Printable Page Corn News   Return to Menu - Page 1 2 3 4 5 6
Market Matters Blog           04/25 13:20
Industry Still Seeks Clarification on Implementing SOLAS VGM Amendment
Will There be a Second Harvest of 2015 Crop?
Canadian Pacific Ceases Pursuit of Norfolk Southern Railroad
NGFA Hosts Seminars on 'Far-Reaching' New Feed Safety Rules
A Closer Look at 93.6 MA
Greats Lakes Seaway Open for Business 
STB Announces Procedure to Expedite Rail Rate Cases
Early Spring Brings First Barge to Minnesota While Flooding Returns to Lower 
Warm Winter Keeps Great Lakes Nearly Ice-Free
Warm Weather Gives Early Start to Spring Ritual

Industry Still Seeks Clarification on Implementing SOLAS VGM Amendment

   With just a little over two months remaining before new rules for verifying 
the weight of shipping containers before they are loaded onto cargo ships goes 
into effect, agricultural-product and other shippers still have many answered 
questions about how the new system will be enforced.

   The International Maritime Organization (IMO) is a specialized agency of the 
United Nations responsible for developing and maintaining a comprehensive 
regulatory framework for worldwide shipping. In May of 2014, the IMO amended 
the Safety of Life at Sea (SOLAS) rules to require, as a condition for loading 
a packed container onto a ship for export, that the container has a verified 
gross mass (VGM). 

   Effective July 1, 2016, any shipping container leaving from any port in the 
world must be accompanied by a shipping document signed either electronically 
or in hard copy by the shipper on the bill of lading listing the VGM of a 
container in order to be loaded onto a ship. After that date, it would be a 
violation of SOLAS to load a packed container onto a vessel if the vessel 
operator and marine terminal operator do not have a verified container weight.

   The SOLAS amendment, which will apply globally, provides two methods 
shippers may use to determine the container weight once the container packing 
process has taken place. Method one is weighing the whole container after it 
has been packed. For example, weighing the whole truck and container at 
certified weighbridge and subtracting truck and chassis weight. Method two is 
weighing all cargo and contents of the container individually, and adding those 
weights to the container's tare weight and factor in additional loading 
equipment weight, if any. 

   Shippers, freight forwarders, vessel operators, and terminal operators will 
all need to establish policies and procedures to ensure the implementation of 
this regulatory change. (A freight forwarder, forwarder, or forwarding agent, 
is a person or company that organizes shipments for individuals or corporations 
to get goods from the manufacturer or producer to a market, customer or final 
point of distribution.)

   The problem facing the industry right now is that nobody really knows all 
the answers as to who is responsible for the official VGM. Midwest Shippers 
Association (MSA) Executive Director Bruce Abbe told me, "There is still a 
pretty alarming lack of communication and clarification from the ocean carriers 
on a practical, implementation level as to how this is to happen through the 
supply chain.

   "We are now only 70 days today out from when the rule is to go into effect 
across the globe -- when shippers must file a verified gross mass weight of the 
loaded containers when booking shipping. There is still a pretty alarming lack 
of communication and clarification from the ocean carriers on a practical, 
implementation level as to how this is to happen through the supply chain.

   "It's a pretty fluid situation," said Abbe. "Unless we get some clear, 
doable procedures in place for executing this, we could definitely see some 
major congestion and disruptions at some ports, and some significant added, 
unexpected costs for shippers. But frankly, there is no reason for this to 
happen. If the carriers just get the systems filing information out there, and 
if they clarify a few procedures and rules (like tolerances) there is no reason 
this can't be accommodated without any problems.  

   "It's important to remember, for the most part shippers are providing the 
key weight information of their container cargo now when submitting their 
shipping instructions," Abbe added.   

   Mike Hajny, vice president of Wesco International, Inc., a hay exporter in 
Ellensburg, Washington, agreed. He told me since they already weigh all their 
cargo at their facility, "It isn't a huge issue for us."

   Hajny added, "One concern is if steamship lines will accept the empty 
container weight printed on the door, or will insist on an actual physical 
weight of the empty container. At this time, it appears they will all accept 
the door weight. If this is the case, the reporting will be a non-issue for us 
given our extensive and detailed database system. This will require another 
layer of data reporting to steamship lines, but it appears it will be 
manageable for us."


   According to IMO SOLAS guidelines, the new SOLAS amendment spells out 
clearly that the shipper of a container shall ensure the verified gross mass is 
stated in the shipping document. "The shipping document shall be signed by a 
person duly authorized by the shipper and submitted to the master or his 
representative and to the terminal representative sufficiently in advance, as 
required by the master or his representative, to be used in the preparation of 
the ship stowage plan."

   The amendment clearly states that if the shipping document, with regard to a 
packed container, does not provide the verified gross mass and the master or 
his representative and the terminal representative have not obtained the VGM of 
the packed container, it shall not be loaded onto the ship.

   Abbe told me there is "implied liability" in these rules that would seem to 
put that liability all on the shippers. "The shippers have always been prepared 
to submit the weight of their cargo (we do now) ... but don't feel we should 
have to submit (have liability) for the combined, added weight of the container 
equipment ... which the carriers own," said Abbe. "Testing has shown that the 
posted "TARE weight" on the sides of containers are often off from actual 
weight. The equipment often has been repaired changing actual weight, or it 
just wasn't accurate. While that may seem like what should be a minor 
difference, the carriers simply haven't specified any acceptable tolerance 
levels here in the U.S."   


   Most ag shippers will use "method 2" set by the IMO, Abbe said, whereby they 
determine the weight of their cargo and add in the weight of the container and 
submit the combined VGM. Abbe said the carriers should be doing this themselves 
but "don't expect it; they'll keep the onus on the shippers if they can."

   "For many grain, soy and DDGS export container shippers, it ought to be 
relatively easy to submit a 'verified' cargo weight because ag/grain elevators 
and facilities use a certified weighing scale, already," said Abbe. "Not all 
other container shippers have this to use." Abbe added, "Identity preserved 
(IP) soybean exporters like many MSA members that load bags or super sack 
totes, also know the weight of their cargo now. When they load them at their 
plant, they're sure of what they load."

   However, Abbe noted that bulk grain, DDGS, and soy exporters that ship rail 
cars to the coasts where it is transloaded into containers, face some added 
challenges. "The actual container is loaded by someone else, a logistics 
service provider. So, since the shippers are to be held responsible -- but 
someone else is loading it -- I see a likely need for some amended language in 
service contracts to clarify these matters. This is one of big concerns; such a 
lack of information on how to implement this so close to deadline."

   "Our MSA grain transloader members also have scales and can and do provide 
weights now in existing processes. But, again, what constitutes 'verified' in 
their eyes has folks concerned."

   For most grain container shippers, the max weight is determined by federal 
highway trucking weight limits, and those are well below what the max is for 
the ocean carriers and railroads. "But for some who may have their grain loaded 
near a rail ramp or port that may be in a 'heavy weight' trucking corridor, 
they will need to make sure they are within the allowed weight levels. No one 
should be overloading -- now or after July 1. But terminals now do check 
weights and at times catch and reject some, as they should," Abbe said.

   What are the tolerances? "There hasn't been any announcement of recommended 
tolerances yet that I am aware of for the U.S.," said Abbe. "Ag products, grain 
in containers, chilled products, often will see small weight changes for 
moisture that can develop while in route in containers when going through rain, 
humid or dry conditions. 

   "Hong Kong, the U.K., and Japan have set a plus-or-minus 5% tolerance level, 
while India has adopted a weight tolerance of plus or minus 200 kilograms (441 
pounds), according to the Journal of Commerce," added Abbe. "That would be 
considered very doable here for ag shippers. But no indication yet."

   For anyone unaware of all this and then sends containers that arrive at the 
terminals without a VGM filed on July 1, there does not seem to be any 
consistency or clarity as to what will happen. "And, it appears to be different 
at different ports," Abbe said. "We know it will be a "No VGM/No load" 
situation; the container won't be loaded on the vessel.

   "Some port terminals have said they'll stop the containers at the gate if 
they don't have a VGM. So the trucker and shipper/forwarder will have to figure 
something else out. Take it somewhere undetermined or figure out how to get a 
verified weight done and submitted. Other ports have said they'll let the 
container in and will hold it somewhere on the side for a period of time. There 
are likely demurrage costs coming in those situations; notable cost penalties," 
said Abbe.

   "Our concern at this point is that we are getting too close to the deadline 
time for these procedures to not only not be communicated to the whole supply 
chains that serve these carriers, but also to not have their actual 
implementation procedures put in place." Abbe told me that according to the 
American Shipper poll, nearly 60% indicated they did not understand how to 
comply with the VGM rule.

   "We are expecting most carriers will enable an electronic data information 
(EDI) system to be put in place. At least three software providers for shipping 
documentation filings that freight forwarders use are developing VGM filing 
means. And carriers presumably will offer something like this in their own 
booking systems, but it hasn't come out yet."

   Abbe said that an MSA forwarder member told him this past week that he has 
asked eight carriers when their systems for VGM filings will be out, and they 
all said, "When we know, we'll let you know."

   A friend of mine who brokers ag containers told me that, basically, the new 
regulation is another layer of reporting and time requirements. He said that 
when you add it to security requirements and the compliance to the new FSMA 
rules, it all conspires to make things more difficult to export. He told me, "I 
am glad I am getting close to retirement."

   Mary Kennedy can be reached at 

   Follow her on Twitter @MaryCKenn

Will There be a Second Harvest of 2015 Crop?

   Since it's my job at DTN to watch and analyze basis moves, I have been 
curious as to how much grain is left on farm and when it may move. If it all 
moves at once, basis would likely drop like a rock and transportation could 
become problematic. Railroads have furloughed workers and parked locomotives 
and cars because demand has dropped due to lack of steady grain movement since 
last fall.

   I reached out to some elevator managers in South Dakota and North Dakota for 
their insight as to how much grain is not sold and also if they believe, as I 
do, that we will see a "second harvest." I have seen it happen in other years 
when harvest was bountiful and low prices caused the producer to keep his crop 
at home until the following summer when he had to make room for the next batch 
of new crop.

   Tim Luken, manager of Oahe Grain in Onida, South Dakota, told me, "As far as 
crops in the bin, I say we are 65% to 70% full in our area. Some of that is on 
delayed price (DP) contracts. There are still covered corn piles that haven't 
been touched since harvest and even some bagged wheat at a few elevators. These 
bags were filled last harvest to make room in the bins for corn."

   In February, Jerry Cope, who does the grain marketing for Dakota Mill & 
Grain, Inc. in Rapid City, South Dakota, told me, "Farmers acknowledge that 
most bins are full, or near full, but low prices have kept them at bay. That 
said, we are seeing signs of resignation to having to trade the market at hand 
rather than the one they want. Our stocks in western South Dakota are mostly 
wheat, sunflowers, millet (other birdseed) and some corn."  

   This past week, Cope told me, "We agree with the latest NASS data of just 
over 50% left in store in South Dakota. The old benchmark for South Dakota 
farmers was to carry 1/4 to 1/3 from year to year. Recent years' production has 
been 105% to 110% of storage capacity. Add in that farmers are saying that with 
tighter cash flow less farm storage will get built this year and the takeaway 
is something has to give. Selling and farm movement has picked up in the last 
30 days and we look for it to continue right up until harvest."

   An elevator manager in northeast South Dakota told me Thursday that he 
thinks a lot of soybeans were sold on the latest rally. It wasn't necessarily 
physical grain movement, except for the little bit ahead of planting, but more 
a change in ownership with delayed price bushels getting priced and/or forward 
contracts being written for summer delivery. He told me, "On this last leg up 
especially, we noticed soybean basis widen out substantially for old crop and 
new crop."  

   As for corn, he told me that there was still plenty left to sell and that he 
"heard anecdotally" that some ethanol plants are short corn to grind in the 
next month. He said his best guess was that about 20% of old-crop soybeans were 
unpriced, but unpriced corn was still in the neighborhood of around 40% to 50%. 

   The picture is much the same in North Dakota. An elevator manger in eastern 
North Dakota told me there is 30% to 35% of last year's wheat still around and 
50% to 60% of last year's wheat left in the western part of the state. There is 
25% to 30% of last year's beans left and 35% to 40% of last year's corn. He 
told me he, "didn't know where we will go with it this summer; wheat, corn, 
soybeans. I'm not sure the farmer understands how ugly basis can get," he added.

   A manager in the same area told me he doesn't think the second harvest is 
coming, but there will be increased grain movement in June/July but not a 
complete exodus. He said he didn't think farmers will sell until they have to 
and he didn't feel that time was here yet.

   He pointed out that the industry has done an unbelievable job of bending 
toward the farmer's financial needs by offering free storage on grain; offering 
interest-free advances on that grain and giving "no payment for six months" 
terms on inputs -- seed, fertilizer, chemical. He said the Bank of North Dakota 
is offering $300 million for working capital shortfalls and some lenders are 
rolling last year's operating note into this year's.

   A grain buyer in western Minnesota who also covers eastern North Dakota told 
me he thinks farmers are still holding over 50% of the corn, 40% of the spring 
wheat and 20% of the soybean crop. He noted it is hard to be certain because 
there is a lot of crop hauled to town on free DP or on unpriced basis 
contracts. He told me, "Many of the basis contracts have been rolled numerous 
times." But he added that with the recent 10-cent jump in corn, he did see more 
corn priced. He is in agreement with a few others that I have talked to in that 
he too isn't sure where all the corn and wheat will go if it moves at one time.

   In the northern part of Minnesota, a manager told me that they have 20% to 
30% of crop left to move off the farm. He said they had good movement of grain 
to the elevator this past winter when everyone was offering free DP on wheat 
and soybeans. Barley stocks in the country might be a little higher, he said, 
and anyone holding open market malting barley (not pre-contracted) has no real 
option to get rid of it at this time and probably not in the future. He 
believes there will be a second harvest as soon as seeding is completed.

   USDA March 31 On Farm Stocks

   In the March 31 Grain Stocks report, USDA reported that 4.34 billion bushels 
of corn were stored on farms as of March 1, down 1% from a year earlier. Among 
those are Illinois reporting 580,000 bushels of corn remaining on farm; Iowa 
on-farm corn stocks were at 930,000 bushels; Nebraska reported 530,000 bushels 
and Minnesota was at 670,000 bushels and Indiana reported 270,000 bushels of 
corn on farm. Since the report, the DTN cash index has gained 21 cents and 
those numbers have likely moved lower. However, in my opinion, there is still 
plenty of corn to move or price before the fall harvest. 

   Soybeans stored on farms are estimated at 728 million bushels, up 19% from a 
year ago as of March 1. Iowa reported that 155,000 bushels were stored on farm; 
Illinois reported 118,000 bushels and Minnesota reported 99,000 bushels. Those 
numbers are likely lower after the strong soybean rally we have seen recently. 
Since March 1, the DTN cash index has gained 90 cents per bushel. 

   As far as wheat, the USDA reported on-farm stocks are estimated at 320 
million bushels, up 15% from March 1, 2015. As far as durum stocks, USDA 
estimated on-farm stocks, at 16.7 million bushels, up 3% from March 1, 2015. 
Since March 1, the DTN cash index for HRW has only gained 2 cents per bushel as 
export demand has been dismal. The DTN cash index for spring wheat has gained 
20 cents and U.S. durum prices have been moving higher as mills report that 
Canada is "low on milling durum." 

   DTN Canadian Grain Analyst Cliff Jamieson said "Current Canadian government 
forecasts suggest we will end with a one million metric ton carryout, just 
slightly higher than last year's 956,000 metric ton. We're currently well ahead 
of the pace to reach our export forecast (by 240,000 mt), so I believe ending 
stocks will be even tighter than forecast." Jamieson also told me that he 
believes that carryout could be largely high fusarium stocks since farmers had 
a chance to sell their milling quality durum at good prices since harvest 2015.

   History tells me that this could be another year where we may see summer 
movement of grain that might rival a fall harvest. Even if farmers continue to 
price out corn and soybeans, they will likely not move it until late May-June, 
because they will be busy in the fields.

   Mary Kennedy can be reached at

   Follow her on Twitter @MaryCKenn

Canadian Pacific Ceases Pursuit of Norfolk Southern Railroad

   Calgary, Alberta-based Canadian Pacific Railway Ltd. on Monday announced it 
was terminating its efforts to merge with Norfolk Southern Corp. Canadian 
Pacific had pursued the merger in an attempt to create a North American 
railroad that would stretch from Canada's west coast to the Gulf of Mexico and 
Atlantic Ocean in the U.S.

   In a statement on the company's website, Canadian Pacific said its decision 
included "the withdrawal of a resolution asking NS shareholders to vote in 
favor of good-faith negotiations between the two companies."

   The company went on to state that, at this time, Canadian Pacific has no 
further plans for financial offers or meetings with the NS board of directors.

   "We have long recognized that consolidation is necessary for the North 
American rail industry to meet the demands of a growing economy, but with no 
clear path to a friendly merger at this time, we will turn all of our focus and 
energy to serving our customers and creating long-term value for CP 
shareholders," said Canadian Pacific CEO E. Hunter Harrison.

   The resolution CP sent to Norfolk Southern shareholders and then later 
withdrew is likely the very thing that sent the possibility of a merger 
spiraling downward.


   On March 3, CP filed a petition with the U.S. Surface Transportation Board 
for declaratory order concerning CP's interest in buying the Norfolk Southern 
(NS). In the petition, CP stated they were pursuing a merger with NS, which had 
refused CP's overtures based in large part, on its assertion that the Surface 
Transportation Board would not approve CP's proposed voting trust structure. 

   "This assertion appears to be intended to discourage stockholder support for 
a CP-NS meeting to discuss the benefits of a merger, and thus its mere presence 
shields NS's current management from their own stockholders by creating the 
impression that the regulatory process creates insurmountable obstacles to any 
transaction," Canada Pacific stated in its petition. "A declaratory ruling from 
the board providing guidance would remove such uncertainty, and thus leave 
stockholders free to make decisions about the efficacy of further meetings 
based on the potential benefits of a merger, not on ersatz regulatory concerns."

   Soon after the petition was filed, opposition grew louder and many groups 
responded to the STB, asking them to allow interested parties 45 days to reply 
to the March 2 petition. 

   At the JPMorgan Aviation, Transportation and Industrials Conference on March 
9, Canadian Pacific CEO E. Hunter Harrison was questioned about the CP bid for 
the Norfolk Southern and the filing to the STB. "We're hoping that the 
resolution, whether it's overwhelming or for whatever reason, would cause them 
to have second thoughts, and maybe they would sit down and talk to us. As they 
sit down and talk to us, and we still can't agree, and they decide they don't 
want to do a deal, then we're closing shop and we're going to Calgary, and 
we're going to run a hell of a railroad in Western Canada and see what happens 
to the North American network, and reward some shareholders and have some fun. 
We don't have to do this deal. I mean, look, Alberta beef is good, but we just 
got some gravy we thought was even better. Let's make it even better. But if 
they don't want gravy on their steaks, then fine," said Harrison.

   On March 10, the STB published a decision stating that, "Replies will be due 
by April 8, 2016, and should address the merits of CP's petition. CP will be 
permitted to file a rebuttal by April 13, 2016."


   Since Dec. 7, 2015, a number of stakeholders had submitted correspondence to 
the STB about CP's pursuit of the NS. Those submitting comments included 
members of Congress, state and local officials, shippers and members of the 
public. While all responses to the proposed merger have not been negative, 
these latest responses may have been the final blow to the deal.

   An example of one of the responses opposing the merger was a statement 
released by U.S. House Transportation and Infrastructure Committee Chairman 
Bill Shuster, R-Penn., on April 5: "I have closely followed Canadian Pacific's 
attempts to merge with another railroad over the past several years, and after 
looking at the merits of the current proposal to merge with Norfolk Southern, I 
do not believe it is in the best interests of the U.S. freight transportation 
system, railroad employees, rail shippers, and the short line railroads."  

   "A strong, healthy, and well-functioning freight rail system is critical to 
the movement of goods in this country. However, CP's pursuit of a merger over 
the last two years has done nothing but create uncertainty in the rail 
industry, and there continues to be no clear path forward for such an 
arrangement," Shuster said. "I have expressed my concerns to the appropriate 
federal agency, and I believe it is time for all parties to move on from 
hypothetical merger proposals and focus on improving the transportation of 
goods and products to help grow the American economy."

   On Thursday, April 7, the United States military filed a response to the STB 
saying, "It is too early to determine whether either a CPRL+NSR merger itself, 
or a downstream merger involving other major railroads, would degrade national 
defense. However, the potential certainly exists for either the CPRL+NSR merger 
or a downstream merger to adversely affect national defense. Therefore, it is 
critical that no common control of CPRL and NSR occur prior to the board ruling 
that such common control, and the merger that cements it, is permissible. Such 
a ruling should certainly consider the effects of both the CPRL+NSR merger, and 
any resultant downstream mergers, on national defense." (

   On Friday, April 8, the U.S. Department of Justice filed an 11-page reply to 
the CP petition for a declaratory order saying, "The STB should reject the 
proposed voting trust structure because it risks altering the competitive 
landscape between the CP and NS and indeed the entire rail system in a way that 
could not be reversed if the STB rejects the merger. We believe that this 
voting trust would create unlawful control violations and would be inconsistent 
with the public interest." (

   I have read through many of the responses provided to the STB concerning the 
Canadian Pacific's pursuit of Norfolk Southern. I have also spoken to various 
CP grain elevator customers over the past year about the merger proposal, and 
some expressed their concerns with one word: "monopoly." Shippers on the CP 
have also expressed concerns that rail rates would increase if a merger were to 
go through and wondered if service may also be negatively affected. Meanwhile, 
shippers on the Norfolk Southern railroad made it very clear in the many 
comments to the STB that they were concerned Canadian Pacific may change the 
infrastructure of NS and have a detrimental effect of those states' agriculture 

   I would agree with their concerns about service changes, especially on the 
Norfolk Southern railroad. The possibility of rail rate increases was a strong 
possibility had the merger gone ahead. Grain prices have dropped significantly 
since harvest 2015. And while rail service has improved throughout the U.S. 
since 2014, the last thing grain shippers need right now is the fear of 
increased costs. 

   Here is a link to all correspondence sent to and from the STB since December 

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

NGFA Hosts Seminars on 'Far-Reaching' New Feed Safety Rules

   Several national and state groups are working to help U.S. grain facilities 
comply with new rules for the handling, transportation and storage of food and 
animal feed that are part of the Food Safety Modernization Act. 

   The National Grain and Feed Association (NGFA) along with the Minnesota 
Grain and Feed Association (MGFA) and the Minnesota Department of Ag (MDA) 
recently hosted a series of regional seminars in Minnesota to educate industry 
members on the far-reaching new feed safety rules being promulgated by the Food 
and Drug Administration (FDA) to implement the Food Safety Modernization Act 

   The three, full-day seminars were part of NGFA's ongoing FSMA education and 
training efforts. The NGFA, in cooperation with state feed regulatory agencies 
and affiliated state and regional associations, has several more seminars 
scheduled in the coming weeks and will continue to add more seminars throughout 
the country.

   NGFA Senior Vice President of Feed Services David Fairfield is leading these 
sessions with NGFA Feed Manufacturing and Technology Committee Chairman Matt 
Frederking, vice president of regulatory affairs and quality at Ralco Nutrition 
in Marshall, Minnesota.

   Fairfield told the over 150 seminar attendees in St. Cloud, "feed is food" 
is the new paradigm. He said FSMA rules will apply to facilities required to 
register as a "food facility" with FDA under Bioterrorism Act requirements. 
Feed mills, grain elevators, grain processors that manufacture, pack process or 
hold food for humans or animals must register with the FDA. He added, "Farms 
(operations meeting FDA's definition of a 'farm') are exempt."

   Under federal regulations, a farm is defined as "a facility in one general 
physical location devoted to the growing and harvesting of crops, the raising 
of animals (including seafood), or both. Washing, trimming of outer leaves of, 
and cooling produce are considered part of harvesting." The definition 
continues to define what the "term farm" includes:

   Fairfield explained that, "The farm definition includes operations under one 
management devoted to the raising of animals that manufacture feed so long as 
the feed is consumed on that farm or another farm under the same management; 
e.g., feedlots, laying operations where hens are fed on farms under the same 
management." He noted that the "Current definition is size-neutral; FDA says 
this is a 'gap' they intend to address." 


   "The FDA final rule current good manufacturing practice (CGMP) regulations 
and preventive controls for animal food is a complex rule," said Fairfield. 
"Facilities 'solely engaged' in storing grain and oilseeds are exempt from 
requirements to implement CGMPs and preventive controls; different treatment 
for elevators handling 'fruits' [i.e., lentils, kidney beans, pinto beans, lima 
beans, coffee beans, cocoa beans, peanuts, tree nuts and seeds for direct 
consumption (e.g., sunflower seeds)." 

   Elevators solely engaged in storing, handling such "fruits" are exempt from 
CGMP requirements, but not exempt from the preventive controls and supply chain 
program requirements. FDA, however, will issue special regulations if it is 
necessary to cover these excluded operations. Here is a link to the FSMA Final 
Rule for Preventive Controls for Animal Food:

   Preventive control rules are defined as those risk-based, reasonably 
appropriate procedures, practices, and processes that a person knowledgeable 
about the safe manufacturing, processing, packing, or holding of animal food 
would employ to significantly minimize or prevent the hazards identified under 
the hazard analysis that are consistent with the current scientific 
understanding of safe food manufacturing, processing, packing, or holding at 
the time of the analysis. 

   Frederking explained that, "Hazard means any biological, chemical (including 
radiological), or physical agent that has the potential to cause illness or 
injury in humans or animals. Known or reasonably foreseeable hazard means a 
biological, chemical (including radiological), or physical hazard that is known 
to be, or has the potential to be, associated with the facility or the animal 

   Here are three reasons why grain elevators will need to comply with 
preventive control rules: aflatoxin, vomitoxin, fumonisin. The exemption for 
preventive control refers to facilities "that are solely engaged in the storage 
of unexposed packaged animal food that does not require time/temperature 
control to significantly minimize or prevent the growth of, or toxin production 
by, pathogens." 

   Here is a reminder of toxin levels unacceptable by the FDA in grain used for 
feed. "FDA policy prohibits blending different lots of grain to reduce the 
mycotoxin level in the resulting lot."

   -- Aflatoxin (action levels): 20-300 ppb, depending on commodity and species 
to which fed;

   -- Vomitoxin (advisory levels): 5-30 ppm, depending on commodity and species 
to which fed; 5-10 ppm in total ration;

   -- Fumonisin (guidance levels): 5-100 ppm, depending commodity and species 
to which fed; 1-5 ppm in total ration.


   The Sanitary Transportation of Human and Animal Food proposed rule 
establishes requirements for vehicles and transportation equipment, 
transportation operations, training, and recordkeeping. For example, shippers 
would be required to inspect a vehicle for cleanliness or contamination prior 
to loading food that is not completely enclosed by its container. Operators of 
motor vehicles, railcars, and other equipment used in food transportation would 
be required to establish written procedures, subject to record keeping 
requirements, for cleaning their vehicles and transportation equipment, 
according to the FDA. At the meeting in St. Cloud, Fairfield said, "This rule 
will apply to feed mills and grain elevators and will impact our industry as 
well as truck and rail." The final rule was published April 1. 

   MGFA said: "The transportation rule, first proposed in January 2014, is the 
second-to-last regulation that needs to be finalized under the Food Safety 
Modernization Act. The proposed rule outlines food safety practices for 
shippers, receivers and carriers who haul food by truck, rail or ocean vessel." 
The final rule is expected to set requirements for equipment, sharing 
information, training and record-keeping in order to prevent contamination. 
"Pay attention," said Fairfield. Here is a link to the rule:

   Bob Zelenka, executive director of MGFA, told me, "MGFA meetings over the 
next year will obviously be heavily weighted towards the FSMA and, to date, the 
focus has clearly been on feed mills and not as much on grain elevator 
implications. That will certainly change going forward." Zelenka said that the 
Sanitary Transportation rule "will certainly affect grain elevators as much as 
and maybe more than it will affect feed mills."

   I can only imagine how hard it would be to try and decipher the over 600 
pages of the entire FSMA Act. Thankfully, with the seminars conducted by the 
NGFA and other state grain and feed organizations and state ag departments, 
there is relief in sight. Check with your local organization or to find out if there are training sessions offered in 
your state and/or to keep track of the latest information about the FSMA.

   You can ask questions via the FDA "help line" as well. The FDA FSMA 
Technical Assistance Network (TAN) is now operational and providing technical 
assistance to industry, regulators, academia, consumers and others regarding 
FSMA implementation.

   Frederking told the crowd of over 150 attendees at the St. Cloud seminar, 
"We need to get over the fact that we think FSMA is going away; there are now 
dates in black-and-white that need to be complied with."

   Here is a link to some key FSMA implementation dates: 

   Mary Kennedy can be reached at

   Follow Mary Kennedy on Twitter @MaryCKenn


A Closer Look at 93.6 MA

   USDA's estimate that 93.6 million acres of corn will be planted in 2016 
caught most by surprise on Thursday and was over 2 million acres above the 
highest guess in Dow Jones newswire's pre-report survey. Finding the number too 
big to believe, I dug deeper and found some helpful insights.

   First, it should be noted that total acres for corn, soybeans and wheat were 
estimated at 225.4 million, virtually the same as 2015. The 5.6-million-acre 
increase in corn was made possible by a 5-million-acre reduction in wheat and a 
half-million-acre reduction in soybeans. Theoretically, there is room for 
corn's increase, but is it correct to believe that all wheat acres will go to 
corn, especially as we have heard about the increased profitability of pulses 
like lentils and chickpeas?

   Going down USDA's state-by-state list of planting estimates, we see that the 
numbers for Illinois and Iowa were increased by 400,000 acres each. South 
Dakota and Nebraska were increased by 300,000 acres each and Indiana by 150,000 
acres. Increased plantings in those high-yield states are definitely bearish. 

   I also can't find fault with a 300,000-acre increase in the estimate for 
Missouri after their flooding problems of 2015. However, a 330,000-acre 
increase in the estimate for Louisiana is hard to believe in the face of this 
spring's flooding. I also have to wonder about the top two increases on USDA's 
state list: 650,000-acre gains for both Kansas and North Dakota. 

   In 2015, North Dakota's corn yield averaged 128 bushels an acre while Kansas 
came in at 148 bushels. Both of these states on the outer fringe of the Corn 
Belt yielded less than the national average of 168.4 bushels an acre, and it is 
fair to wonder about their potential in 2016. The latest U.S. Drought Monitor 
shows both states currently considered abnormally dry with a patch of moderate 
drought conditions in southwestern Kansas. 

   Overall, USDA's corn planting estimate is plausible, but only as long as we 
understand that not all the new acres are necessarily high-yielding ground. The 
most bearish aspect of Thursday's report is that it has been branded in our 
minds and will dominate the numbers we talk about until more is known about the 
new crop. For corn growers hoping for a better price in 2016, USDA's June 30 
report and summer weather can't get here soon enough.

   Todd Hultman can be reached at 

Greats Lakes Seaway Open for Business 

   It was a busy week for the Great Lakes as lakers moved into position to 
officially open the 2016 shipping season. Lakers are ships constructed for 
carrying cargo on the Great Lakes. 

   It all started on March 21 as the St. Lawrence Seaway opened two weeks 
earlier than normal with no ice hindering ships thanks to the warm weather. 

   "We certainly welcome the warmer weather," Terence Bowles, president and CEO 
of The St. Lawrence Seaway Management Corporation (SLSMC), said in a press 
release. "A return to an opening in the third week of March provides our 
clients with the opportunity to move cargo in a timely manner, and make the 
most of the navigation season," 

   In terms of the outlook for 2016, Bowles noted that a lower Canadian dollar 
may spur more Canadian exports this year. "The combination of a rebound in 
Canadian manufacturing activity, a solid U.S. economy, and the prospect of more 
trade with Europe brings about several catalysts which may boost Seaway 
tonnage," he said. 

   In the Twin Ports of Duluth/Superior, the Edwin H. Gott departed from its 
winter berth at the Clure Public Marine Terminal at 4 a.m. beneath Duluth's 
famed Aerial Bridge to the CN Dock in Two Harbors to fuel and load iron ore 

   In a press release, Adele Yorde, public relations director for Duluth Seaway 
Port Authority, said, "From the list of vessels heading upbound through the Soo 
Locks, it looks like the port will welcome its first two inbound lakers over 
the weekend with anticipated arrivals of the Stewart J. Cort and the Burns 
Harbor on Saturday."

   "The first Canadian laker should arrive early next week," Yorde said. "It's 
difficult to predict with any certainty at this point in time the arrival of 
the Port's first saltie, which must still cross the Atlantic and transit the 
full length of the waterway." 

   Yorde told me that it looks like the first saltie may arrive around April 4 
to open the grain shipping season. 

   Shortly after midnight on Friday, March 25, the 858-foot Roger Blough was 
the first freighter to enter and pass through the Soo Locks (sometimes spelled 
Sault Locks, but pronounced "soo"). The four Soo Locks operated by the United 
States Army Corps of Engineers are the Davis, Sabin, MacArthur, and Poe locks; 
currently, all ships use the larger Poe (1,200 feet) and MacArthur (800 feet) 

   According to the USACE, the location of the Soo Locks provides a critical 
infrastructure link for ship owners and ports on both sides of the border. "As 
a gateway for commerce, the locks allow for the movement of essential raw 
materials to transit from Lake Superior to the lower Great Lakes," according to 
USACE. "Four thousand commercial vessels transit the locks each year carrying 
more than 80 million tons of iron ore, low-sulfur coal, grain, limestone and 
breakbulk cargoes from or destined for domestic and foreign ports."

   "The opening of the Soo Locks reminds the shipping community that another 
year has passed for our nation's aging infrastructure, which highlights the 
need to protect the Soo by twinning the Poe Lock," Vanta Coda, executive 
director of the Duluth Seaway Port Authority, stated in a press release by the 
Great Lakes Seaway Partnership. 

   On Feb. 17, 2016, U.S.-based Great Lakes Maritime Task Force warned in its 
2015 annual report that relying on the single Poe-sized lock to connect Lake 
Superior to the lower lakes and seaway is one of the top issues threatening the 
future of shipping on the Great Lakes.

   Tim Heney, CEO of the Thunder Bay Port Authority, the largest grain export 
port on the lakes, stated in the press release that the Soo Locks are important 
to the port since 100% of their trade moves through the locks down to the 
Welland Canal and out through the seaway. "The majority of our grain leaves the 
port on lakers for transloading onto ocean vessels in Quebec destined for 
customers in Europe, the Middle East, Africa, and Latin America. We also load 
ocean vessels for direct export," added Heney.

   "The opening of the Soo Locks is, for us, the opening day of baseball," Coda 
said. "It's the excitement of a new season -- the anticipation of seeing ships 
underway and commerce flowing in and out of the Duluth-Superior Harbor beneath 
the iconic Lift Bridge."

   It is an amazing sight to see the "ladies of the lake" moving in and out of 
the ports. If you have not witnessed it, put it on your bucket list. For a 
taste of what you would see and hear, watch this video of the 1,000-foot Edwin 
H Gott starting off the 2016 shipping season for Duluth, courtesy of 

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

STB Announces Procedure to Expedite Rail Rate Cases

   Grain shippers will have the opportunity next month to share ideas with the 
U.S. Surface Transportation Board on how to improve the process for shippers to 
challenge railroad freight rates they believe are unreasonable. 

   On March 9, the U.S. Surface Transportation Board announced final rules for 
revising the procedural schedule for certain large railroad rate cases. The 
action was taken to comply with the Surface Transportation Board 
Reauthorization Act of 2015, which called for revising regulations that set the 
procedural schedule for "stand-alone cost," or "SAC" case handling.

   On March 15, the STB announced that its staff will hold informal meetings 
with stakeholders during April 2016 to explore and discuss ideas to expedite 
rate reasonableness cases. "These informal discussions will be used to enhance 
STB staff's perspective on strategies and pathways to expedite and streamline 
rate cases, especially SAC cases where the board's time to analyze the record 
and issue a decision has been substantially shortened," stated the press 

   "These meetings will be a valuable opportunity for STB staff and interested 
parties to talk openly and candidly about our procedures for handling rate 
cases, and to brainstorm ideas for improving our processes and expediting case 
resolution," STB Chairman Daniel R. Elliott said in the release. "Additionally, 
these meetings will further my efforts to make the board more available and 
accessible to our stakeholders." 

   The STB announced meeting times will be available Tuesdays, Wednesdays, and 
Thursdays between 10 a.m. and 2 p.m. during April. Interested persons are 
requested to contact the Rail Customer and Public Assistance office 
(202-245-0238) to schedule individual meeting times. Questions about the 
meetings should also be directed to RCPA.


   The Surface Transportation Board Reauthorization Act of 2015 was passed by 
the House of Representatives Dec. 10, 2015, following the Senate passage of the 
bill on June 18, 2015. The legislation, which was signed into law by President 
Barack Obama, gives the STB the right to initiate investigations of freight 
rail practices that have national or regional significance on its own 
authority, without having to wait for a shipper to first file a formal 

   Section 11 of the STB Reauthorization Act requires the board to "maintain 
procedures for the expeditious handling of rate cases before the agency. 
Accordingly, timelines in SAC rate case proceedings found at 49 C.F.R. ? 1111.8 
have been significantly shortened, including limits on the time allowed for 
discovery and the time allowed for development of the evidentiary record," said 
the STB. The board's final rules can be found at this link:


   A public hearing was held June 10, 2015, to explore the issue of making the 
STB's rate case process more accessible to grain shippers and to create a more 
streamlined, cost-effective and workable process for grain shippers to use to 
challenge unreasonable rates. The National Grain and Feed Organization (NGFA) 
urged the STB at that hearing to issue a proposed rulemaking to establish a new 
process that agricultural commodity shippers could use to challenge freight 
rates they believe are unreasonable or unlawful under the Staggers Rail Act of 

   NGFA said in a press release on June 11, 2015, that NGFA Rail 
Shipper/Receiver Committee Chairman Kevin Thompson, assistant vice president 
and transportation lead for Cargill Inc., Minneapolis, Minnesota, told the 
agency at the June 10 hearing that its current rate-challenge appeal procedures 
"are simply inappropriate and unworkable for agricultural commodities because 
they are too complex and costly compared to the potential recover of rate 

   NGFA Board member Bruce Sutherland, vice president of Michigan Agricultural 
Commodities (MAC), presented real-world examples to the STB of current 
rate-pricing practices by a major Class I rail carrier. "These increases in 
rail rates are several orders of magnitude greater than typically thin 
grain-trading margins," Sutherland said. "Consequently if we are to be 
price-competitive in selling commodities to domestic user and foreign buyers, 
we inevitably have to try and pass on the cost impacts we can't absorb back to 
farmer customers. Seldom are we able to pass such costs forward to the ultimate 
buyer, as they have alternative sources of supply in the grain market -- which 
is a truly competitive market." 

   To see the June 15, 2015 story about the hearing and responses/reactions 
from both shippers and railroads, see 

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

Early Spring Brings First Barge to Minnesota While Flooding Returns to Lower 

   Upper Mississippi River shippers celebrated the opening of the 2016 shipping 
season over the weekend with the arrival of two tow boats. There was no cause 
for celebration on the Lower Mississippi, though, with the river at or near 
flood stage and likely to cause shipping delays. 

   On Saturday, March 12, the first tow of the season, the Ronald E. 
Wagenblast, was making its way through the thin ice on Lake Pepin. Located 60 
miles downriver from St. Paul, Minnesota, Lake Pepin is the widest naturally 
occurring part of the Mississippi River. Pepin is the last roadblock for barges 
waiting to come upriver to open the spring shipping season.

   Close behind was a second tow, the Jonathan Erickson. Both tows were pushing 
barges upriver to the St. Paul, Minnesota, District and arrived at Lock and Dam 
2 on March 13 in the early morning hours to celebrate the opening of the 2016 
shipping season.

   This year, Pepin had an early melt. On March 9, the U.S. Army Corps of 
Engineers said the thickest ice was 10 inches and that they no longer would 
continue measurements on the lake since barges can break through ice less than 
20 inches thick. The U.S. Army Corps of Engineers (USACE) said the 10-year 
average for the first towboat to arrive in the St. Paul District is March 24. 
The earliest date for an up-bound tow to reach Lock and Dam 2 was March 4, in 
1983, 1984 and 2000, according to the USACE. The latest start to a navigation 
season since 1970 occurred on April 16, 2014.

   Tows also had to wait for the reopening of Lock and Dam 9 on March 12, but 
nobody could have predicted that Lake Pepin's ice would be nearly gone by now. 
Lock and Dam 9, near Lynxville, Wisconsin, was closed to all navigation traffic 
Dec. 9, 2015, for winter maintenance, but the mild winter allowed for the 
repairs to be completed earlier than scheduled. The Corps originally projected 
reopening the lock March 17.


   On March 10, Louisiana Gov. John Bel Edwards declared a state of emergency 
for the entire state because "a strong upper-level storm system that has caused 
thunderstorms across most of the state, is expected to continue through the 
week and bring heavy rain, flash flooding and damaging winds to areas which are 
already experienced flooding." The storms dropped up to 20 inches of rain in 
parts of the state, causing near-record flooding and forcing a call-up of the 
National Guard to help evacuate thousands of people from their homes. 

   Remember back to early January when the flooding caused the St. Louis Harbor 
to close and caused tow and barges to pile up in the Harbor. Then, as St. Louis 
started to recover, the trickle-down effect caused slowdowns and closures from 
Vicksburg to New Orleans, which in turn caused tow boats and barges to bunch up 
in the south. 

   On March 2, Tom Russell, Russell Marine Group, told me, "Tow companies have 
been upside-down and out of sync during high water that occurred during January 
and February. The result was a backlog of barges waiting to be hauled. Tow 
boats are now returning to normal traffic patterns and ironing out the delays. 
Most high-water safety restrictions have been lifted in Baton Rouge, but 
dredges are at work in the southwest pass (SWP) due to the high water causing 
excessive silting."

   Less than two weeks after our conversation, the Mississippi River was on the 
rise once again. On Sunday, March 14, the river at Vicksburg was at 42.59 feet 
and was expected to crest at flood stage of 43 feet late evening on March 14. 
The river at Baton Rouge was at 35.12 feet (flood stage is 35 feet) and is 
expected to continue rising until cresting at around 36.5 feet by early 
Wednesday morning, March 16.

   Until the river returns to normal, conditions in the lower Mississippi river 
down to the Gulf will likely cause shipping delays due to high water and 
restrictions once again. Once the river recedes, dredges will likely head back 
to work on the areas where more shoaling occurred due to the flooding.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

Warm Winter Keeps Great Lakes Nearly Ice-Free

   Ice cutters will have an easier job on Lake Superior and the rest of the 
Great Lakes, and shipping could begin earlier than normal on the upper 
Mississippi River thanks to warm weather this winter.

   The ice cutter Alder is currently parked in the Twin Ports as she awaits her 
spring ritual of cutting ice on Lake Superior. She is scheduled to begin 
cutting ice on Monday, March 7. She should have an easier time of it than in 
past years since the ice measurement on Lake Superior as of March 6 is at 12.5% 
versus last year at the same time of 92% and 93.8% in 2014 on the same date. 
Overall, the Great Lakes ice coverage as of March 6 was at 19.7% versus 83.7% 
in 2015 on the same date. 

   According to the Duluth Shipping news via the USCG, "U.S. Coast Guard Cutter 
Alder will commence spring break-out operations in the Duluth-Superior area 
Monday, March 7, 2016. Initially, ice-breaking operations will occur inside the 
Duluth and Superior Harbors. The ice breaking work will expand in coming weeks 
to prepare Two Harbors, Minnesota; Taconite Harbor, Minnesota; Silver Bay, 
Minnesota; and Thunder Bay, Ontario, for commercial ship movements."

   "Unlike the past two winters, this year was unseasonably warm. Regional ice 
cover is not as expansive, nor did it reach traditional thicknesses. The 
forecast for the next seven to 10 days calls for temperatures conducive to 
rapid deterioration of ice. These operations will continue periodically over 
the next few days and weeks to prepare regional waterways for the start of the 
Great Lakes commercial navigation season."

   I asked Adele Yorde, public relations director for the Duluth Seaway port 
Authority, if the 2016 shipping season would open early due to the low ice 
coverage. She told me, "No early open for the 2016 navigation season -- even 
with the low/no-ice conditions. With demand for iron ore so diminished, none of 
the fleets are clamoring to sail earlier than usual. Soo Locks still plan to 
reopen on schedule on March 25 (midnight leading into the March 26). The Locks 
on the St. Lawrence Seaway (Montreal/Lake Ontario section) are scheduled to 
reopen at 8 a.m. on March 23; the Welland Canal is set to open the morning of 
March 21." 

   Once the Seaway opens, oceangoing vessels or saltwater vessels, called 
salties, make their way to Great Lakes destinations, including the Twin Ports 
for grain loading. Last year, on Monday, April 14, the Port of Duluth-Superior 
welcomed Kom, the first saltie to have made full transit of the 2,342-mile 
Great Lakes-St. Lawrence Seaway. Expectations are that we will see the first 
saltie sooner than that in 2016.

   The St. Lawrence Seaway Management Corporation reported that for 2015, 
"Grain volumes on the Seaway amounted to 10.8 million metric tons, one of the 
strongest years in recent memory. The Port of Thunder Bay, the principal point 
of entry for grain into the Great Lakes/Seaway System, reported its second-best 
season in 15 years. Combined with grain being loaded onto ships from other 
ports such as Hamilton, Duluth/Superior and Toledo, agricultural commodities 
have become increasingly important to the Great Lakes/Seaway System."


   The U.S. Army Corps of Engineers, St. Paul District, is reopening Lock and 
Dam 9, near Lynxville, Wisconsin, five days earlier than expected, according to 
an email sent to DTN by Patrick Moes, public affairs for USACE. The lock was 
closed to all navigation traffic Dec. 9, 2015, for winter maintenance. "An 
extremely efficient work crew and mild winter allowed for the repairs to be 
completed earlier than scheduled. The Corps originally projected reopening the 
lock March 17," said Moes.

   Once the lock is open, navigation traffic will be able to move north of Lock 
9. Lake Pepin ice may delay navigation reaching St. Paul, Minnesota, but Corps 
surveyors started measuring the ice thickness on Feb. 17 and will continue to 
do so bi-weekly, reporting the information to navigation officials. With the 
unseasonably warm temperatures blanketing parts of Minnesota, it is likely that 
the river shipping season may get an early start in 2016. Moes said, "The 
earliest that navigation has started in St. Paul is March 4. It has happened 
three times since 1981 -- 1983, 1984 and 2000." 

   In 2015, the motor vessel New Dawn moved through Lock and Dam 2, near 
Hastings, Minnesota, after breaking through Lake Pepin ice on March 25. Once 
Lake Pepin gives up her ice, we will see barges heading north. Ceres Barge Line 
noted that there is a good supply of barges making their way out of St. Louis 
in to the UMR, which is pressuring barge freight in the St. Paul District and 
Middle Mississippi. "Shippers will not have to worry about empties for a bit as 
the empties are plentiful," according to Ceres. 

   Cheap barge freight is good for basis levels, but with a slowdown in demand 
recently, river basis levels have been mostly steady. The Gulf basis was 
stronger last week, as most of the high-water conditions from the recent 
flooding have been lifted. However, Tom Russell, Russell Marine, told me that, 
"The high water did cause excessive silting at SWP, forcing pilots to reduce 
draft down to 42 feet max. There are seven dredges working SWP that will 
continue to work until normal draft of 45 feet or more is restored. Otherwise, 
barge and ship traffic is moving normally in the port."

   "Tow companies have been upside down and out of sync during high water that 
occurred during January and February. The result was a backlog of barges 
waiting to be hauled. Towboats are now returning to normal traffic patterns and 
ironing out the delays." Russell added that, overall, "March river conditions 
currently indicate smooth sailing."

   Here is a link to the March 2 ice measurements: 

   Next measurements will be taken March 9.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn 

Warm Weather Gives Early Start to Spring Ritual

   In some areas, an early spring may bring early load limits on rural roads. 
That could be a problem with so much grain in on-farm storage. When selling 
starts, we could see a lot of it all at once -- a kind of "second harvest -- 
which could be detrimental to basis.

   When the frozen ground thaws in late winter and early spring, some road beds 
-- especially older highways and gravel roads -- become saturated and the 
potential for damage from heavy trucks is high. On Feb. 22, the South Dakota 
counties of Sully and Potter posted "spring" load limit restrictions. This was 
nearly one month early as the recent warm-up is causing frost to come out of 
the ground earlier than normal. The National Weather Service in Sioux Falls 
reported record temperatures on Saturday, Feb. 27, in Mitchell at 69 degrees, 
70 degrees at Huron and Sioux Falls tied a record a 63 and on Sunday 
temperatures reached 68.

   Tim Luken, manager of Oahe Grain in Onida, South Dakota, told DTN it was the 
earliest he had seen load limits come on. "We have lost 98% of our snow," he 
said. When asked if farmers were nervous about the early load-limit postings, 
Luken said, "farmers are still reluctant to haul anything due to low prices." 

   Jerry Cope, who does the grain marketing for Dakota Mill & Grain, Inc. in 
Rapid City, South Dakota, told DTN, "Road restrictions and the predicted 
warm-up will have many thinking of farming and not hauling. South Dakota weight 
limits are based on the number of axles and axle spacing. Trucks with double 
trailers that are properly set up can still haul full 100,000 pound loads over 
seven-ton per axle roads. That will create opportunity for custom trucks, such 
as we have, as farmers do begin to market. However spring thaw, less than 
seven-ton restrictions and soft farmyards will slow movement. The net effect 
could put off grain movement even later and become a harvest before the harvest 
in May and June."

   "In Day County, the highway department reserves the right to put load limits 
of six-tons per axle on March 1, and I think most counties in South Dakota are 
similar," said Ryan Wagner who farms in Roslyn, South Dakota. "Depending on the 
weather, they sometimes put them on right away but most often wait if it's 
cold. This year, it looks like they will likely be put on right away on Mar. 1. 
Since this is an every year occurrence I don't think it will disrupt farmers' 
plans because they are accustomed to it now and plan accordingly."

   Wagner added that he thinks there is a misconception that a lot of farmers 
don't follow those load limits. "The fines are so steep that it just isn't 
worth it and more importantly, we have a vested interest in protecting the 
roads, so I think most everybody is very careful not to be overweight." 


   In his area, Luken said, "Corn is 40% sold and I would call on-farm storage 
at 70% full yet between wheat, corn and sunflowers. Lots to move as each day is 
getting closer to harvest and basis levels are going to get wider yet as we go 
forward. Already see them slipping."

   Stocks in western South Dakota are mostly wheat, sunflowers, millet (other 
birdseed) and some corn, Cope said. "Farmers acknowledge that most bins are 
full, or near full, but low prices have kept them at bay. That said, we are 
seeing signs of resignation to having to trade the market at hand rather than 
the one they want," he added. "Cash flow concerns would lead us to guess that 
there will be less new bin building than in years past. That won't bode well 
for prices or elevator logistics."   

   "There is a lot of corn, beans and wheat to move but I don't really see any 
'panic selling' so to speak just yet. But like you said, with rents coming due 
and spring being a high cash flow time of year, we could see a little of that," 
said Wagner. 

   "One thing I have noted is there seems to be a lot more basis contracts this 
year, so even if we do get a futures rally this spring while farmers are busy 
and/or load limits are in place, I think guys will take advantage of that to 
lock in the futures leg of their basis contracts, which could keep a lid on 
rallies. There are also a lot of elevators that have been offering free DP 
(delayed pricing) for quite a while now, so any rally will likely cause guys to 
price DP bushels they hauled this winter to generate cash."

   I have been talking to elevator managers and farmers elsewhere about the 
sizable amount of grain still sitting in bins and my opinion is that we may see 
a good chunk of it move at one time. Wagner said, "I think you are spot on with 
the "second harvest" hitting around June 1 with all the grain yet to move, 
which could really be negative to basis."   

   South Dakota's load limits can be found at:

   All other affected states can be found at that state's Department of 
Transportation (DOT) websites.

   Mary Kennedy can be reached at

   Follow her on Twitter @MaryCKenn


For more free DTN information sent right to your email each morning - click here to sign up for DTN Snapshot.
Copyright DTN. All rights reserved. Disclaimer.
Powered By DTN