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Market Matters Blog           02/20 13:06
Early Start to Grain Shipping and Planting Season? 
Hard Amber Durum: The Noodle Wheat Faces Challenges
Corn Exports, Please?
Will Latest Executive Order Put the Brakes on Pending Truck Regulations?
Will Latest Executive Order Put the Brakes on Pending Truck Regulations?
STB Pending Rail Regulations: Will New Administration Derail Them?
Mother Nature Unkind to Grain Shippers, End Users, Exporters
DDG Prices Lower
2016 Transportation Review: US River System
China's Final Word on US DDGS Imports: Higher Tariff, Duties

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Early Start to Grain Shipping and Planting Season? 

   Punxsutawney Phil may have predicted six more weeks of winter on Feb. 2, 
2017, but since then, temperatures have been warming in the Midwest. If the 
warm weather continues, we may see an early start to the grain shipping season 
on U.S. waterways this year.

   Ice coverage on Lake Superior and on Lake Pepin is unseasonably light for 
this time of year. Both lakes are key to the grain shipping spring season 
opening, normally in late March or early April. 

   On Feb. 3, DTN Senior Ag Meteorologist Bryce Anderson reported, "The updated 
outlook for February has nearly the whole continental United States in 
warmer-than-average conditions more likely."

   On Feb.17, the NOAA Great Lakes Coastal Forecasting System (GLCFS) reported 
that total ice coverage on the Great Lakes was at 13.3% vs. 20.3% at the same 
time in 2016, with Lake Superior coverage at 5.9% vs. 9.5% in 2016 on the same 
date. The Coast Guard issued a warning that, "Unseasonably warm air 
temperatures will cause frozen waters to melt at an alarming rate and may cause 
misperceptions about Great Lakes water temperatures, which will remain 
dangerously cold, posing safety concerns for anyone venturing onto the lakes." 
Strong winds in recent weeks also have helped reduce ice cover, breaking up any 
ice that had formed.

   The Great Lakes and Seaway Shipping News reported as of Feb. 18, the opening 
of the 2017 navigation season is scheduled to take place on March 20 at 8 a.m. 
with vessel transits subject to weather and ice conditions. Restrictions may 
apply in some areas until lighted navigation aids have been installed. Early 
ship traffic will be limited to a maximum draft of 26 feet, 3 inches in the 
Montreal/Lake Ontario section of the Seaway until the South Shore Canal is 
ice-free or April 15. The maximum draft then increases 3 inches through that 
section and the Welland Canal. The opening of the Sault Ste. Marie locks is 
scheduled for March 25.

   In 2016, the Great Lakes spring shipping season commenced on March 21 as the 
St. Lawrence Seaway opened two weeks earlier than normal, with no ice hindering 
ships thanks to the warm weather. The very first ocean-going vessel (saltie) of 
2016 sailed into the Port of Duluth-Superior beneath the Aerial Lift Bridge on 
April 3, 2016, officially opening the grain-shipping season.

   On Wednesday, Feb. 15 crew members with the U.S. Army Corps of Engineers 
(USACE), St. Paul District took the first of their annual measurements on Lake 
Pepin, finding less ice on the lake than in previous years at the same time of 
year. Lake Pepin is located 60 miles downriver from St. Paul, Minnesota, and 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. It is basically the only "highway" to get to the St. Paul Mississippi 
River District, which is home to many grain terminals that ship barges of corn, 
soybeans and feed grains downriver.

   The Corps reported that the thickest ice on the lake measured 17 inches, 
about 1 mile southeast of Lake City. However, when they went 3 miles north of 
Lake City, they encountered open water. Crew members concluded that "this is 
the least amount of ice they've seen on the lake in the last few years." 
Measurements will be taken every week or two and will be used to decide when 
it's safe for barges to break through any remaining ice and begin the 
navigation season in the northern portion of the Upper Mississippi River. Tows 
will typically move barges through ice no thicker than 10 to 12 inches so they 
don't risk damage to their vessels.

   In 2016, the first tow passed through Lake Pepin to reach St. Paul, arriving 
on March 13. The 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.

   WILL PLANTING SEASON OPEN EARLY IF WARM WEATHER CONTINUES?

   While planting season is not too far away for states such as Texas (corn 
planting started Feb. 17 in south Texas), Arkansas (corn planting started Feb. 
18 in parts of the state) and Mississippi, warm air temperature does not 
necessarily mean that spring planting would start any sooner than normal. Soil 
temperatures at a 2-inch depth should be 55 degrees Fahrenheit by 9 a.m. for 
three consecutive days for good corn germination. Also, in some parts of the 
Midwest, fields may be too muddy as frost leaves the ground earlier than normal 
and continued warm weather speeds that process up. 

   The other key component in deciding to plant early that famers need to be 
aware of, is crop insurance plant dates. Planting dates for corn in the key 
growing states are usually April 6 to April 11 with the latest date being in 
the Northern states. Crops planted before the specified earliest planting date 
will not be eligible for replanting payments.

   Anderson noted in his Midwest moisture forecast on Feb. 13, that a large 
portion of the central and southern Midwest, portions of southeastern Iowa, 
much of Illinois and Indiana, and most of Missouri is quite dry. Precipitation 
since last October is in many parts of this sector, running well under half the 
normal amount. "In fact, almost all of Missouri is in abnormally dry or 
moderate drought stages, according to the U.S. Drought Monitor. In contrast to 
the northern areas, this part of the Corn Belt could use some moisture," said 
Anderson.

   Heading to the Upper Midwest, the scene is much different. The Red River 
Farm Network reported in their Feb. 6 newsletter that, North Dakota Ag Weather 
Network interim director Daryl Ritchison thinks spring will be on the cool and 
wet side of average. "I don't know if we'll get extremely cold or extremely 
wet, but leaning in those two directions, a little cooler and wetter than 
average," added Ritchison. "The last two springs, we've had very little snow. 
We were able to get into the fields with warm, dry and no snow to melt very 
early. This year, there are greater odds of having to wait for the snow to melt 
and it will take a while to get rid of that snow." That could give the 
perception of delayed planting.

   While the warm weather may be a temptation for farmers to start spring field 
work early, much needs to be considered before they take their tractors out of 
hibernation and head to the fields to officially start the 2017 growing season.

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

   Follow Mary Kennedy on Twitter @MaryCKenn

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Hard Amber Durum: The Noodle Wheat Faces Challenges

   Durum is a type of wheat that is very dense and high in protein. 
Approximately 80% of the nation's nearly 100 million bushels of durum wheat is 
grown in North Dakota. One 60-pound bushel makes about 42 pounds of pasta or 
roughly 210 servings of spaghetti. It is often considered one of the most 
nutritionally significant forms of wheat. 

   It is also one of the hardest of the wheat family to protect from Fusarium 
head blight (FHB), a kiss of death for growers. Also called head scab, it can 
produce the mycotoxin DON, also known as vomitoxin. This disease causes 
significant yield loss and reduces quality.

   The 2016 durum crop was hit by FHB and many North Dakota and Montana durum 
growers have been having second thoughts about growing durum again. U.S. Wheat 
Associates reported this past fall that FHB was reported across northern North 
Dakota and in northeast Montana durum area, and the final average DON value for 
durum was expected to be higher than normal in 2016. Humans are not normally 
affected by vomitoxin, unless infected grain is ingested in very high 
quantities. FDA has limits on intake in finished product (i.e., less than 1 
ppm), but even at low levels millers are reluctant when it comes to buying 
infected wheat. Grain infected with vomitoxin can also affect flavors in food 
and processing performance and limit the sale of feed by products produced by 
the milling process. 

   Durum likes dry hot days and cool nights which is why much of the U.S. crop 
is grown in northwestern North Dakota and northeastern Montana, also known as 
the durum triangle. However, in 2016, much of the key growing areas experienced 
humid weather during the critical stage of flowering and grain filling stages 
of the durum plant. Growers were diligent in applying fungicide to fight the 
scab, but to no avail. The disturbing part is that the disease hit areas that 
hadn't seen much, if any, in the past.

   Jochum Wiersma, a small grains specialist and professor at the University of 
Minnesota Crookston, told DTN that he spent 20 years in the trenches fighting 
FHB and said that while some progress has been made, the disease is far from 
"tamed." The disease first flared up in the 1990s in northeast North Dakota and 
northwest Minnesota during a continued, ongoing wet spell. Wiersma told me that 
he initially wanted to work on this disease in graduate school but was 
dissuaded to do so as one member of his exam committee asked if he "had any 
plans to complete his degree." 

   Nevertheless, in his role as extension agronomist, Wiersma has worked with 
growers since 1995 to combat this disease. During the past 20 years, progress 
has been made in developing crop varieties that are relatively resistant to 
scab, plus farmers have better access to, and better understanding of, 
fungicides that hold down the disease. Also, rotation is key. "With the 
popularity of corn in North Dakota, it is imperative to remember that corn is 
an alternative host to Fusarium graminearum, the fungus that causes FHB in 
durum, but causes stalk rot in corn. Corn stover will be a food source for this 
fungus for two years after the corn has been harvested," added Wiersma.

   "Long-term weather patterns appear to be switching to a wetter cycle which 
will be more favorable for FHB and the next wet cycle will tell us if we've 
made adequate progress to limit the economic damages caused by this 
opportunistic disease," said Wiersma.

   CANADA DURUM WORSE OFF THAN U.S. 

   On Oct. 20, 2016, the Saskatchewan weekly crop progress report said that 
harvest was stalled for the third straight week, with 24% of the durum crop 
still in the rain-soaked fields. Each week the crop stayed in the field, the 
more the quality was compromised. In the final grade report from Canadian 
Grains Commission, they reported that overall, 64.6% of the samples were 
degraded due to fusarium damage. The HVAC count was degraded in 11.2 % of the 
samples, 9.3% with mildew and 2.2 % with severe sprout. The majority of the 
samples graded No. 3 Canada Western Amber Durum (CWAD).

   "There were lots of issues with contracts up here last fall that were being 
handled differently from company to company," said Cliff Jamieson, DTN Canadian 
Grains Analyst. "I heard about a farmer that had 4CWAD contracts in place with 
two companies roughly in the $6/bushel area. Grain was grading Canada feed, so 
one company was reported to be deducting around $3/bu., the other over $5/bu. 
Doesn't leave much left for the grower, especially when you spend three to four 
months trying to get it off the field."

   An expected increase in both United States and global durum stocks, combined 
with Canada's record 2016 durum production of below-average quality, continues 
to pose a challenge for the prairie durum market. On Feb. 3, Statistics Canada 
reported 6.9 million metric tons of durum stocks as of Dec. 31, up 63.1% from 
the previous year and a record for this date.  The most recent export data 
shows cumulative exports through licensed facilities as of week 27, or Feb. 5, 
at 2.172 mmt. This is roughly 13% below the same period in 2015/16, and the 
lowest volume shipped at this point in time in the past five years. Current 
government estimates point to 2016/17 exports falling just 1% from the previous 
year by the end of the crop year.

   "Ending stocks are expected to balloon by 136% to 2.6 mmt this crop year 
according to government forecasts, although the five-year average disappearance 
in the January-through-July period is 3 mmt, which points to the potential for 
ending stocks to reach a much higher level by year's end," added Jamieson. 
"Success in pushing the lower grades into feed channels will be the key to 
capping the growth in stocks. Top grade prices on the Prairies are ranging from 
$7 to $8/bu., while there seems little hope for upside potential at present."

   Jamieson expressed concern that the large carryover and growing risk of 
fusarium damage on the Prairies is pointing towards a move away from durum in 
2017. "Early indications from Agriculture and Agri-Food Canada suggest 
producers will reduce seeded acres by 15% in the upcoming year to approximately 
5.3 million acres, while private estimates suggest that the reduction will even 
be larger. Both canola and spring wheat are expected to benefit from this move 
away from durum."

   FINANCIAL BOTTOM LINE?

   What's the bottom line financially?

   While durum commands a higher price than spring wheat, the risks can many 
times outweigh the value of any premiums. Currently No. 1 Hard Amber Durum 
(HAD) is at about a $1.50 to $2.00 premium to No. 1 MQ 14 pro spring wheat 
depending on the milling grade/value. That's not much of a premium when you 
factor in the complexity of growing a "perfect" crop that will appeal to buyers.

   Durum commands a premium when it is at least 75% HVAC (hard and vitreous 
kernels of amber color), 13% protein, 60 pounds, 300 falling number, plump 
kernels and as the old timers I used to trade with said, "It has to have a 
shine." Top milling durum that grades 85% HVAC or better, is 13.5% protein and 
325 FN can receive an even bigger premium. It also needs to be free of sprout, 
ergot, frost, and anything else that affects the No. 1 milling grade sought 
after by semolina (durum flour) buyers and pasta plants. 

   If a farmer has a top milling durum contract and drops below the required 
grade, he can face major discounts as high as $5 or more per bushel, or even 
rejection depending on how low the quality drops. Some farmers will run 
scabby/vomitoxin-infected durum through a cleaner, but while the added expense 
of doing that can cut in to margins, it is still a "cheaper" hit cost wise if 
they try to market it uncleaned.

   Jamieson said that last fall, "Farmers in Canada not meeting required grades 
on their contracted durum were facing the prospect of writing a check for tens 
of thousands, in some cases hundreds of thousands of dollars to buy out their 
contract, unless they could roll it." He said he had heard a buyout on a 
farmer's contract could be as high as $250,000. The farmer, like many others in 
the area, was not able to harvest all of his durum and the poor quality didn't 
meet his contract requirements.   

   The North Dakota Wheat Commission (NDWC) reported that the 2016 U.S durum 
crop in Montana and North Dakota was the largest since 2000 and nearly 50% 
larger than 2015, due to record yields and a one-third increase in planted 
area. "The crop averages No. 1 Hard Amber Durum with grade parameters that are 
very similar to 2015. The crop benefited from mostly dry conditions for the 
bulk of the harvest, although significant differences in moisture and disease 
pressure during the last half of the growing season resulted in a big 
difference in DON levels in some of the northern growing regions," said the 
NDWC. (See https://goo.gl/gykJHr)

   "Had the U.S. crop also been poor and had the market run higher, the 
financial loss to the growers in Canada would have been even worse," concluded 
Jamieson.

   For more on the subject of vomitioxin, see my blog last fall on "What 
Happens When Grain Gets Sick?" at https://goo.gl/YlCZDW.

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

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Corn Exports, Please?

   I know it's my own fault, but another WASDE report has come and gone, and 
I'm feeling like Charlie Brown after Lucy pulled the football away again. Why 
didn't USDA raise its estimate of U.S. corn exports? Arghh!

   Okay, to be honest, I've been around long enough to know USDA estimates 
aren't required to make sense, but of all the things in February's World 
Agricultural Supply and Demand Estimates, this one seems the least defensible. 

   As of Groundhog Day 2017, USDA shows 819 million bushels of corn already 
shipped in 2016-17 with another 802 mb of sales on the books. Total the two 
numbers and we find corn exports and sales up 67% from where they were a year 
ago at this time. However, USDA's export estimate for all of 2016-17 is up just 
17% from last season's 1.898 billion bushels. Why the big gap?

   Playing USDA advocate, we could say USDA is erring on the side of caution 
and, after all, we don't know how Mexico, the biggest U.S. corn customer, is 
going to respond to President Donald Trump's attempts to reform NAFTA. On the 
other hand, NAFTA is not going to be renegotiated overnight, and the current 
export season only has a little more than six months left.

   It could also be said USDA is reluctant to hike its export estimate while 
Brazil's crops are doing well. Brazil's government just estimated its corn crop 
at 87.4 million metric ton on Thursday, up from last year's 67.00 mmt. But that 
argument also doesn't go very far. Even in a good year, Brazil's corn exports 
don't typically pick up until July, which means that U.S. corn exports still 
have at least four more months of active business. 

   One year ago at this time, USDA showed 490 mb of corn shipped, which means 
that 1.408 bb of corn were shipped in the final 6 3/4 months of the season. 
This year, 819 mb of USDA's 2.225 bb estimate have already been shipped, 
meaning USDA expects no more corn will be shipped from this point on than what 
we saw last year.

   But if we compare the two years, 2016-17 clearly has the more bullish edge. 
This year, Brazil's real is 27% more expensive, leaving U.S. corn prices with a 
significant export advantage that was not there a year ago. 

   The February issue of Grains: World Markets and Trade from USDA's Foreign 
Agricultural Service shows FOB corn prices at $168 a ton in the U.S. in early 
February, significantly below FOB prices around $180 a ton in Brazil and 
Argentina. USDA noted that Argentina's forward prices from March onward are 
competitive with the U.S., but until they become cheaper, U.S. exports are 
likely to remain active.

   Granted, acknowledging a 200 mb increase in corn exports would not make a 
big dent in USDA's 2.32 bb of ending stocks and the impact on prices would 
likely be small. But with cash corn prices in the low $3s, even small changes 
matter and the evidence is there. For 2016-17, USDA's ending corn stocks 
estimate is too high.

   Todd Hultman can be reached at todd.hultman@dtn.com

   Follow Todd Hultman on Twitter @ToddHultman1

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Will Latest Executive Order Put the Brakes on Pending Truck Regulations?

   A number of regulations affecting the U.S. trucking industry were in the 
works last year. But now, two executive orders signed by President Donald Trump 
aimed at curbing federal regulations, could put the brakes on the new rules. 

   On Aug. 26, 2016, The U.S. Department of Transportation's National Highway 
Traffic Safety Administration (NHTSA) and the Federal Motor Carrier Safety 
Administration (FMCSA) proposed speed limiter on all large commercial vehicles 
in an attempt to increase safety, in addition to boosting fuel and emissions 
savings. However, this proposal may not become law since the release of Trump's 
executive orders. Another FMCSA regulation in limbo is a rule to establish 
national driver training standards.

   The speed limiter proposal would establish safety standards requiring all 
newly manufactured U.S. trucks, buses and multipurpose passenger vehicles with 
a gross vehicle weight rating more than 26,000 pounds to come equipped with 
speed-limiting devices. The proposal discusses the benefits of setting the 
maximum speed at 60, 65 and 68 miles per hour, but the agencies stated in the 
FMCSA press release that they would consider other speeds based on public 
input. 

   "This is basic physics," NHTSA Administrator Mark Rosekind said in the press 
release. "Even small increases in speed have large effects on the force of 
impact. Setting the speed limit on heavy vehicles makes sense for safety and 
the environment." Here is a link to the press release and proposed rule: 
https://goo.gl/BVQNi7

   Joe Rajkovacz, head of regulatory affairs for the Western States Trucking 
Associations, was quoted in numerous trucking publications as saying, "[Trump's 
regulatory] freeze, I think, is a death knell for the speed-limiter mandate -- 
that's an easy one since so many in the industry have ripped it apart." 

   On Oct. 6, 2016, the American Trucking Association (ATA) released a 
statement on their website condemning the proposal. CEO Chris Spear stated: 
"Despite ATA's decade-old, pro-safety policy on speed, the new joint rulemaking 
from the National Highway Traffic Safety Administration and Federal Motor 
Carrier Administration proposes a menu of three speed options for commercial 
trucks, not one. It provides insufficient data, and fails to make a 
recommendation regarding which of the three proposed speeds it believes is best 
and why. Most disconcerting is the fact that DOT's new rulemaking does not 
address the differentials in speed that would exist between any of the three 
proposed national speed limits for trucks and the speed laws of multiple states 
-- allowing passenger vehicles to travel at much higher speeds than commercial 
trucks. This lack of data and direction only elevates the safety risks to the 
motoring public."

   ATA added that a mandate for a "one-size-fits-all speed limiter" will 
squelch innovation in technologies to enhance safety and accommodate not only 
highways, but potentially secondary roads and beyond.

   DRIVER TRAINING LAW IN JEOPARDY

   On March 4, 2016, the U.S. Department of Transportation's Federal Motor 
Carrier Safety Administration released notice of proposed rulemaking of 
comprehensive national prerequisite training standards for entry-level 
commercial truck and bus operators seeking to obtain a commercial driver's 
license (CDL). 

   Under the proposal, applicants seeking a "Class A" CDL -- necessary for 
operating a combination tractor-trailer-type vehicle weighing 26,001 lbs. or 
more -- would be required to obtain a minimum of 30 hours of behind-the-wheel 
training from an instructional program that meets FMCSA standards, including a 
minimum of 10 hours of operating the vehicle on a practice driving range.

   Applicants seeking a "Class B" CDL -- necessary for operating a heavy 
straight truck (such as a dump truck or box truck) or a school bus, city 
transit bus, or motorcoach -- would be required to obtain a minimum of 15 hours 
of behind-the-wheel training, including a minimum of seven hours of practice 
range training. Here is a link to the entire proposal on the FMSCA website: 
https://goo.gl/HoF4Am

   On Feb. 1, 2017, in light of the Jan. 31 executive order, the FMCSA 
published a notice officially delaying the effective date of a new rule 
establishing national truck driver training standards.

   ELD MANDATE

   Another new regulation affecting the trucking industry, the electronic 
logging device (ELD) rule, is intended to help create a safer work environment 
for drivers, and make it easier and faster to accurately track, manage and 
share records of duty status (RODS) data. An ELD synchronizes with a vehicle 
engine to automatically record driving time, for easier, more accurate hours of 
service (HOS) recording. The effective date of this rule was Feb. 16, 2016, 
which was the date 60 days after the rule's publication in the Federal 
Register. 

   Carriers and drivers who are subject to the rule must install and use ELDs 
by the appropriate deadline. Carriers and drivers who are using paper logs or 
logging software must transition to ELDs no later than Dec. 18, 2017. Carriers 
and drivers who use automatic on-board recording devices (AOBRDS) prior to the 
compliance date must transition to ELDs no later than Dec. 16, 2019. Here is a 
link to the final rule published by the FMCSA: https://goo.gl/IPT8nW

   This rule has been challenged in court by the Owner Operators Independent 
Drivers Association (OOIDA), an organization that represents small-business 
truckers. The OOIDA called the ELD mandate devices "arbitrary and capricious," 
saying that it violates 4th Amendment rights against "unreasonable searches and 
seizures" and filed a lawsuit against the FMCSA on March 16, 2016. OOIDA 
contends that requiring electronic monitoring devices on commercial vehicles 
does not advance safety since they are no more reliable than paper logbooks for 
recording compliance with hours-of-service regulations. A three-judge panel on 
the appeals court ruled against the lawsuit in October 2016.

   The OOIDA then filed a petition on Dec. 14, 2016, to the U.S. Court of 
Appeals for the 7th Circuit for a rehearing of their case against the Federal 
Motor Carrier Safety Administration. This appeal means that OOIDA wants all 12 
judges on the 7th Circuit bench to hear their case. Jim Johnston, president and 
CEO of OOIDA, said in a press release that the association is preparing for 
"the next phase of the challenge with an appeal to the Supreme Court but will 
also continue to pursue the issue on the congressional side."

   "It's clear now that we have to pull out all the stops to convince lawmakers 
and the new Trump administration of the need to set aside the ELD mandate," 
said Johnston.

   The OOIDA is the only national trade association representing the interests 
of small-business trucking professionals and professional truck drivers. The 
association currently has more than 150,000 members nationwide. OOIDA was 
established in 1973 and is headquartered in the Greater Kansas City, Missouri, 
area.

   I spoke to a retired independent truck driver who currently farms 1,400 
acres of corn and soybeans in Michigan, and he told me that, in his opinion, 
large trucking firms are trying to use safety regulations as a way to force 
smaller companies to spend their limited budgets and manpower on things that 
don't generate revenue. "Assuming owner operator trucks are not safe is no 
different than assuming dairy farms abuse their cattle," he said.  

   He went on to say that professional drivers are safety oriented because its 
makes long-term economic sense. Drivers face a physical fitness requirement 
that in any other industry would be considered discrimination. Couple that with 
wild swings in fuel and road usage costs, and there is more burden placed on 
drivers by the USDOT. If government regulatory agencies can't prove the 
benefits of these new rules, then the regulations should be stopped, he said. 

   Like farming, the trucking industry is already heavily regulated enough and 
is an economically challenging industry, he concluded.

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

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
Will Latest Executive Order Put the Brakes on Pending Truck Regulations?

   A number of regulations affecting the U.S. trucking industry were in the 
works last year. But now, two executive orders signed by President Donald Trump 
aimed at curbing federal regulations, could put the brakes on the new rules. 

   On Aug. 26, 2016, The U.S. Department of Transportation's National Highway 
Traffic Safety Administration (NHTSA) and the Federal Motor Carrier Safety 
Administration (FMCSA) proposed speed limiter on all large commercial vehicles 
in an attempt to increase safety, in addition to boosting fuel and emissions 
savings. However, this proposal may not become law since the release of Trump's 
executive orders. Another FMCSA regulation in limbo is a rule to establish 
national driver training standards.

   The speed limiter proposal would establish safety standards requiring all 
newly manufactured U.S. trucks, buses and multipurpose passenger vehicles with 
a gross vehicle weight rating more than 26,000 pounds to come equipped with 
speed-limiting devices. The proposal discusses the benefits of setting the 
maximum speed at 60, 65 and 68 miles per hour, but the agencies stated in the 
FMCSA press release that they would consider other speeds based on public 
input. 

   "This is basic physics," NHTSA Administrator Mark Rosekind said in the press 
release. "Even small increases in speed have large effects on the force of 
impact. Setting the speed limit on heavy vehicles makes sense for safety and 
the environment." Here is a link to the press release and proposed rule: 
https://goo.gl/BVQNi7

   Joe Rajkovacz, head of regulatory affairs for the Western States Trucking 
Associations, was quoted in numerous trucking publications as saying, "[Trump's 
regulatory] freeze, I think, is a death knell for the speed-limiter mandate -- 
that's an easy one since so many in the industry have ripped it apart." 

   On Oct. 6, 2016, the American Trucking Association (ATA) released a 
statement on their website condemning the proposal. CEO Chris Spear stated: 
"Despite ATA's decade-old, pro-safety policy on speed, the new joint rulemaking 
from the National Highway Traffic Safety Administration and Federal Motor 
Carrier Administration proposes a menu of three speed options for commercial 
trucks, not one. It provides insufficient data, and fails to make a 
recommendation regarding which of the three proposed speeds it believes is best 
and why. Most disconcerting is the fact that DOT's new rulemaking does not 
address the differentials in speed that would exist between any of the three 
proposed national speed limits for trucks and the speed laws of multiple states 
-- allowing passenger vehicles to travel at much higher speeds than commercial 
trucks. This lack of data and direction only elevates the safety risks to the 
motoring public."

   ATA added that a mandate for a "one-size-fits-all speed limiter" will 
squelch innovation in technologies to enhance safety and accommodate not only 
highways, but potentially secondary roads and beyond.

   DRIVER TRAINING LAW IN JEOPARDY

   On March 4, 2016, the U.S. Department of Transportation's Federal Motor 
Carrier Safety Administration released notice of proposed rulemaking of 
comprehensive national prerequisite training standards for entry-level 
commercial truck and bus operators seeking to obtain a commercial driver's 
license (CDL). 

   Under the proposal, applicants seeking a "Class A" CDL -- necessary for 
operating a combination tractor-trailer-type vehicle weighing 26,001 lbs. or 
more -- would be required to obtain a minimum of 30 hours of behind-the-wheel 
training from an instructional program that meets FMCSA standards, including a 
minimum of 10 hours of operating the vehicle on a practice driving range.

   Applicants seeking a "Class B" CDL -- necessary for operating a heavy 
straight truck (such as a dump truck or box truck) or a school bus, city 
transit bus, or motorcoach -- would be required to obtain a minimum of 15 hours 
of behind-the-wheel training, including a minimum of seven hours of practice 
range training. Here is a link to the entire proposal on the FMSCA website: 
https://goo.gl/HoF4Am

   On Feb. 1, 2017, in light of the Jan. 31 executive order, the FMCSA 
published a notice officially delaying the effective date of a new rule 
establishing national truck driver training standards.

   ELD MANDATE

   Another new regulation affecting the trucking industry, the electronic 
logging device (ELD) rule, is intended to help create a safer work environment 
for drivers, and make it easier and faster to accurately track, manage and 
share records of duty status (RODS) data. An ELD synchronizes with a vehicle 
engine to automatically record driving time, for easier, more accurate hours of 
service (HOS) recording. The effective date of this rule was Feb. 16, 2016, 
which was the date 60 days after the rule's publication in the Federal 
Register. 

   Carriers and drivers who are subject to the rule must install and use ELDs 
by the appropriate deadline. Carriers and drivers who are using paper logs or 
logging software must transition to ELDs no later than Dec. 18, 2017. Carriers 
and drivers who use automatic on-board recording devices (AOBRDS) prior to the 
compliance date must transition to ELDs no later than Dec. 16, 2019. Here is a 
link to the final rule published by the FMCSA: https://goo.gl/IPT8nW

   This rule has been challenged in court by the Owner Operators Independent 
Drivers Association (OOIDA), an organization that represents small-business 
truckers. The OOIDA called the ELD mandate devices "arbitrary and capricious," 
saying that it violates 4th Amendment rights against "unreasonable searches and 
seizures" and filed a lawsuit against the FMCSA on March 16, 2016. OOIDA 
contends that requiring electronic monitoring devices on commercial vehicles 
does not advance safety since they are no more reliable than paper logbooks for 
recording compliance with hours-of-service regulations. A three-judge panel on 
the appeals court ruled against the lawsuit in October 2016.

   The OOIDA then filed a petition on Dec. 14, 2016, to the U.S. Court of 
Appeals for the 7th Circuit for a rehearing of their case against the Federal 
Motor Carrier Safety Administration. This appeal means that OOIDA wants all 12 
judges on the 7th Circuit bench to hear their case. Jim Johnston, president and 
CEO of OOIDA, said in a press release that the association is preparing for 
"the next phase of the challenge with an appeal to the Supreme Court but will 
also continue to pursue the issue on the congressional side."

   "It's clear now that we have to pull out all the stops to convince lawmakers 
and the new Trump administration of the need to set aside the ELD mandate," 
said Johnston.

   The OOIDA is the only national trade association representing the interests 
of small-business trucking professionals and professional truck drivers. The 
association currently has more than 150,000 members nationwide. OOIDA was 
established in 1973 and is headquartered in the Greater Kansas City, Missouri, 
area.

   I spoke to a retired independent truck driver who currently farms 1,400 
acres of corn and soybeans in Michigan, and he told me that, in his opinion, 
large trucking firms are trying to use safety regulations as a way to force 
smaller companies to spend their limited budgets and manpower on things that 
don't generate revenue. "Assuming owner operator trucks are not safe is no 
different than assuming dairy farms abuse their cattle," he said.  

   He went on to say that professional drivers are safety oriented because its 
makes long-term economic sense. Drivers face a physical fitness requirement 
that in any other industry would be considered discrimination. Couple that with 
wild swings in fuel and road usage costs, and there is more burden placed on 
drivers by the USDOT. If government regulatory agencies can't prove the 
benefits of these new rules, then the regulations should be stopped, he said. 

   Like farming, the trucking industry is already heavily regulated enough and 
is an economically challenging industry, he concluded.

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

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
STB Pending Rail Regulations: Will New Administration Derail Them?

   
At the end of last year, the U.S. Surface Transportation Board appeared on 
track to finalize several rules that would affect the nation's railroads and 
shippers who use rail service to move products, including agricultural products 
and fertilizer. Now a move by the new presidential administration to freeze 
regulations pending review is raising questions about whether some of those 
rules might be derailed.

   The U.S. Surface Transportation Board (STB) has been in the process of 
taking comments and replies on the Dec. 28, 2016, Notice of Proposed Rulemaking 
(NPRM) of rail transportation of grain, rate regulation review and rate 
complaint procedures as well as the NPRM on July 27, 2016, proposing revisions 
to the current rules governing the provision of reciprocal switching service. 
The board had also adopted a final rule to establish new regulations requiring 
all Class I railroads and the Chicago Transportation Coordination Office 
(CTCO), through its Class I members, to report certain service performance 
metrics on a weekly, semiannual and occasional basis. This rule was to be 
effective on Jan. 29, 2017, with the initial reporting date of Feb. 8, 2017.

   In the Dec. 28, 2016, NPRM, the STB proposed amendments to its regulations 
governing the publication, availability and retention for public inspection of 
rail carrier rate and service terms for agricultural products and fertilizer. 
The board also clarified its policies on standing and aggregation of claims as 
they relate to rate complaint procedures. https://goo.gl/cEGvmS

   In the July 27, 2016, NPRM, the board proposed new regulations governing 
reciprocal switching in Docket No. EP 711 (Sub-No. 1), which would allow a 
party to seek a reciprocal switching prescription that is either practicable 
and in the public interest or necessary to provide competitive rail service. 
https://goo.gl/f0CLjv

   I reached out to the Dennis Watson, media officer for the STB and asked if 
the regulatory freeze would affect any of these issues. He told me midweek that 
the STB was currently reviewing the Jan. 20 memo. Here is link to the entire 
memo on the White House website: https://goo.gl/AuUotC

   Late Friday, Jan. 27, I received word from Watson that the board is 
extending the effective date of the final rule for service performance metrics 
reporting in response to a memorandum issued Jan. 20, 2017, by the White House. 
"The new effective date of the final rule will be March 21, 2017, with the 
first reports to be filed by Class I railroads on March 29, 2017. Class I 
railroads are instructed to continue reporting under the board's Interim Data 
Order until March 23, 2017," reported the STB on their website.

   As of Late Friday, there was no word on what the status of the pending NPRM 
decisions is based on the White House memorandum.

   RECIPROCAL SWITCHING: A HOT-BUTTON ISSUE

   On Jan. 13, 2017, the Alliance for Rail Competition and 18 state grain and 
transportation organizations filed a reply to the STB saying, "Not only are the 
Board's proposals in the public interest, but they should be strengthened 
through removal of barriers to switching, including the requirement of showing 
market dominance, which finds no support in the statute or in sound policy 
considerations. Competitive switching can offer qualifying shippers a new 
option for addressing pricing and service issues." 

   The filing went on to say that to the extent that railroads are allowed to 
avoid market discipline in the form of competition, the need for effective 
regulatory remedies is increased. "This is the fundamental premise of the 
Staggers Act, and increases in railroad industry financial strength means that 
the era of minimal competition and minimal regulation, at the expense of 
captive rail customers, needs to end," noted the reply.

   On Jan. 13, 2017, in a press release, the Association for American Railroads 
(AAR) noted that they sent a reply to the STB in response to comments filed by 
groups of shippers "pushing the STB for a new regulation that would force 
railroads to turn their traffic over to competitor railroads."

   In its reply comments, the AAR outlined to the STB how the shipper comments 
"...do nothing to contradict the conclusion that the Board's proposed 
reciprocal switching rules are unlawful..." and "...the shippers are using the 
proposed rule as a means of circumventing existing rate regulation standards." 
The filing also states: "...The narrow self-interest of certain shippers in a 
revenue transfer in their favor -- based on government intervention that they 
would never tolerate in their own industries -- cannot offset the multiple 
flaws in the Board's proposal." Here is a link to the entire 46-page reply by 
the AAR: https://goo.gl/C8hO9i

   The AAR contends the shipper comments underscore the need for the STB to 
"terminate the proceeding and withdraw its forced access proposal" because it 
violates the STB's governing statute, principles of sound economics, and 
longstanding policy without any coherent rationale. 

   In the reply made by the National Grain and Feed Organization (NGFA) to the 
STB, they included, among other comments, remarks by Thomas Wilcox, attorney 
for the NGFA. He said: "The arguments of Class 1 railroad commenters that the 
Board has acted arbitrarily or capriciously are wrong and have no support in 
law or case precedent. Their claims of the potential harm this modest proposal 
will cause the railroad industry are wildly speculative and exaggerated." Here 
is the link to the entire 21 page NGFA reply comments to the STB: 
https://goo.gl/W4ohEB

   If you would like to see all the reply comments by shippers and Class 1 
railroads, here is a link to the filings: (Scroll down to Jan. 13, 2017) 
https://goo.gl/W4ohEB

   CHANGES AT THE STB

   On Wednesday, Jan. 25, the STB released a statement saying that President 
Trump appointed Ann Begeman to serve as acting chairman of the Surface 
Transportation Board, replacing recent Chairman Daniel Elliot. Ms. Begeman is 
currently serving a second, five-year term as a member of the board confirmed 
by the U.S. Senate on Dec. 9, 2016. Her current term expires Dec. 31, 2020. 
Here is the press release from the STB in its entirety: https://goo.gl/B63Xoq

   The next change that may or may not take place, will be if the board 
increases its current membership from three to five members. The STB 
Reauthorization Act of 2015 authorized that STB's membership could be extended 
from three to five board members, but there have been no additions up to this 
date. Currently, any two members cannot communicate directly with each other on 
pending matters unless a public meeting is called. The addition of two more 
members allows a majority of STB members to meet in private to discuss agency 
matters, subject to certain rules and procedures. 

   The Surface Transportation Board Reauthorization Act of 2015 was a bill to 
establish the STB as "an independent establishment, and for other purposes" and 
was passed by the U.S. Senate on June 18, 2015, and then by the U.S. House of 
Representatives on Dec. 10, 2015. The bill reauthorized and strengthened the 
oversight functions of the STB of the U.S. freight railroads, giving them 
authority to investigate issues of national or regional significance and 
requires them to establish regulations governing such investigations. The bill 
was intended to help make the STB more efficient, effective and accountable for 
the benefit of both shippers and railroads. Here is a link to the full text of 
bill s.108: https://goo.gl/VhvsUU

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

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
Mother Nature Unkind to Grain Shippers, End Users, Exporters

   To say logistics are "messy" in parts of the Upper Midwest and Pacific 
Northwest is an understatement. The Minot Daily news reported that the North 
Central Research Extension Center just south of Minot, North Dakota, reported a 
total of 47 inches of snow in four snowfalls since November 2016. Trains were 
partially buried in high snow drifts near Mobridge, South Dakota, and railroad 
workers have been busy clearing snow on the tracks throughout the Northern tier 
since November. On Wednesday, Jan. 11, 2017, Portland, Oregon, was buried in a 
foot of snow. One week later on Jan. 18, Portland was hit with a crippling ice 
storm. 

   In other words, the pain literally spread from North Dakota to the Pacific 
Northwest over a two-month period, leaving the railroads to keep playing 
catch-up. Even though the railroads have been working around the clock to keep 
service from being delayed as little as possible, Mother Nature keeps pushing 
them back.

   The BNSF, UP and CP have been reporting service delays on and off since the 
Northern portion of the U.S. has been under siege by Mother Nature. The latest 
one from the BNSF was posted on their website on Jan. 18: "BNSF is currently 
experiencing an operational impact due to numerous downed trees along a portion 
of our Fallbridge Subdivision, which runs between Pasco and Vancouver, 
Washington. Significant freezing rain in this area is causing heavy ice buildup 
on trees as well as road closures, affecting crew transportation. This location 
impacts traffic to and from facilities in the Seattle and Portland areas. The 
estimated time for opening for the main tracks has not been determined. While 
we have implemented procedures to re-route some trains, customers may 
experience delays on shipments moving through this corridor." 

   The UP on Jan. 18 posted this service update, highlighting the areas where 
they were having problems: "Winter storm Kori is bringing heavy rain and ice to 
the Pacific Northwest, resulting in multiple service interruptions to our 
operations between Portland, Oregon; Spokane, Washington; and Pocatello, Idaho. 
Our ability to respond to the problem areas has been further hampered by road 
closures around Hinkle and Pendleton, Oregon, and Spokane, Washington. As we 
work diligently to recover from the most recent service interruptions, our 
customers could experience a delay of 48 hours, along with interrupted local 
service in the Hinkle, Pendleton and Nampa, Idaho areas."

   Exporters I spoke to on the PNW, told me that there was no rail service on 
Thursday, Jan. 19, due to snow, ice, landslides and downed trees from the ice. 
On top of that, one exporter told me that the Columbia River is also full of 
anchorages for ships to moor while they wait for a place to berth at the 
assigned elevator. He said because of that traffic jam, there are a number of 
ships just driving around in circles in the Pacific Ocean, waiting for space to 
clear in the river so they can come in and park. Another exporter told me that 
some of the waiting ships have been there for a month. Here is a map of where 
the Pacific Ocean enters the Columbia River: 
http://www2.portofportland.com/Marine/Navigation 

   Grain shippers in North Dakota have been fighting a slowdown in logistics 
for well over a month. Farmers have had trouble getting grain from their bins 
to the elevators, and elevators have been slow to receive cars. Shuttle loaders 
on the BNSF told me that shuttle trips per month are behind normal and that 
some of the shuttles they have received are less than the regular amount of 110 
cars. A North Dakota shuttle loader told me that the BNSF was routing some 
trains around the south routes and then back up, and also heard that the UP was 
doing the same. 

   FREIGHT COSTS, BASIS SURGE

   The price for secondary shuttle freight has been moving higher for the past 
month. There are shippers who had sold grain for January through March and did 
not have freight locked in. Recent numbers posted have been $2,200 to $2,500 
per car for January, and one shipper told me that most bids posted end up 
trading higher. Much of the increase is due to the weather-related slow 
service, but also due to shippers who have commitments in January and also some 
shippers who have piles that are going bad and need to get them picked up and 
shipped out sooner than later. 

   He told me that shippers who were able to sell FOB (buyer supplies, freight, 
and freight cost is reflected in basis paid) don't have to worry about freight; 
they have to carry the grain until the freight does come, but at least they are 
avoiding late discounts like the ones who sold "delivered" are facing. 
Exporters will need to find replacements for the contracted grain if the 
original shipper can't perform, because they face vessel demurrage and other 
penalties if grain doesn't make it to waiting ships on time. If they have to 
"buy in" a customer who is late, it can become very costly for that customer.

   The need for corn, wheat and soybeans to fill export contracts becomes 
critical when shipments are having trouble making it to their destination. 
China still has soybeans committed to come off the PNW, and Japan and Korea 
have wheat and corn contracted, among others owed grain as well. When the need 
becomes great, exporters will increase basis. The basis for corn delivered to 
the PNW in January hit a high this past week of +140H for first-half January 
and +135H for last half. Soybean basis hit a high of +115H with the spring 
wheat basis hovering at +130H. 

   If you're a farmer and hear those kind of prices, you might think you've hit 
the jackpot. But sadly, that's not the case. One shuttle loader pointed out to 
me that the recent increase in secondary freight costs has added at least 62 
cents a bushel to their bottom line for now and has cut in to their margins. 
Most of the secondary freight increase is passed on to the farmer, because one 
of the major factors influencing basis is transportation costs. Once freight 
gets cheaper, those costs should weaken, but once the railroads catch up, the 
basis will weaken too.

   An exporter told me that the picture in Portland on Friday was a little 
better, but there are still a lot of ships to sort through. Shuttle loaders in 
North Dakota feel that even though the BNSF is working hard at trying to get 
back to normal, they think it will be well in to February for service to get 
caught up. 

   Mother Nature, if you are listening, please be kinder for the rest of the 
winter.

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

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
DDG Prices Lower

   The DTN average DDG spot price moved $5 lower from one week ago to $93 for 
the week ended Jan. 12. Price declines ranged from $2 to $20 per ton. Of the 39 
locations from which DTN collects spot prices, 25 bids were lower, 5 bids were 
higher and the balance of the prices were unchanged.

   On Jan. 10, China released a final ruling on U.S. distillers grains duties 
and tariffs following a year-long trade probe. Anti-dumping duties were set at 
a range from 42.2% to 53.7%, while anti-subsidy tariffs will be between 11.2% 
and 12%. The duties and tariffs apply to both distillers dried grains with and 
without solubles and will be in effect for five years starting Jan. 12, 2017. 
The preliminary penalties assessed in late September 2016 were an anti-dumping 
deposit of 33.8% and an anti-subsidy tariff of 10% to 10.7%. Merchandisers told 
DTN the market had expected the news, but some thought the final ruling was a 
bit harsh. A few noted prices have been helped a bit by good truck demand in 
the Midwest. However, Eastern Corn Belt locations with quality problems are 
trading $10-15 per below standard quality product. Remember, there is a 
vomitoxin issue in parts of the ECB and if tainted corn is put through the 
plant, it can affect the DDG allowable ranges for various animal feeds.

   CIF NOLA (New Orleans, Louisiana) DDGS prices for the week ended Jan. 12 
were 6 cents lower for January at $118. February/March prices were 2 to 4 cents 
lower at $112 to $128. Informa Economics reported that export data through 
November 2016 was down 9 percentage points compared to a year ago. "Exports to 
China were off by roughly two-thirds compared to the previous year, so some of 
the impact of tariffs has already influenced the market. The weakness in DDGS 
prices at container yards and the Gulf suggest that this is an opportunity to 
entice new export demand."

   The value of DDG relative to corn for the week ended Jan. 12 was lower at 
72.68% and the value of DDG relative to soybean meal was lower at 28.68%. The 
cost per unit of protein for DDG was lower at $3.72 compared to the cost per 
unit of protein for soybean meal which was higher at $6.83. The relative price 
of DDG to corn and meal futures is running below average and remains a good 
value for end users.


                                                CURRENT      CURRENT
COMPANY    STATE                               1/12/2017    1/5/2017    CHANGE
Bartlett and Company, Kansas City, MO (816-753-6300)
           Missouri             Dry              $120         $115        $5
                                Modified          $60          $58        $2
CHS, Minneapolis, MN (800-769-1066)
           Illinois             Dry              $100         $100        $0
           Indiana              Dry               $90          $95       -$5
           Iowa                 Dry               $90          $98       -$8
           Michigan             Dry               $75          $85       -$10
           Minnesota            Dry               $85          $90       -$5
           North Dakota         Dry               $95          $95        $0
           New York             Dry              $105         $110       -$5
           South Dakota         Dry               $90          $95       -$5
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
           Kansas               Dry              $110         $110        $0
POET Nutrition, Sioux Falls, SD (888-327-8799)
           Indiana              Dry               $95          $90        $5
           Iowa                 Dry               $95         $100       -$5
           Michigan             Dry               $95          $90        $5
           Minnesota            Dry               $95         $100       -$5
           Missouri             Dry              $100         $105       -$5
           Ohio                 Dry               $90          $90        $0
           South Dakota         Dry               $98          $98        $0
United BioEnergy, Wichita, KS (316-616-3521)
           Kansas               Dry              $105         $105        $0
                                Wet               $40          $40        $0
           Illinois             Dry               $95         $105       -$10
           Nebraska             Dry              $105         $105        $0
                                Wet               $40          $40        $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
           Illinois             Dry               $85          $95       -$10
           Indiana              Dry               $80         $100       -$20
           Iowa                 Dry               $90         $100       -$10
           Michigan             Dry               $80         $100       -$20
           Minnesota            Dry               $85          $90       -$5
           Nebraska             Dry              $100         $105       -$5
           New York             Dry              $105         $125       -$20
           North Dakota         Dry              $105         $105        $0
           Ohio                 Dry               $80         $100       -$20
           South Dakota         Dry               $85          $90       -$5
           Wisconsin            Dry               $90         $100       -$10
Valero Energy Corp., San Antonio, TX (402-932-5901)
           Indiana              Dry               $85          $90       -$5
           Iowa                 Dry              $100          $95        $5
           Minnesota            Dry               $92          $92        $0
           Nebraska             Dry              $100         $105       -$5
           Ohio                 Dry               $95         $110       -$15
           South Dakota         Dry               $90          $90        $0
           California                            $156         $158       -$2
Western Milling, Goshen, California (559-302-1074)
           California           Dry              $170         $175       -$5
*Prices listed per ton.
           Weekly Average                         $93          $98       -$5
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.

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

******************************************************************************
2016 Transportation Review: US River System

   Part two of this two-part column looks at the performance of commodity 
movement via barge on the U.S. waterways and challenges faced throughout the 
year.

   **

   The start to 2016 was disastrous for the entire river system, as heavy rains 
and melting snow from a massive winter storm in late December 2015 caused 
extensive flooding along the Mississippi River and its tributaries. The 
flooding plagued the entire U.S. river system for nearly the first 4 1/2 months 
of the year.

   By mid-January 2016, the glut of water from heavy rains and melting snow 
that caused extensive flooding along the Mississippi River in Missouri and 
southern Illinois made its way farther south toward the Gulf of Mexico. 

   The flooding caused delays, stoppages and slowdowns in New Orleans, wreaking 
havoc on the shipping industry in the Gulf. The high water from Vicksburg to 
New Orleans caused numerous navigation accidents and river closures, causing 
tow boats to be delayed making deliveries into New Orleans Port. As a 
consequence, tow boats got out of sync and stacked up on the southern part of 
the Lower Mississippi River. 

   In mid-February 2016, Tom Russell of Russell Marine Group told me, 
"Logistics on the river were still working through the wicked hangover left 
behind from the flooding."

   For much of March, Russell told me that the Southwest Pass in southeastern 
Louisiana at the mouth of the Mississippi River, still had draft restrictions 
in place for ocean vessels. "The continuous massive flow of water deposits a 
lot of sand/silt right where Mother Nature intended, at the mouth of the 
river." Draft sizes were raised from the norm of 45 feet to 41 to 43 feet until 
dredges were able to clear the areas that were affected. 

   As April approached, the river closed for eight days at Mile 30 to 44 in the 
Upper Mississippi after a 30-barge southbound tow collided with the Thebes 
Bridge, located just above Cairo, sinking two barges. In mid-May, rains in the 
Central Plains states and into the Midwest pushed some river levels up once 
again. "Safety protocols were in place for parts of the Illinois River, and the 
Lower Mississippi experienced a slight rise again to warrant some safety 
protocols put in place for the southern portion," said Russell. 

   By the end of June, Russell reported that rivers were in good shape and for 
the first time since November 2015, river levels in New Orleans had fallen 
below 10 feet above zero gauge.

   2016 BARGE TONNAGE HIGHER DESPITE ROUGH START TO YEAR

   In the northern tier of the Upper Mississippi River (UMR), the 2016 shipping 
season opened March 13 and ended Dec. 2. The northern section of the UMR starts 
in St. Paul, Minnesota, and runs downriver through Guttenberg, Iowa. The St. 
Paul District maintains a 9-foot navigation channel from Minneapolis to 
Guttenberg, Iowa. The U.S. Army Corps of Engineers (USACE) St. Paul District 
said in its 2016 shipping report that "keeping this system open is vital to the 
nation's economy." 

   Even with a shorter season than the rest of the river system, 2016 was a 
strong year for the UMR. The USACE reported that "Lock and Dam 10, near 
Guttenberg, Iowa, was above the 10-year average for combined lockages. The 
lockages supported 18,908,851 tons of commodities by the navigation industry. 
This is the highest amount since 2002. During the 2015 season, Corps staff 
supported 2,088 commercial lockages and the movement of 14,338,740 tons of 
commodities."

   The USDA weekly Grain Transportation report said that as of week 51 (Dec. 
24), total grain barge tonnages in 2016 reached 42.4 million tons, 20% higher 
than last year's annual total. "Furthermore, with one week remaining in the 
year, the year-to-date cumulative total grain tonnage moved during 2016 is 
already the highest since 2003, when the annual tons were 42.5 million tons." 

   In 2015 during the fourth quarter, there was only one week when the weekly 
tonnages exceeded 1 million tons. In comparison, during the fourth quarter of 
2016, there were seven times when the weekly tonnage exceeded 1 million tons, 
according to USDA. "In addition, there were six weeks during July and August 
when the weekly tonnages exceeded 1 million tons." 

   WRDA 2016: WILL IT BE ENOUGH? 

   The Water Resources Development Act (WRDA) of 2016 was officially signed 
into law by President Barack Obama on Dec. 16, 2016. The law authorizes the 
USACE to address the needs of America's harbors, locks, dams, flood protection 
and other water resources infrastructure critical to the nation's economic 
competiveness.

   The Mississippi River watershed is the fourth largest in the world, 
extending from the Allegheny Mountains in the east to the Rocky Mountains in 
the west. The watershed includes all or parts of 31 states and two Canadian 
Provinces. The watershed measures approximately 1.2 million square miles, 
covering about 40% of the lower 48 states, according to the U.S. National Park 
Service. As the river makes its 2,350-mile journey south to the Gulf of Mexico, 
it is joined by hundreds of tributaries, including the Ohio and Missouri Rivers.

   As the aging 28 locks and dams continue to deteriorate, especially when 
damaged by floods, the USACE has to make costly repairs and, in some cases, put 
a Band-Aid on the damaged locks. The USACE has said that it is "unable to 
adequately fund maintenance activities to ensure the navigation system operates 
at an acceptable level of performance." 

   Mike Steenhoek, executive director of the Soy Transportation Coalition 
(STC), said in an email to DTN, "The future of the U.S. Waterways depends on 
better funding from the government before it's too late to repair the aging 
locks and dams." 

   "Great nations, as well as great industries, continue to invest in 
themselves," said Steenhoek. "Investing in infrastructure should not be an 
isolated incident. It needs to be perpetual." Following is a link to the STC 
analysis, "Farm to Market: A Soybean's Journey." The attached summary 
highlights the need to continue to invest in infrastructure. 
http://www.soytransportation.org/FarmToMarket/FarmToMarketSummary.pdf

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

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
China's Final Word on US DDGS Imports: Higher Tariff, Duties

   In a further escalation of battles between the U.S. and China over trade, 
China's Ministry of Commerce on Tuesday increased some significant anti-dumping 
duties and tariffs on distillers dried grains from the U.S. 

   China duties and tariffs -- which have already had a significant impact on 
exports of distilled grains -- were increased Tuesday by China on distillers 
grains in a final ruling following a year-long trade probe. Anti-dumping duties 
were set at a range from 42.2% to 53.7%, while anti-subsidy tariffs will be 
between 11.2% and 12%.

   The duties and tariffs apply to both distillers dried grains with and 
without solubles and will be in effect for five years from Thursday, according 
to news reports.

   China originally launched an investigation into U.S. distillers dried grains 
-- with and without solubles -- a year ago after a petition was filed by the 
China Alcohol Drinks Association against the U.S.

   Last September, in a preliminary ruling, China's Ministry of Commerce stated 
that the U.S. was dumping distillers dried grains in China, damaging the 
domestic industry, thus requiring them to pay a duty on distillers dried grains 
with and without solubles from the U.S. China had originally imposed an 
anti-dumping deposit of 33.8% and added an anti-subsidy tariff of 10% to 10.7%.

   The duties and tariffs are a blow to the U.S. distilled grains market. USDA 
reported on Jan. 6 that U.S. exports of distillers grains were down 9% in the 
first 11 months of 2016 from a year ago, hurt by a 63% drop in China's total. 
China's absence has given other countries a chance to pick up the slack. In 
November, U.S. exports were actually up 9% from a year ago, led by Vietnam and 
Mexico.

   Yet, there are also troubles in Vietnam for U.S. distilled grains. In 
mid-October, Vietnam, the third top importer of U.S. distillers dried grains 
with solubles, announced it would suspend imports in mid-December because of 
contamination from the "Ballion" variety of beetle. In mid-December, Vietnam 
did indeed ban imports of U.S. distillers dried grains with solubles until 
Vietnamese officials meet with USDA staff to address the fumigation process, 
the ban will stay in place. Expectations from merchandisers are that a meeting 
may take place by mid-February, but nothing official has been announced.

   The U.S. Grains Council said in a statement Thursday that it was "deeply 
disappointed in this series of events that is a severe departure from our 
industry's three decades of broad, cooperative work with China's government and 
livestock industry and that follows a year of extensive cooperation on the part 
of the U.S. DDGS and ethanol industry with MOFCOM investigations."

   "The decisions in the anti-dumping and countervailing duties investigations 
are not supported by the evidence and raise serious questions regarding the 
ministry's compliance with standard AD/CVD procedures and with China's 
international obligations," the Grains Council said in its statement. "While 
painful and damaging to the U.S. DDGS industry, their biggest negative impact 
will ultimately be on China's feed and livestock industries, which risk losing 
access to an important and cost-effective feed ingredient, and on millions of 
Chinese households that will likely face greater food price inflation and less 
access to affordable, wholesome pork, poultry and dairy products."

   The China decision comes 10 days after action by the Chinese government to 
increase tariffs on imported U.S. ethanol from 5% to 30%. USGC said the latest 
action effectively stopped a "growth market for U.S. farmers and ethanol 
producers. U.S. farmers also continue to wait for China's approvals of biotech 
corn events, which last happened in 2014." 

   Here is a link to the complete press release: 
http://www.grains.org/news/20170111/us-grains-council-statement-china-actions 

   Informa Economics said that the uncertainty of export demand from top 
destinations in coming months is keeping end users from booking very far 
forward. "Prices are apt to soften enough for other export destinations to 
realize the value of distillers and increase their usage. The lack of 
confidence in export sales in coming months suggests that relative prices to 
corn and soybean meal will continue to stay below five-year average levels."

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

   Follow Mary Kennedy on Twitter @MaryCKenn

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