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Market Matters Blog           04/13 10:59
Port of Portland Loses More Business
Sorghum S&D Shake-Up
Will China Import More Corn? 
Truck Driver Shortage
U.S. Dollar Takes a Break
Lock and Dam 2 Welcomes First Barge
West Coast Port Tension Still Simmering
Overheard at NGFA
Ice in Upper Mississippi River Melting; Ice Jams a Danger 
STB Wants Weekly Railroad Service Reports to Become Permanent

Port of Portland Loses More Business

   OMAHA (DTN) -- After nine months of stalled labor negotiations and the loss 
of a major customer, the Port of Portland had another setback, losing a second 
customer at its container-handling Marine Terminal 6 (T-6). The terminal has 
been operated by International Container Terminal Service, Inc. (ICTSI) since 
2011 after signing a 25-year lease with the Port of Portland for operation of 
the container/break bulk facility at Terminal 6, according to the company's 

   On Feb. 10, Hanjin Shipping Co., which accounted for 78% of the business at 
T-6, officially withdrew from the Port of Portland, saying its last day would 
be March 4. In a Feb. 11 article, the Associated Press (AP) reported that 
Hanjin's pullout wasn't a surprise. In recent years, the company has been 
unhappy about the pace of work among longshore workers. "If you are in 
Portland, you should know why. Can't afford the expense of operating there. 
Simple," Mike Radak, senior vice president for Hanjin USA, told AP.

   The Hapag-Lloyd website said "In an effort to improve the schedule integrity 
of our Mediterranean Pacific Service (MPS), Hapag-Lloyd took the decision for a 
permanent omission of the port of Portland, Oregon, effective at the end of 
March 2015." With the departure of Hapag-Lloyd and Hanjin Shipping Co., the 
only remaining shipping line is Westwood Shipping Lines, a smaller shipping 
company, which specializes in forest products, and containerized and oversized 

   ICTSI Oregon, Inc. released a statement on its website saying, "ICTSI 
Oregon, Inc. is very disappointed to hear the news of Hapag-Lloyd's decision to 
cease its direct MPS service calling Portland. Hapag-Lloyd has been very 
supportive and loyal to the Portland market. Coupled with Hanjin's recent 
announcement to leave Portland and discontinue its Asia service, Hapag-Lloyd's 
departure will adversely affect regional businesses that rely on Terminal 6." 
Here is the link to the full press release: 

   The news is not good for shippers who relied on the Port of Portland to 
ship, among other things, agriculture products. SL Follen Company, which 
exports hay and feed products from the U.S. to Asia and the Middle East, told 
KOIN News of Portland that costs will rise for their business. "We decided to 
go temporarily through Texas at an even higher cost to us," Vince Follen told 
KOIN 6. "We were probably going to have to go to Tacoma and then truck it down, 
which meant at least another thousand dollars in through-put costs just to get 
the cargo back to Oregon."

   Mike Hajny, vice president of Wesco International, Inc., a hay exporter in 
Ellensburg, Washington, told DTN in an email that Portland cargo has been an 
absolute nightmare as of late. "We have a plant south of Salem that is owned by 
another gentleman, but we market all of his product. Since Hanjin has pulled 
out, all of the Portland cargo has to be railed or trucked to Seattle/Tacoma. 
As you can imagine, the rail is over capacity, and trucking from Salem to 
Tacoma on a daily basis is a logistical headache with the current port 
situation. The Port of Portland has always been a problem child, but it is 
going to cause some major changes in pricing structure and product shipment in 
our business model."

   According to AP, the ICTSI is trying to attract new lines to the container 
terminal. That may be a tough sell due to the labor problems between ICTSI and 
dockworkers. The other issue is the location of T-6. Because it is inland along 
the Columbia River, it is less convenient than other West Coast ports.


   On Friday, April 3, ILWU Coast Longshore Caucus delegates voted to recommend 
approval of the tentative agreement reached on Feb. 20, 2015, between the union 
and employers represented by the Pacific Maritime Association (PMA), according 
to a press release on ILWU's website. The proposed five-year contract covers 
20,000 dockworkers at 29 West Coast ports.

   All 90 delegates spent the week prior to April 3 reviewing the proposed 
agreement "line-by-line" before voting by 78% to recommend the proposal.

   "This agreement required 10 months of negotiations -- the longest in recent 
history," said ILWU International President Bob McEllrath, "but we secured a 
tentative agreement to maintain good jobs for dockworkers, families and 
communities from San Diego to Bellingham. Longshore men and women on the docks 
will now have the final and most important say in the process."

   The next step will be mailing the proposal to affected longshore union 
members who will then discuss it at local union meetings. A secret ballot 
membership ratification vote will be the final step in the process, and the 
final tally will be conducted on May 22.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

Sorghum S&D Shake-Up

   Bell Eagle, Tennessee, used to be in the heart of cotton country. But now 
Richard Jameson grows corn, soybeans, wheat, cotton and, for the first time 
since 2004, milo. 

   "There is a lot, and I mean a lot, of interest in grain sorghum in the 
mid-south for 2015," Jameson told DTN. "I noticed, and so did other farmers I 
know, that the USDA enumerators did not ask us in Tennessee if we were going to 
plant milo this year when they called in early March."

   Historically, Tennessee doesn't grow much milo, also called grain sorghum, 
and that's probably why enumerators didn't ask, he said. 

   "Using my operation as an example, my acres in milo will be 20% of my total, 
after not planting any since 2004," Jameson said. "The outside sales rep from 
the co-op told me this week that he has orders for 6,000 acres of milo in 2015 
after only 1,500 last year."

   In March's Prospective Planting report, USDA forecast farmers would plant 
7.9 million acres to sorghum, up from 7.1 million acres in 2014. On Thursday, 
USDA made major revisions to sorghum's supply and demand balance sheet, cutting 
the ending stocks by 33%. 

   "USDA's April ending stocks estimate of 18 mb was bullish for sorghum and 
below expectations," said DTN analyst Todd Hultman said. "The risk ahead is 
that so much of this market depends on China's demand, and will their demand 
for sorghum hold up after they agreed again to accept U.S. corn?"

   China approved the biotech corn trait MIR 162, also known as Agrisure 
Viptera, for import last December, ending a year-long standoff that caused 
trade to grind to a halt. So far, current and outstanding export sales to China 
are a mere fraction -- 179,000 metric tons vs. 2.6 million metric tons -- of 
what they were before the trade disruption. 

   Sorghum sales are a different story. More than 5.1 million metric tons of 
sorghum, about 200 million bushels, have already been shipped to China. Another 
1.6 mmt of sales are on the books for this year, as well as about 400,000 
metric tons for the next marketing year. 

   USDA adjusted the supply and demand table to reflect the current pace of 
export demand, up 50 mb to 350 mb. USDA also lowered feed use and use for 
ethanol, noting that no sorghum was used for ethanol production in February. 

   It also made a large adjustment to the residual component of demand.

   "U.S. sorghum feed and residual use for 2014-15 is projected at 85 million 
bushels, despite indicated feed and residual disappearance for the first half 
of the marketing year (September-February) of 154 million bushels," USDA 
stated. "Early harvested 2015-crop sorghum, particularly from Texas, is 
expected to augment 2014-15 marketing year supplies and support exports at 350 
million bushels during the 2014-15 marketing year that ends August 31.

   "The Prospective Plantings report indicated that Texas producers intend to 
increase sorghum plantings by 20 percent for 2015. Last year, more than 80 
percent of the Texas sorghum crop was mature by mid-August. These additional 
supplies, exported before the September 1 start of the new marketing year, push 
feed and residual use during the second half of 2014-15 (March-August) well 
into negative territory. These supplies will also boost first-quarter 
(September-November) feed and residual disappearance in the 2015-16 marketing 
year, as in 2014-15." 

   Back in Tennessee, Jameson said it's been so rainy and wet that corn 
planting is delayed -- just 2% compared to the five-year average of 10% planted 
as of April 6. It's giving Jameson, and his neighboring farmers, extra time to 
reconsider their crop mix for 2015. 

   Hultman and DTN Senior Analyst Darin Newsom agree that given the risks 
(relying almost solely on China's purchases), it's still worth planting milo 
this year. 

   Newsom added: "especially if you can lock in a strong new-crop basis early 
and let the futures market (try to) rally this spring." 

   Katie Micik can be reached at 

   Follow Katie Micik on Twitter @KatieMDTN

Will China Import More Corn? 

   There's no bigger long-term question in the grain markets today: Will China 
import more corn? 

   The answer appeared to be a clear 'yes' just a few years ago. After all, 
China's share of the U.S. export market had surged from 2% in 2010 to 13.5% in 
2013. China was on the path to becoming a regular and consistent buyer. But 
then it began rejecting corn cargo ships for low-level presence of biotech 
traits that we're yet approved for import, and China's potential as a major 
market for U.S. corn was once again in question. 

   Despite the fact that China has since approved MIR 162, the biotech trait at 
the heart of the issue, corn sales to China amount to barely a trickle. There 
are lots of reasons as to why, with the three biggest being China's domestic 
corn policies, the substitution of grain sorghum and U.S. grain traders' 
reluctance to risk another rejected corn cargo. 

   A recent article in the magazine Choices, a peer-reviewed publication run by 
the Agricultural and Applied Economics Association, attempts to answer that 
question by taking an on-the-ground fundamental look at China's livestock 
industry, the elusive statistics that just don't add up, demand for different 
feed grains and changes to China's self-sufficiency policy. 

   I don't think I've ever read an article that so thoroughly explains the 
state of China's corn and livestock markets. It's written by Brian Lohmar, who 
is currently the U.S. Grain Council's China director. He previously served as 
the director of economic research for Bunge CHINA and as a China specialist for 
USDA's Economic Research Service. He knows China agriculture as well, or 
better, than any American I've met. 

   I highly encourage you to take the time to read the article, but for those 
of you who are just plain busy this time of year, here's the CliffsNotes 
version. (Here's a link to the full article: 

   -- The growth and modernization of China's livestock industry has changed 
the grain markets, but there's very poor quantifiable information on meat 
supply and demand in China. 

   Lohmar explains that generally, China is the largest producer of pork, eggs, 
and aquaculture products in the world and the second largest producer of 
poultry. Yet getting an understanding of the underlying supply and demand is 
quite difficult. Based on official statistics, China slaughters 715.6 million 
hogs annually, about 40.7 kilograms per capita. Yet consumption estimates show 
that Chinese consumers eat 21.2 kg/year at home. Even considering the amount 
consumed outside of the home, there's a pretty stark discrepancy. 

   China's Commerce Department even started gathering data on slaughter, and it 
doesn't add up to the official pork production numbers either, Lohmar said. All 
of this, especially when combined with the feed conversion ratio, plays an 
important role in understanding China's feed production estimates and demand 
for certain feed ingredients.

   -- In 2012, total feed use in China was only 267.7 mmt, far below the 350 
mmt suggested by commercial feed production estimates. Protein meal inclusion 
in rations has increased much faster than energy feed inclusion, at about 7% 
per year over 10 years compared to 3.5%. 

   "The point of all this is that China's official production and consumption 
estimates for livestock products are far apart and one must go through 
substantial gymnastics to arrive at estimates that are reasonable in themselves 
and reasonably close to each other," Lohmar writes. "Moreover, even an estimate 
that assumes meat production is much lower than official production estimates 
is well beyond the individual estimates of feed use for specific ingredients 
such as corn and soybean meal. For a country that puts such emphasis on not 
only development of the livestock industry but also on maintaining feed grain 
production growth to meet domestic demand, it is somewhat surprising that there 
are no real reliable estimates of livestock production, feed demand or demand 
for important feed ingredients such as corn. Or at least the estimates that do 
exist, do not seem to match each other."

   He concludes that meat consumption is likely below the official production 
numbers, meaning there's substantial room for continued growth. Second, as 
protein meal inclusion rates increase to a level that maximizes efficiency, the 
growth of energy feed and protein meal will begin to converge. "For energy 
feed, this means an acceleration of growth vis--vis total feed demand growth."

   -- China has conflicting goals: maintaining high domestic corn prices and 
developing a competitive livestock industry, all while attempting to embrace 
market mechanisms. 

   China's decision to adopt a 95% self-sufficiency policy for grains in the 
mid-1990s lead to the boom in soybean imports as farmers focused on growing 
food grains. 

   China's domestic corn production grew from about 99 mmt in 1993 to 213 mmt 
in 2013. Lohmar notes that 70% of the growth was due to expanded acreage, not 
yield improvements. It's also not clear where the 15 million hectare expansion 
of acreage came from. With China's fierce competition for land, Lohmar doesn't 
see acreage increasing, so any future gains in China's crop will have to come 
from yield. Yield improvements face challenges from China's land tenure system 
that favors small farms and makes it uneconomical to implement the 
fertilization programs needed to enhance yields. 

   "... It seems that corn production growth in China will slow in coming 
years," Lohmar writes. "Meanwhile, as protein meal inclusion growth begins to 
slow and converge with overall feed growth, demand for energy feeds will do the 
opposite. Energy feed growth can be expected to rise to converge to overall 
feed demand growth, and the additional energy feed will likely come from corn 
or other feed grains. Together, these two trends will cause corn import demand 
to grow, especially if demand growth for animal products remains robust."

   China's focus on expanded corn production has lead it to pay increasingly 
higher prices to farmers in the Northeastern provinces for nearly five years in 
a row. Global prices have declined significantly in the past couple of years, 
and China reacted by restricting imports of cheaper global corn. This forces 
livestock feeders to pay higher prices for feed, making them less competitive. 

   "Whether China decides to import corn to support domestic livestock 
production rather than import the livestock products directly, will depend in 
part on how China resolves the current situation of large, expensive stocks and 
transitions to a policy that allows corn prices to converge closer to import 
parity," he writes. "However, it will also depend on whether China's producers 
can improve efficiency and also whether they can reduce some of the 
environmental impacts of large livestock operations.  Livestock producers in 
China are increasingly efficient, but the industries, in aggregate, are still 
not as efficient as more developed industries in many of China's trading 
partners, who also currently have the additional advantage of low corn prices."

   Lohmar eventually sees China liberalizing its corn import policies and 
trying to get its domestic prices to converge with global prices. "As demand 
for animal products continues to grow, and the industry continues to modernize 
and adjust to new realities, we will likely see imports of both feed products 
and animal products rise, with corn being a key component of these trends."

Truck Driver Shortage

   While we have had our attention on ag transportation difficulties at 
railroads and at ocean ports, several issues also have been developing for 
over-the-road trucks and drivers.

   In October of 2014, Bob Costello, chief economist and senior vice president 
of the American Trucking Associations (ATA) told the attendees at ATA's 
management conference, "The one dark cloud is a driver shortage that is "as bad 
as ever and is expected to get worse in the near term." 

   In an April 1 press release on the ATA's website, Costello said, "Due to 
growing freight volumes, regulatory pressures and normal attrition, we expect 
the problem to get worse in the near term as the industry works to find 
solutions to the shortage."

   Costello said one of the reasons for the shortage is demographics; the 
average age of a truck driver is 49 years old vs. an average of 42 years old 
for all U.S. workers. Another reason is the gender issue; the average number of 
women employed in the U.S. is 47% while only 6% of truck drivers are women. He 
also said getting a commercial drivers license is expensive and not easy, and 
while trucking companies reimburse the expense, many pay it back in 
installments. Pay has been an ongoing issue and many trucking companies are now 
offering driver bonuses to entice workers. "Even with pay increases, we are 
still having trouble attracting people," said Costello.

   A driver shortage makes it "difficult to add capacity" and it "increases 
operational hardships by costing freight delays," Costello said. Here is a link 
to his interview posted on the ATA website: 

   HireRight, a leading provider of online background checks, drug and health 
screenings, and employment eligibility verifications released their annual 2015 
Transportation Spotlight. The report also addresses the problems plaguing the 
trucking industry. "The ATA estimates that the current driver shortage tops 
35,000 driver candidates; and an additional 240,000 new truck drivers will be 
needed by 2023," noted the report.

   "While there are a multitude of reasons, the top three reasons why drivers 
leave an organization remain fairly consistent from year-to-year; to make more 
money (49% in 2015 vs. 51% in 2014); to spend more time at home (40% in 2015 
vs. 41% in 2014); and to receive better benefits(32% in 2015 vs. 27% in 2014). 
Almost a quarter (24%) of respondents reported health issues as being a reason 
for driver turnover. Life on the road is an extremely physically demanding 
occupation. The average life expectancy of a trucker is less than that of the 
general public. As the workforce continues to age, regulatory agencies will 
continue to scrutinize the health of drivers." Here is the link to download the 
entire report: 


   On November 28, 2014, the Federal Motor Carrier Safety Administration 
(FMCSA) announced "it is considering a rulemaking that would increase the 
minimum levels of financial responsibility for motor carriers, including 
liability coverage for bodily injury or property damage; establish financial 
responsibility requirements for passenger carrier brokers; implement financial 
responsibility requirements for brokers and freight forwarders, and revise 
existing rules concerning self-insurance and trip insurance. FMCSA asked for 
public comments on these topics that were due February 26, 2015." Here is a 
link to the announcement: 

   The National Grain and Feed Association (NGFA) responded and said it "values 
FMCSA's efforts to promote safety on the roadways and supports efforts to keep 
drivers of commercial motor vehicles operating safely." However, it said, 
"While safe operation of commercial motor vehicles is in everyone's best 
interest for myriad reasons, the FMCSA proposal to increase the minimum levels 
of financial responsibility for motor carriers raises questions as to how this 
proposal would achieve that objective."

   NGFA urged the FMCSA to forgo issuing such a proposed rule, or "at the very 
least, evaluate the impacts of additional premium costs on commercial freight 
transportation" before doing so.

   Others support the proposed rule; Joan Claybrook, chair of Citizens for 
Reliable and Safe Highways, posted this comment on the FMCSA website: "Congress 
recognized in the Motor Carrier Act of 1980 that minimum insurance requirements 
encourage safe operations by carriers but the incentive provided by this 
mandate is seriously diluted if the requirements are grossly outdated. With 
updated substantial minimum insurance requirements that reflect the current 
realities of the industry, risky carriers will seek to avoid serious crashes 
instead of simply treating such tragic events as nothing more than the cost of 
doing business. As such, I support raising the minimum levels of financial 
responsibility for motor carriers." Here is link to view the 2,179 comments 
received by the FMCSA: 

   Another pending FMCSA mandate is the rule mandating the use of electronic 
logging devices. According to the FMCSA, "The proposed rule will ultimately 
reduce hours-of-service violations by making it more difficult for drivers to 
misrepresent their time on logbooks and avoid detection by FMCSA and law 
enforcement personnel. Analysis shows it will also help reduce crashes by 
fatigued drivers and prevent approximately 20 fatalities and 434 injuries each 
year for an annual safety benefit of $394.8 million."

   "ATA supports FMCSA's efforts to mandate these devices in commercial 
vehicles as a way to improve safety and compliance in the trucking industry and 
to level the playing field with thousands for fleets that have already 
voluntarily moved to this technology," said ATA President and CEO Bill Graves.

   However, many owner-operators aren't in agreement and say they are concerned 
over costs, privacy and how the data will be stored. The proposal by the FMCSA 
is expected to cost the industry $1.6 billion, which could cause an increase in 
rates and become a financial burden for smaller motor carriers.

   The final ruling for implementation of electronic devices is expected to be 
issued by the end of 2015 and implemented by 2017.

   Mary Kennedy can be reached at 

   Follower her on Twitter @MaryCKenn

U.S. Dollar Takes a Break

   What a difference a month can make. On Mar. 10, I wrote about a U.S. dollar 
index that was spiraling higher, fed by news of a growing U.S. economy that was 
anticipating its first hike in interest rates since 2006.* At the same time, 
Europe's economies struggled with low growth, Greece's debt problems, and 
pockets of high unemployment. 

   Money chases opportunity and the obvious contrast sent the dollar index to a 
high of 100.33 on Mar. 13, a 26% gain in just under nine months. For U.S. grain 
prices, the dollar's rise was bearish news, especially in the month of March 
when little else was happening to entertain traders. 

   Just this week, we have finally seen a change in the dollar's bullish 
narrative, the first fundamental challenge to higher prices since last summer. 
The European Central Bank began its program of quantitative easing less than a 
month ago, but some encouraging signs have already emerged. 

   On Mar. 31, Eurostat reported that the unemployment rate for the Euro area 
improved from 11.4% to 11.3% in February.** It is a small change, but in the 
right direction, and was also the lowest rate since May of 2012. In Germany, 
where fourth quarter GDP growth was the sixth best of 28 European nations, the 
number of unemployed dropped to 2.932 million in March, the lowest total since 
the two Germanys reunited 24 years ago.*** 

   At the same time Europe is showing glimmers of improvement, the outlook for 
the U.S. economy is softening. Concerns about first-quarter growth found 
ammunition on Apr. 1 when the Institute of Supply Management's index of U.S. 
manufacturing dropped from 52.9 to 51.5 in March, the same day that a different 
manufacturing index for the Eurozone hit its highest level in ten months.

   Adding to the bearish arguments, the Atlanta Federal Reserve said Thursday 
that it expects no GDP growth for the U.S. in the first quarter of 2015, down 
from its earlier estimate of 1.9% annualized growth in early February.**** It 
blamed the slowdown on winter weather and a more expensive U.S. dollar.

   As I write this on Friday morning, the U.S. dollar index is down .84 after 
the U.S. Labor Department said that the U.S. unemployment rate stayed at 5.5% 
in March. Non-farm payrolls, however, only increased by 126,000 in March, much 
less than expected reported -- a statistic that reinforces concerns 
over the economy's latest hiccup.

   The overall fundamental outlook still favors a higher U.S. dollar as it 
remains likely that the U.S. economy will increase interest rates ahead of 
Europe. However, this week's change in the narrative has deflated the buying 
frenzy that we witnessed in early March and is giving grain prices bullish 
relief. For grains, the dollar's bearish influence is fading and the focus is 
coming back to weather, where the increased attention is well-deserved.

   *"Seven Months and Counting" posted Mar. 10, 2015 on DTN.

   ** Eurostat news release, Mar. 31, 2015, "Euro area unemployment rate at 
11.3%" at:

   *** "German unemployment slides below 3 million" posted Mar. 31, 2015 by 
Deutsche Welle at: 

   **** "Atlanta Fed cuts growth forecast to zero" by Heather Long, Apr. 2, 
2015 at:

   Todd Hultman can be reached at 

   Follow Todd Hultman on Twitter @ToddHultman1

Lock and Dam 2 Welcomes First Barge

   OMAHA (DTN) -- Spring shipping season is near. The Upper Mississippi River 
opened after a vessel moved barges through Lock and Dam 2 as the lead-off act. 
But three of the Great Lakes remain more than 50% ice covered.

   On the first day of spring 2015, 12 to 13 miles of Lake Pepin were covered 
in ice with the thickest spot 19 inches. Lake Pepin is located 60 miles 
downriver from St. Paul, Minnesota. 

   According to the Minnesota Department of Natural Resources, Lake Pepin is 
the largest lake on the Mississippi River. 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.

   On March 24, the U.S. Army Corp of Engineers (USACE) St. Paul District said, 
"The ice on Lake Pepin is thinning and the amount of coverage has decreased to 
just five miles. The thickest ice was measured at 12 inches at mile 772. Mother 
Nature's getting closer to freeing up the river for commercial tows and rec 

   Tows will typically move barges through ice no thicker than 10 to 12 inches 
so they don't risk damage to their vessels.

   At the crack of dawn on March 25, the appropriately named motor vessel New 
Dawn moved through Lock and Dam 2, near Hastings, Minnesota. "She was pushing 
nine loaded fertilizer barges en route to St. Paul, Minnesota," said the USACE.

   Once the barges unload, they will likely move up to St. Paul and load grain 
to move south. The first tow to arrive at Lock and Dam 2 becomes the unofficial 
"opening act" of the spring navigation season. That means all the Mississippi 
River locks are accessible to commercial and recreational vessels. The earliest 
date for an up-bound tow to reach Lock and Dam 2 since 2000 was on March 4 and 
the latest arrival since 1970 came last year on April 16.


   While the ice on the Great Lakes is nowhere as severe as it was this time 
last year, over 50% ice remains on three of the lakes. As of March 29, Lake 
Superior was 71.4% ice covered vs. 90.9% one year ago; Lake Erie was 69.7% 
covered vs. 74.3% last year; and Lake Huron was 56% covered vs. 85.1% one year 
ago. Lake Michigan was 23% ice covered vs. 42.5% and Lake Ontario was the only 
one currently above last year's figure at 21% vs. 12% one year ago. Here is a 
link to the most current ice coverage on the Great Lakes:

   The official start to the Great Lakes commercial season began on March 23 on 
Lake Superior when the John G. Munson loaded iron ore pellets and headed out of 
the Twin Ports after a winter layup one week later than the usual first 
departure. At the head of Lake Superior however, Thunder Bay, Ontario, shipping 
has yet to start and the April 2 scheduled date may now be pushed back to April 
5, depending on ice conditions.

   At 12:01 a.m., Wednesday March 25, the USACE officially opened the Soo 
Locks. The locks at Sault Ste. Marie, Michigan, are among 16 locks that form 
the Great Lakes-St. Lawrence Seaway navigation system, which extends from 
Duluth, Minnesota, to the Atlantic Ocean via the St. Lawrence Seaway, according 
to the USACE. However, as ships moved through the locks, the ice conditions 
became too difficult for them to continue. On March 29, the Great Lakes 
Shipping News reported, the "Edwin H. Gott and Roger Blough continue to 
struggle with ice west of Whitefish Point. USCG Mackinaw and Alder have 
returned to Sault Ste. Marie, possibly for fuel or repairs. Algoma Olympic 
remains tied on the lower Poe Lock pier until permission is given for her to 
enter the ice fields above the locks."

   Tim Heney, CEO of the Thunder Bay Port Authority told the Great Lakes 
Shipping News, "While the ice isn't as bad as last year, it is still 
challenging. As the largest grain export port on the Lakes, the Soo Locks are 
essential to Thunder Bay 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."

   In the meantime, the opening of the St. Lawrence Seaway has been delayed to 
April 2 due to heavy ice in sections of the passage. The St. Lawrence Seaway is 
the waterway from Montreal to mid-Lake Erie and normally opens around March 25. 
The Great Lakes Shipping News reported that St. Lawrence Seaway Management 
Corp. said it made the decision to delay the opening after considering 
"conditions affecting safe navigation and effective system transit."

   Once the Seaway opens, ocean-going vessels or saltwater vessels (salties) 
make their way to Great Lakes destinations. Officials expect ships will still 
have a slow trip depending on ice conditions. Ship owners have said some 
vessels will need an ice breaker as an escort, especially on Lake Erie and Lake 
Superior. Many of the ice breakers that helped the Great Lakes last year may be 
unavailable for help because of the harsh ice conditions on the East Coast.

   The first saltie to open the grain shipping season is not expected in the 
Twin Ports of Duluth/Superior until mid-April. Adele Yorde, PR manager for the 
Duluth Seaway Port Authority told DTN in an email, "Considering the ice and the 
late opening of the (St. Lawrence) Seaway this year not sure we'll see one 
arriving at this end of the system until at least April 10-12."

   Mary Kennedy can be reached at

   Follow Mary on Twitter @MaryCKenn

West Coast Port Tension Still Simmering

   OMAHA (DTN) -- It's been one month since the Pacific Maritime Association 
(PMA) and the International Longshore and Warehouse Union (ILWU) tentatively 
agreed on a new five-year contract, covering workers at all 29 West Coast 
ports. The next step will be taken sometime during the week of March 30 when a 
caucus of 90 union delegates will decide to recommend it for consideration by 
the full membership. Then, every union member will receive a copy of the 
tentative agreement for discussion at their local union meeting. After that, a 
vote to ratify (or not) is then taken by secret ballot sometime during April.

   There has been talk circulating that the ILWU Local 10 in Oakland is 
expected to vote against the contract. Evidence of this mounted when, on March 
11, the Port of Oakland said on their website, "Oakland International Container 
Terminal has suspended yard and gate operations for the remainder of the day 
shift March 11. The terminal said that it has dismissed longshore workers after 
they refused to work due to a dispute over staffing levels." On March 11, the 
PMA issued a statement saying that "ILWU Local 10 has repeatedly engaged in 
illegal work stoppages at the Port of Oakland, bringing operations to a 
standstill at Oakland International Container Terminal, the largest terminal in 
the Port." The terminal was reopened for business on March 12. Here is the link 
to the PMA press release on March 11: 

   The Port of Oakland also had problems with workers shortly after the 
tentative contract had been negotiated. On Feb. 22, the port experienced some 
labor issues with the day shift, resulting in the suspension of those workers. 
The port's website said while work resumed at the Port of Oakland the evening 
of Saturday, Feb. 21, it continued Sunday morning, but then was suspended for 
the remainder of the day shift. The website said that "The issue is a 
labor-management dispute over break time." The PMA released a statement on Feb. 
22 saying they "will continue to address any future work stoppages by Local 10 
through the grievance and arbitration process, and, if necessary, in court." 
Here is a link to the full PMA press release on Feb. 22: 

   The Port of Portland is not without its problems either. The International 
Container Terminal Services, Inc. (ICTSI), which operates at Terminal 6 and the 
ILWU, still have "bad blood" between them, according to a comment made by Port 
Executive Director Bill Wyatt to the Oregonian in February. And with the 
departure of Hanjin shipping from the port in March, the port is concerned that 
the ICTSI could follow, although Wyatt doesn't feel it will come to that and 
said that ICTSI is working to entice new business to the Port. Still, relations 
between both parties have been tense for some time and are one of the reasons 
said to have driven Hanjin out of Portland.

   The Oregonian reported on March 10 that "a federal judge ordered the 
national longshoremen union and its Portland chapter to pay nearly $60,000 to 
the National Labor Relations Board for violating a court order to resume normal 
operations at the Port of Portland's Terminal 6." In December 2014, the ILWU 
was found guilty of work slowdowns at the container terminal that went on for 
more than a year. In July of 2012, U.S. District Judge Michael Simon extended 
an order banning slowdowns by ILWU and required longshoremen to comply with his 
order. At that time, Hanjin was staying away from Portland because of the work 
disruptions. Finally, in 2015, the company decided enough was enough and on 
March 9, left Portland for good. 


   There seems to be a consensus forming among shippers that Congress should 
get involved to ensure that U.S. ports don't go through costly slowdowns every 
time a labor contract comes up for renewal. Many exporters would like to see 
Congress remove U.S. ports from under the governing body of the National Labor 
Relations Act (NRLA). At issue is that the NLRA allows for work and labor 
slowdowns, which has happened during contract negotiations. Exporters would 
like to see the U.S. ports have a new "boss": the Railway Labor Act (RLA), 
which currently governs airlines and railroads. The general purpose of the RLA 
is "to avoid any interruption to commerce or to the operation of any carrier 
engaged therein" and to "provide for the prompt and orderly settlement of all 
disputes concerning rates of pay, rules, or working conditions," among other 
things. Here is the link to the full text of the RLA: 

   Mike Hajny, vice president of Wesco International, Inc. Ellensburg, 
Washington, told DTN in an email that he agrees that ports should be subject to 
the Railway Labor Act. He said, "While the ILWU should continue to be free to 
negotiate whatever labor contract they feel is justified, they should never 
again be permitted to shut down our ports. They need to be subject to the 
Railway Labor Act -- and 2015 should be the last time that we ever have to 
suffer through an ILWU port shut-down again."

   Hajny told DTN that Wesco has been exporting hay since 1971, and together 
with the farmers, vendors, and suppliers they work with, have faced many 
challenges over the years. "Whether it's untimely rain at harvest time, or 
drought, or sudden changes in exchange rates or oil prices, we're used to the 
ups and downs of agriculture in the international marketplace. What we're not 
used to, however, and what we have no way to prepare for or defend against is 
the devastating harm caused when the ILWU holds our access to international 
transportation hostage in their periodic contract negotiations with the PMA."

   "In terms of gross sales lost during the 11/1/14-2/23/15 ILWU slowdown, 
Wesco's sales were down $6,500,000 when compared to the same period the 
previous year." Hajny said. "But the real, personal toll of the slowdown came 
in the paychecks of our 65 employees who had their overtime eliminated just as 
they were going into the Christmas season. Real working people lost wages, real 
farmers lost the full value of their harvest, and thousands upon thousands of 
eastern Washington families had to worry about their financial futures, while a 
couple hundred cynical ILWU members in Seattle and Tacoma played chicken with 
the PMA over their $140,000-plus salaries, $80,000 pensions, and who was going 
to pay the payroll taxes on their $35,000-a-year Cadillac medical insurance 

   Hajny added, "We really, really need the help of our local and federal 
legislators to protect the economy of eastern Washington and the livelihoods of 
so many people by making it impossible for the public infrastructure of the 
ports of Seattle and Tacoma to be hijacked by the narrow, self-serving 
interests of such a small group of people."

   Mary Kennedy can be reached at  

   Follow Mary Kennedy on Twitter @MaryCKenn

Overheard at NGFA

    Planting prospects, corn quality concerns, how to handle the closing of the 
pit trade -- just a few of the conversations I overheard at this year's 
National Grain and Feed Association annual convention in San Antonio. At 
meetings like these, some topics are hot potatoes tossed around everywhere you 
turn, like transportation and agriculture's revamped relationship with the 
Commodity Futures Trading Commission. Others are just sparks, things overheard 
here or there, left to smolder where they were spoken. 

   My notebook filled up with these little gems. 

   -- Any large shifts from corn to soybeans seems like they will be regional. 
In northwest Iowa and parts of Minnesota, one elevator manager said he could 
see a 3% to 7% shift away from corn this year depending on spring weather, but 
it will mostly come from ground that's been in corn-on-corn production for many 
years. Near Aberdeen, South Dakota, one manager said farmers are asking about a 
variety of smaller crops like sunflowers and barley. There were some reports of 
wheat being ripped up in Southern Illinois. Gentlemen from the Texas panhandle 
said the wheat crop there is in the best shape it's been in for the last few 
years, and that farmers are starting to pull their cattle off. Other parts of 
Texas reported increased competition from milo. 

   -- Many elevator managers said they see farmers mostly sticking to their 
rotations unless spring weather dictates they do something else, but they also 
added that agronomy sales are lagging their usual pace. Sales of P and K 
(phosphorous and potassium) are lagging in many parts of Corn Belt, and farmers 
seem content to let the fertility they've built up in the soil during the boom 
years carry them through this season. They also noted farmers are purchasing 
more non-GMO corn seed and seed varieties with one or two fewer stacked traits 
to try and save on input costs. Elevators expressed concern that this could 
lead to lower yields. 

   -- Corn quality varies by region. In Nebraska, South Dakota and parts of the 
Northern Plains, harvest was dry and swift. Corn in those areas is coming out 
of the bin a little dry, but in areas like Ohio and Michigan the story couldn't 
be more different. Much of the corn was put up wet, and dryers are still 
running. And in Missouri, the manager of one elevator said they've started to 
notice an odor on corn from storage bags. He thinks farmers have about 15 days 
to empty them before quality becomes a problem. 

   -- Farmers are still holding a lot of grain on the farm, and many of the 
country elevator committee board members said they think it could be as high as 
50%. Many are preparing for a "second harvest," when a new flood of grain comes 
to the market. In the meantime, they're busy picking up and shipping the corn 
stored in ground piles before it gets too hot. 

   -- CME Group is sorting through the details of how to transition to an 
electronic-only market. NGFA's risk management committee seemed to have two 
large concerns: how CME would handle certain types of market orders than can 
only be executed by brokers on the floor, and how they'd structure the short 
post-close session that allows traders to even up their books. Market-on-close 
orders seemed to get the most discussion. Usually a broker makes these trades 
as close to the close as possible, and currently, there's no way to do it 
electronically. CME suggested the trade-at-settlement order type, which is 
commonly used in the energy markets, might be a solution. The committee 
responded cautiously and said CME has a lot of education to do because there 
are subtle differences between the order types. CME is also seeking input on 
how long its post-close trading session should be and what kinds of parameters 
it should operate under.  

   -- High frequency trading was as hot a topic as ever. One member of the risk 
management committee expressed frustration that his questions on how HFT 
trading affected the market have gone unanswered by the CME group. CME 
responded by saying it's close to launching its "Myths Project," which will 
answer many of the industry's questions. CFTC Chairman Timothy Massad said the 
regulator wants to study the role HFT trading plays in the derivatives markets; 
however, the agency's inadequate funding has caused long delays. In other HFT 
related talk, an interesting lawsuit was filed earlier this month accusing a 
"John Doe" HFT trading firm of spoofing the treasuries market. The suit was 
filed by the brokerage firm where the president of the National Futures 
Association works, and aims to make CME Group disclose the name of the firm 
that in violation. You can read more details on that case here: 

Ice in Upper Mississippi River Melting; Ice Jams a Danger 


OMAHA (DTN) -- Warmer weather is allowing ice on northern portions of U.S. 
inland waterways to melt and break up, leading to warnings of ice jams on major 
river shipping routes.    On March 10, the National Weather Service (NWS) 
released its north-central river forecast for the Mississippi and Illinois 
rivers and said ice had thickened in the north the prior week. It was beginning 
to break up and head south, and along with melting snow, stream flows were 
increasing. NWS warned that ice jams were a strong possibility until all the 
ice cleared out. The agency said that the heaviest ice indicted by a MODIS 
satellite imagery was at Lock and Dam 3 (LD) through LD15. Ice measured in that 
area ranged from 90% to 100% coverage with ice ranging from 5 to 19 inches 

   The U.S. Army Corps of Engineers (USACE), St. Paul District, had hoped to 
reopen Lock and Dam 5A, near Fountain City, Wisconsin, on March 9, but thick 
ice conditions indicated that navigation will not begin on the Upper 
Mississippi River until later than originally anticipated. The USACE is hoping 
to open LD5A no later than March 23. The lock and dam was closed for renovation 
and maintenance on Dec. 1, 2014. The lock was dewatered to perform the work in 
order to repair concrete: repair, sandblast and paint the miter gates and 
replace the bubbler system. This extensive work occurs about every 15-20 years 
on each of the district's lock and dams from Upper St. Anthony Falls Lock and 
Dam in Minneapolis to Lock and Dam 10 in Guttenberg, Iowa. 

   The ice measurements at Lake Pepin on March 11 showed a slight improvement 
from the prior week, but still are showing ice thickness of 11 to 24 inches. 
Barges will not move through the lake until ice is below 15 inches. In 2014, 
the first barge was not able to move through Lake Pepin until Wednesday, April 
16. The extreme ice thickness on Lake Pepin last winter caused the latest start 
to a navigation season since 1970 (excluding the flooding in 2001). On average, 
the start to the UMR navigation season with the first barge moving on Lake 
Pepin, is March 22.

   Ice on the Illinois River was reported by the NWS to be breaking up and 
coverage was at 30% to 100%. They said the threat of ice jams will likely 
continue for another week. Ice jams can be dangerous to moving barges with 
traffic either slowing or stopping depending on the severity.

   Down river at Cairo, Illinois, flooding from the Ohio River has moved above 
flood stage. The Ohio River crested March 15 at a level not seen since 1997. 
The NWS has said that the melting snow and several rainfalls have caused the 
flooding, and dangerous ice jams from the northern rivers will continue to be a 
hazard. Here is a link to the current level of the Ohio River at Cairo.


   The USCG ice cutter Alder began breaking ice in the Twin Ports of 
Duluth/Superior on March 9. "Right now we are preparing the inbound and 
outbound track for the Duluth-Superior Harbor," Lt. J.G Barton Nanney, the deck 
watch officer, told the Great Lakes Shipping News. "Just getting ready for the 
shipping season, but also just kind of doing a little bit of recon to see how 
bad the ice is out there."

   Nanney said this year is off to a better start. "We're looking at probably 
about 6 inches out here, maybe a foot in some places," he said. "We've seen a 
couple pressure ridges that are a couple feet thick." He reported that there 
were some trouble spots on the lake and that "Whitefish Bay over to the east is 
usually pretty thick, and no one's been over there yet. So that's going to be 
kind of a tell to see how bad it's going to be." He said they will keep working 
on the ice in the Twin Ports harbor and then head farther out onto the lake and 
possibly head to Thunder Bay or Marquette if ordered.

   On Friday, March 13, the USCG began icebreaking operations in the St. Marys 
River in preparation for the 2015 shipping season. The USCG said that the ice 
breaking work will be "conducted by the Mackinaw (Cheboygan, Michigan), 
Biscayne Bay (St. Ignace, Michigan), Mobile Bay (Sturgeon Bay, Wisconsin) and 
Katmai Bay (Sault Ste. Marie, Michigan)." All of these ice cutters will be 
working toward one goal and that is to prepare for the opening of the Soo 
Locks, which were scheduled to re-open March 25. The Soo Locks are located on 
the St. Marys River between Lake Superior and Lake Huron, between the upper 
peninsula of the U.S. state of Michigan and the Canadian province of Ontario.

   In an email sent to DTN on March 13, Ron Johnson, port director in Duluth, 
said, "On March 10 the Seaway opening date of March 27 was pushed back until 
April 2." Once the Laker season opens on the Great Lakes, the start to the 
grain shipping season waits for the first oceangoing vessel, known as a saltie, 
to make it to the Twin Ports after the making a full transit of the 2,342-mile 
Great Lakes-St. Lawrence Seaway. Johnson told DTN that, "Based on some 
conversations with some area port folks there is no official date -- just a 
general estimated date of mid-April for the first saltie arriving 
Duluth-Superior." In 2014, the first saltie did not make it to the Twin Ports 
until May 8 which was the latest opening to the grain shipping season on record.

   On March 15, National Oceanic and Atmospheric Administration reported the 
Great Lakes ice coverage at 63.2% versus 82.8% on March 17, 2015. NOAA said it 
was the highest mark for that late in the season in more than 35 years, and it 
surpassed the previous mid-March high of 75.85% set on March 15, 1978.

   Mary Kennedy can be reached at 

   Follow Mary Kennedy on Twitter @MaryCKenn

STB Wants Weekly Railroad Service Reports to Become Permanent

   OMAHA (DTN) -- Several shipping groups and the National Grain and Feed 
Association are among those voicing support for the Surface Transportation 
Board's proposal to require railroads to publicly file various weekly data 
reports pertaining to service performance. 

   On Oct. 8, 2014, the Surface Transportation Board made a decision requiring 
all Class 1 railroads to publicly file weekly data reports to the STB to 
"promote industry-wide transparency, accountability and improvements in rail 

   DTN reported in January that on Dec. 30, 2014, the STB issued two decisions 
in regard to rail service issues and service issues-performance data. The first 
proposal would require new regulations of permanent weekly reporting by all 
Class 1 railroads and the Chicago Transportation Coordination Office (CTCO). 
The STB is also proposing to make the weekly rail service reports permanent, 
saying that collection of performance data on a weekly basis would allow 
continuity of the current reporting and improve their ability to "identify and 
help resolve future regional or national service disruptions more quickly, 
should they occur." 

   Here is the link to the entire Dec. 30 decision by the STB regarding this 

   The STB required comments on both decisions to be submitted by March 2, 
2015. Reply comments are due by April 29, 2015.


   The Alliance for Rail Competition and other rail shipper interests (ARC, et 
al.) wrote in their comments that they "commend the STB for its efforts to 
address U.S. rail service issues in recent months. We are convinced that the 
severe problems experienced by rail shippers since 2013 would have been far 
worse if the STB had followed recommendations of BNSF and CP and had taken no 

   ARC, et al. includes among their members shippers of coal and grain in unit 
trains and shuttle trains of 50 cars or more. "We also represent captive and 
other rail-dependent shippers whose shipments move in volumes of single-car 
shipments or in multiple car shipments of 49 cars or less. These include 
shipments of fertilizer, propane, sand used for fracking (including synthetic 
sand), oil, pipe, and pulse crops (beans, peas, lentils and the like)." 

   "While reports of inadequate service, and resulting adverse impacts, have 
been plentiful, details are lacking because of the STB's focus in its reporting 
requirements on shipments of 50 cars or more." The group told the STB that 
while they mostly approve of the current weekly reporting system, additional 
reporting is needed as to service problems involving shippers that are not able 
to ship in unit or shuttle train volumes of 50 cars or more. Here is the link 
to ARC and 16 shipper organizations comments to the STB:

   The National Grain and Feed Association (NGFA), which consists of more than 
1,050 grain, feed, processing, exporting and other grain-related companies 
handling more than 70% of all U.S. grains and oilseeds, "strongly commends the 
STB for proposing to make permanent the reporting of rail service performance."

   In their comments to the STB, NGFA said that "such reporting also will 
assist in building a baseline of factual information on rail service 
performance that can be used as a barometer for comparative analysis by 
carriers, rail customers and the STB itself to evaluate future trends. There is 
no way to accomplish this core objective without having such data being 
collected and compiled on an ongoing basis." Here is a link to the AAR comments 
submitted to the STB:


   The Association of American Railroads (AAR), a trade association 
representing the interests of North America's major freight railroads, said; 
"The AAR acknowledges the STB's concerns that led to the 'Notice of Proposed 
Rulemaking,' but respectfully submits that the reporting regulations should not 
be adopted as proposed because they are overbroad and may not be helpful in the 
long run. It is the AAR's position that only macro-level reporting metrics that 
the industry has long been providing voluntarily should be made permanent by 
regulation. In a commitment to improve communications with its customers, the 
railroad industry, except the Canadian Pacific who reports on their own 
website, has already voluntarily published such metrics on a public website 
since 1999." The performance measures are available online at

   The AAR suggested that "the STB should carefully balance the practical 
utility of the information it is proposing to require Class 1 railroads to 
report with the burdens that reporting will impose. As a result of that 
analysis, the STB should not make data reporting related to the current service 
recovery permanent, but should instead rely on system-level metrics to identify 
future service disruptions, should they occur." Here is a link to the AAR 
comments submitted to the STB:

   The BNSF submitted comments to the STB, which said; "BNSF is concerned by 
pressures the STB faces to add granularity to existing reporting. At various 
points throughout 2014, the STB has received informal and formal requests for 
more specialized reporting of service data, including corridor-specific and 
additional commodity-specific metrics. BNSF remains concerned that requests 
from trade associations and other shipper groups are mistaken attempts to skew 
service in their favor at the expense of shippers of other commodities." 

   "BNSF shippers already have access to significant information about network 
volumes and velocity, as well as robust information about their specific 
shipments on BNSF. Requiring BNSF to provide additional cuts of data at the 
individual commodity level or specific geographic sub-levels on a regular basis 
would be burdensome and counterproductive to BNSF's efforts to address the flow 
issues affecting our network as a whole. Reporting can consume critical 
resources without significant commensurate benefit." Here is a link to the BNSF 
comments submitted to the STB:

   Service on the BNSF so far in 2015 is flowing much better than at this same 
time one year ago. On March 6, 2014, the BNSF reported that average outstanding 
car orders were at 13,680 and were 19.8 days late. In their service update to 
the STB on March 6, 2015, the BNSF reported that outstanding car orders totaled 
2,569 and average days late were 16.3. In fact, all Class 1 railroads have 
reported improved service at this time versus one year ago.

   Mary Kennedy can be reached at

   Follow Mary Kennedy on Twitter @MaryCKenn


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