waterways infrastructure is in desperate need of renovation and 
modernization, and this much-needed increase in the user fee is absolutely 
essential to the future global competitiveness and economic growth of U.S. 
agriculture and other industries, and job creation they represent."

   On June 10, President Barack Obama signed into law the Water Resources, 
Reform and Development Act (H.R. 3080), which provided a process for 
authorizing certain inland waterway navigation projects. However, legislation 
did not include an increase in the inland waterways user fee, which is 
imperative for funding lock-and-dam and all other improvement projects. The 
NGFA noted in a press release on Dec. 17 that industry estimates are that the 
9-cent-per-gallon increase in the barge diesel user fee will generate up to an 
additional $80 million per year when combined with the federal matching funds. 

   There are 29 locks and dams total on the Mississippi River from Minneapolis, 
Minn., to St. Louis, Mo. The lower 27 are numbered, with Lock and Dam Number 
One located near the Ford Bridge between Minneapolis and Saint Paul. The two 
locks that are not numbered are the Upper and Lower St. Anthony Falls Locks and 
Dams, located in downtown Minneapolis. Most of the inland waterway locks and 
dams were built in the 1930s with a projected 50-year life span. Of the 
nation's 241 locks, 57% now are 50 years are older, while 26% exceed 70 years 
of age.

   While this extra fee is good news for the aging waterway locks and dams, it 
may be too late to help out the upper-most locks and dams on the Mississippi 
River. On Dec. 18, the U.S. Army Corps of Engineers (USACE), St. Paul District, 
in a press release stated that they were closing the Upper St. Anthony Falls 
Lock in Minneapolis to all navigation. "The action is mandated as a result of 
the Water Resources Reform and Development Act of 2014 with the requirement 
that the lock be closed on or before June 10, 2015," explained the USACE.

   "The action will end all use of the lock by commercial, recreation and other 
navigational uses," said the USACE. "This will end the ability to ship cargo, 
such as gravel and scrap metal to and from barge terminals above Upper St. 
Anthony Falls Dam. Cargo that would otherwise be moved by barge during the 
normal shipping season will likely now be moved by truck or other 
transportation means. This will have an economic effect for those companies 
above the dam." 

   Here is the public notice released on Dec. 18 by the USACE: 
http://goo.gl/bnFQRR 

   EXTRA POWER, GOOD WEATHER HELPS RAIL TRAFFIC IMPROVE

   The Burlington Northern Santa Fe (BNSF) in its weekly service update to 
customers said that they experienced another week of improving car velocity and 
steady on-time performance. "Aided by the impact of additional resources and 
capacity, along with generally favorable weather conditions, we maintained good 
fluidity throughout the network even as we handled one of our largest weekly 
volumes of the year. As we come to the official beginning of winter and year's 
end, our typical winding down of maintenance projects also helped to improve 
fluidity."

   The BNSF told customers that additional locomotives have steadily reduced 
the number of trains holding for power and in the last month, have reduced 
trains held by more than 50%. "Looking into 2015, we expect to make even more 
performance gains with the 330 new locomotives that will be added to our fleet 
next year," said the BNSF.

   The Canadian Pacific Railway (CP) told the Surface Transportation Board 
(STB), that "Our performance as relates to the Rapid City, Pierre & Eastern 
Railroad (RCP&E) was strong as we fulfilled 314 of 300 requests. And as we 
indicated last week, the locomotive balance is approaching the target of zero. 
On Dec. 15, there was only one more RCP&E locomotive on CP than there were CP 
units on RCP&E. The locomotive balance will fluctuate, but it is trending in 
line with the zero target."

   Tim Luken, Manager of Oahe Grain, Onida, S.D., told DTN that service was 
better on the RCP&E. "We have been getting service once a week with 50 to 55 
cars, so I can't complain," Luken said. "That's much better than getting less 
than 50 cars as we experienced during the wheat harvest."

   The labor problems on the West Coast continue to have some effect on both 
the CP and BNSF. The BNSF said in their service update to customers on Dec. 19, 
"We continue to monitor the ongoing labor situation at the West Coast ports. 
While negotiations between port operators and dockworkers continue, we are 
actively responding to changing conditions affecting both inbound and outbound 
shipments. We remain hopeful for a resolution in the near future."

   However, as of Dec. 19, there were no resolutions to the contract talks that 
took place in San Francisco Thursday between negotiators for the Pacific 
Maritme Association (PMA) and International Longshore and Warehouse Union 
(ILWU). 

   On Monday, Dec. 22, the PMA requested federal mediation in its contract 
negotiations with the ILWU. "After seven months of negotiations, we remain far 
apart on many issues," said PMA spokesman Wade Gates. "At the same time, the 
union continues its slowdowns, walk-offs and other actions that are having 
impacts on shippers, truck drivers and other local workers -- with no end in 
sight. It is clear that the parties need outside assistance to bridge the 
substantial gap between us." Here is the link to the full press release: 
http://goo.gl/Fe0UzZ 

   The U.S. Federal Mediation and Conciliation Service (FMCS) responded it has 
been closely monitoring these negotiations for some time and due to the 
sensitivity of the negotiations, "the FMCS will have no further comment on this 
request and will not comment regarding the status or substance of the 
negotiations." Here is the link for the full press release: 
http://goo.gl/zKpXL0 

   Mary Kennedy can be reached at mary.kennedy@dtn.com   

   Follow Mary Kennedy on Twitter @MaryCKenn

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Informa: Beans Acres Exceed Corn Acres

   OMAHA (DTN) -- Private analytical firm Informa Economics sees farmers 
planting more soybean acres than corn acres next year for the first time since 
1983.

   Based primarily on its survey of producers in December, Informa said farmers 
are likely to plant 88.8 million acres of soybeans next year and 88 ma of corn. 
The changes are slight adjustments to group's prior estimates. 

   "Informa Economics made a slight reduction to their estimate for corn acres 
in 2015, from 88.3 million to 88.0 million acres," DTN analyst Todd Hultman 
said. "Their estimate of soybean acres increased slightly, from 88.3 million to 
88.8 million acres, based on their December survey."

   Informa's latest estimates are 3.2% lower than last year's corn acreage and 
5.5% higher on soybeans. Corn acreage in the Eastern Corn Belt is expected to 
decline 1 ma from 2014 while the Western Corn Belt is expected to decline 1.4 
ma. Soybeans are most likely to be planted on those acres, Informa said. 

   "As could be expected from these slight changes, corn and soybean prices 
showed no impact from Informa's report Friday and were trading lower both 
before and after the numbers were released," Hultman said. "The anticipation of 
more corn acres going to soybeans in 2015 gives new-crop soybeans an early 
bearish bias, but there is a long way to go before harvest next fall." 

   Informa's report included production forecasts based on trend-type yield. It 
projects corn production at 13.4 bb with a 165.9 bpa yield, and soybean 
production at 4 bb with a 45 bpa yield. 

   Winter wheat was seeded on 42.3 million acres this fall, Informa estimated. 
That's about 121,000 acres lower than last year's plantings. Hard red winter 
wheat area, at 30.9 ma, is 408,000 acres higher than last year. Soft red winter 
wheat planting is estimated at 561,000 acres lower than last year at 7.9 ma. 

   "Informa's estimate of all wheat acres slipped from 56.8 million to 56.6 
million acres and also had no visible impact on prices Friday," Hultman said. 

   All wheat production was projected at 2.21 billion bushels, about 180 mb 
larger than in 2014, Informa said. The all wheat average yield, at 45.6 bushels 
per acre, is about 2 bpa higher than last year. 

   USDA will release its initial winter wheat seedings report at 11 a.m. on 
Jan. 12. It will also release quarterly Grain Stocks, the Crop Production 
Annual Summary and the World Agricultural Supply and Demand Estimates. 

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Logistic, PNW Labor Issues Hurting Business

   OMAHA (DTN) -- "Frustrated" was the one word Bob Sinner, president of SB&B 
Inc. located in Casselton, N.D., kept repeating during a recent conversation 
with DTN.

   Sinner's business manages the marketing and sale of an extensive line of 
identity-preserved (IP), non-GMO and organic products to customers worldwide 
and has been supplying food-grade crops both domestically and internationally 
for over 20 years. Lately, however, it has been a challenge to do so because of 
the most recent snafu in logistics: a stall in negotiations between the 
International Longshore and Warehouse Union (ILWU) and the Pacific Maritime 
Association (PMA). The ILWU in this case consists of a group of 20,000 workers 
and the PMA represents shippers, stevedores and terminal operators at 29 West 
Coast ports.

   Both organizations have been in contract discussions since May in hopes of 
avoiding problems when the contract expired on July 1 and eventually agreed to 
continue working under the current contract and continue talks. Sinner told 
DTN, "Here it is, five months later and things are only getting worse." 

   According to the PMA, tensions began to escalate in October, causing 
slowdowns and disruptions to container shipping. The union denied 
responsibility and told the press the problems were due to operational and 
logistic issues. 

   Sinner said both exports and imports of all containerized commodities are 
suffering. According to an article in the Minneapolis Star Tribune, "The 
dispute affects any cargo that needs to be shipped in containers, including 
fruit, vegetables, wine, beef and pork, high-protein distillers dried feed 
grain from ethanol plants, and specialty soybeans. It does not affect bulk 
vessels that ship Midwest corn and soybeans for animal feed abroad."

   In late November, the BNSF railroad ceased shipments from St. Paul of empty 
railcars heading for Seattle or Tacoma to pick up containers from ships. Sinner 
said his only "saving grace" was his ability to move containers out of 
Minneapolis on the Canadian Pacific Railway through Vancouver, BC. While this 
helped move some of the 240 containers of high-quality soybeans that he 
normally ships each month to the PNW, he said there are still many containers 
waiting to move.

   Sinner said others were not so fortunate. He mentioned vegetable and fruit 
producers on the West Coast had to dump product in fields because the products 
weren't getting shipped and therefore spoiled.

   Sinner is concerned his customers will get tired of waiting and look 
elsewhere for product, like Canada and South America. Sinner's customers reside 
in 15 countries, including Japan, Korea and Taiwan, and each customer has 
specific instructions for every bag of non-GMO soybeans that are shipped. He 
said his customers will not tolerate late arrivals of soybeans and will charge 
late fees or even cancel the delayed shipment altogether; a very costly 
situation for Sinner's business. 

   A small container shipper told DTN he has been unwilling to make sales 
because he is unsure if they will ship or not. "You can imagine what is 
happening to other guys and the losses in fresh fruit, veggies, hay off 
California, Oregon, Washington; losses are in the nine-digit range and jobs are 
being lost." 

   Sinner told DTN the only glimmer of hope right now is the scheduled caucus 
in San Francisco beginning on Dec. 15 between the ILWU and PMA. 

   "Every port on the West Coast is suffering right now," said Sinner. "While 
there are strong hopes for a resolution during the caucus, it would still take 
weeks before the members vote. It is so frustrating not knowing what is going 
on."

   On Nov., 17, a group representing United States agriculture and forest 
products producers -- including farmers, food processors, exporters, and 
transportation and logistics providers -- wrote a letter to President Barack 
Obama urging him to send a labor mediator to help reach a contract deal. In the 
letter, the group warned, "There is nothing that we produce in this country in 
agriculture and forest products, that cannot be sourced somewhere else in the 
world. We can grow the best in the world, but if we can't deliver our products 
affordably and dependably, the customer will go somewhere else and may never 
come back." 

   According to the Minneapolis Star Tribune, "A White House spokesman said the 
president is monitoring the situation, but isn't planning to force a 
resolution."

   Here is a link to the letter written to the president: http://goo.gl/edqoMg

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary on Twitter @MaryCKenn

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Milder Weather, Lower Freight Volumes Allow Railroads to Boost Performance 

   OMAHA (DTN) -- Milder weather and lower freight volumes have helped improve 
railroad service across the country, according to a recent BNSF report.

   In its weekly service update, BNSF said that operations remained fluid over 
the past week with strong gains in on-time performance across all business 
groups. "With Thanksgiving behind us and freight volumes returning to their 
traditional levels, locomotives are becoming more available and favorable 
conditions exist for improved velocity and network performance as we approach 
the New Year. We also expect milder, above-average temperatures throughout much 
of the network, particularly in the North Region, during the upcoming week."

   One snag in service last week was a derailment on Dec. 1 near Wadena, Minn., 
which closed both tracks. Service was restored by Dec. 4, and traffic is once 
again moving at a normal pace. 

   The ongoing labor dispute in the Pacific Northwest is still an issue for all 
railroads in that corridor. BNSF said it is continuing to manage service 
inconsistencies at the ports and in some cases have place restrictions on some 
export/import traffic at several of its hubs. BNSF said, however, some of those 
restrictions were "subsequently withdrawn based on a daily evaluation of 
conditions. With port operators and dockworkers resuming contract negotiations 
this week, we continue to hope for a resolution in the near future."

   According to its weekly update to the Surface Transportation Board (STB), 
BNSF cars due in North Dakota rose to 3,783 versus 3,145 the prior week. 
Montana's total was lower at 1,361 versus 1,381 the prior week, and Minnesota's 
total was also lower at 617 versus 891 cars the prior week. Shuttle turns per 
month to the PNW was steady at 2.4 TPM versus the desired turns of 2.5 per 
month.

   To see all of the Class 1 railroad service updates to the STB on Dec. 3, go 
to: http://goo.gl/IbOHHL

   CANADA EXTENDS MINIMUM MANDATE BUT LOWERS TARGETS FOR RAILROADS

   This past August, the Canadian government raised the minimum weekly volume 
for shipments of grain that Canadian Pacific Railway (CP) and Canadian National 
Railway (CN) have to move in order to alleviate the rail backlog in Canada that 
was costing farmers and grain handlers lost revenue. The original mandate of 
500,000 metric tons of grain was set in March, and in August, the mandate was 
raised to 536,260 metric tons with an expiration date of November. If the 
railroads did not meet those mandates, there were monetary penalties to be paid.

   On Saturday, Nov. 29, the Canadian government extended a mandate for the 
movement of grain by rail through the end of March 2015. The new weekly minimum 
will require the CN and CP to ship 200,000-465,000 metric tons and can 
fluctuate in that range through March 2015. Dow Jones reported the following 
targets for Nov. 30, 2014, through March 2015:


Time period                                      Metric tons per week
Nov. 30, 2014 to Dec. 20, 2014                   345,000
Dec. 21, 2014 to Jan. 3, 2015                    200,000
Jan. 4, 2015 to Feb. 21, 2015                    325,000
Feb. 22, 2015 to March 21, 2015                  345,000
March 22, 2015 to March 28, 2015                 465,000

   The mandate is designed to ensure Canada's grain crop is moved in a timely 
fashion in the hopes of preventing the backlog that left nearly 30 million 
metric tons of grain waiting to be moved through the first half of 2014. 

   According to an article published by Argus Media, the government also 
ordered carriers to provide data on railcar order fulfillment by corridor, 
including the placement of cars at producer loading sites and along short-line 
railways to help promote transparency, a similar request made in the U.S. by 
the Surface Transportation Board. The difference is that the Canadian order 
includes a penalty of up to C$100,000 per violation if a carrier misses its 
quota, while there is no monetary penalty in the U.S.

   Small single-car grain shippers on short lines in Western Canada felt the 
original mandate only helped the large-unit shippers and left them short of 
cars most of the year with no recourse to the railroads. One of those shippers 
told DTN in an email that "It's nice to see the government appear to hold the 
railways to account, but it isn't clear that these orders do much to affect 
their performance ... except to give the railways another excuse to not service 
small shippers." 

   He went on to say that shippers continue to receive roughly "half of their 
weekly wants. With the new process of canceling unplanned orders at the end of 
each week, CN shows no backlog of orders. Since this implementation, we have 
had over 300 orders cancelled."

   He said that shippers have seen some cars most weeks, which is a huge 
improvement from last winter. "Service hasn't deteriorated ... yet." Many 
shippers wonder what will happen if the winter turns ugly and if railroad 
performance will suffer even with the mandates in place. Both railroads were 
also required to submit winter contingency plans to the government to include 
service strategies for "producer car loaders and short-line railways" through 
July 2015.

   Both the CP and CN have publicly stated that they will continue to meet the 
grain mandates even though they don't agree with Bill C-30. In April, prior to 
the mandate becoming law, the Calgary Herald reported that the CEOs of both 
rail companies expressed their opposition to the House of Commons. The Herald 
reported that CN CEO Claude Mongeau called the introduction of the bill "a sad 
day for Canada," while CP CEO Hunter Harrison called it "grossly unfair."

   The Herald also reported that Harrison told the government at the April 
meeting, "We are very concerned about the speed and lack of consultation by the 
government in making such significant changes to the rail transportation system 
that could result in unintended consequences for all stakeholders. We need to 
move away from reactionary legislative interventions that target unfairly one 
participant."

   Mary Kennedy can be reached at mary.kennedy@dtn.com 
Follow Mary Kennedy on Twitter @MaryCKenn

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Everyone Needs a (Marketing) Code They Can Live By

   DTN Senior Analyst Darin Newsom reminds me of the NCIS television show 
character Agent Leroy Jethro Gibbs every once in a while. They're both 
considered to be some of the best at what they do (analyzing markets and 
tracking down bad guys, respectively). They refuse to accept the easiest 
obtainable information as truth (USDA reports and plausible alibies, 
respectively). And they both keeps these weird lists of "rules" that can, and 
should, be broken in certain circumstances. 

   Agent Gibb's list of rules is much more extensive than Darin's, but then 
again his job is to solve heinous crimes and capture the world's worst 
criminals. Darin's mission is, perhaps, a little narrower and a whole lot 
nicer: to help farmers understand the markets and make better marketing 
decisions.  

   To use Gibb's words: Everyone needs a code they can live by. Darin has a 
similar philosophy, although I've never heard him articulate his rules all 
together, at once, until this morning at DTN University's Master Marketing 
course in Chicago. If I could only tell you how many times I've heard about 
Rule No. 1 or Rule No. 2. In all honesty, I've never been able to keep them 
straight, so I'm going to make you (and me) a little cheat sheet. 

   1) Don't get crosswise in the trend. 

   Some people would also describe this one as "the trend is your friend." But 
if you've read Darin often enough, this is where he often refers to Isaac 
Newton's First Law of Motion in its application to markets: a trending market 
will stay in that trend until acted upon by an outside force. That outside 
force can be a lot of things, like a change in fundamentals or simply a strong 
change in speculative traders' viewpoint. 

   Now, when it comes to looking at trends, Newsom's pretty strict. There are 
short term charts (daily), mid-term charts (weekly) and long term charts 
(monthly). Daily charts can gyrate heavily on news that doesn't fundamentally 
change the markets direction and often show technical signals that don't 
materialize. On the other hand, monthly charts can take too much time to 
reflect a major change. So Newsom likes to look at charts of weekly prices to 
gauge the trend of the market. 

   2) Let the market dictate your actions. 

   While this rule is very simple in concept, Newsom's interpretation is 
structural, taking all of the emotion or attempts to outguess USDA reports out 
of the equation. Farmers need to know how the basis, futures spreads, and 
futures contracts are trending. Futures spreads reveal the position of 
commercial grain traders. A strong carry situation is considered a bearish 
outlook, while a tighter carry is less bearish to neutral and an inverse is 
bullish. 

   The position of noncommercial, or speculative, traders is often revealed in 
the futures market and in the weekly CFTC Commitment of Traders report.

   Newsom created a matrix of market types based on whether commercial and 
noncommercial traders are bullish, bearish or neutral. He then matched them up 
with the best marketing strategy for that market type. Here's a link to the 
presentation he gave today, and the chart is near the end, page 30: 
http://bit.ly/1yYtKOH 

   3) Manage margin risk. 

   "I've seen margin calls be the death of the best marketing plans I've seen 
in place," Newsom said. "By understanding the different types of markets, and 
that each has a different read, we can manage our margin risk by running it 
through different filters." Farmers need to think about price distribution, 
seasonality and market volatility when deciding what kind of strategy they 
apply. 

   Like I mentioned earlier, Newsom's rules are not absolutes. Sometimes there 
are contra seasonal moves or excessive volatility that make a certain strategy 
impractical. And some of the market types are rare and tend to be very 
short-lived, like No. 7 when commercial traders are bullish and speculative 
traders are bearish. In that kind of scenario, it won't be long before one side 
changes its opinion. Most often, speculative traders will come around to 
commercials' point of view, but not always, Newsom said.

   Darin, like Agent Gibbs, stands firmly behind his rules, and only calls them 
"guidelines" when its absolutely necessary to break them. Gibb's rules are much 
broader, and he often refers to them as a code. I'm thankful Darin's are more 
specific.

    (For anyone who would like to look over Agent Gibb's Rules, here's a good 
link: http://bit.ly/1A6NNtq)

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