Flooding Disrupts Grain Shipping on Illinois River

By Tom Polansek and Karl Plume

CHICAGO, June 17 (Reuters) – Flooding halted barge site visitors on the Illinois River on Wednesday and excessive water ranges prompted futures market operator CME Group Inc to declare power majeure for all corn and soybean delivery stations for the primary time in additional than two years.

Barge strains have voluntarily stopped delivery site visitors after heavy rains, river retailers mentioned. CME, which owns the Chicago Board of Trade (CBOT) and different markets, mentioned a majority of delivery stations on the river had been unable to load crops as a consequence of excessive water ranges.

Traders mentioned the disruptions would doubtless have a restricted impression on grain buying and selling as a result of they may in all probability be over earlier than the top of the month, when merchants can start delivering crops in opposition to futures contracts. The Illinois River is forecast to crest at many places by early subsequent week, in keeping with the National Weather Service.

Supplies of corn and soy, shipped by firms corresponding to Cargill Inc, Archer Daniels Midland Co and Bunge Ltd, are giant after U.S. huge harvests final 12 months.

Cargill, ADM and Bunge, which management the river, could advise CME at any time that loading situations have improved, Rich Feltes, head of Market Insights for dealer RJ O’Brien, mentioned in a be aware.

The delivery stations are supply factors for crops traded on the CBOT, and the declaration of power majeure permits a delay of contracted deliveries. Under alternate guidelines, if barges can’t be loaded at a majority of delivery stations, shipments could also be delayed during the issue.

Only 25 corn contracts, representing 125,000 bushels, had been registered for supply on the CBOT as of Tuesday, firm knowledge present. No soybean contracts had been registered for supply.

In the money marketplace for grains, spot premiums for soybean barges delivered to Gulf Coast export terminals surged in response to the delivery disruptions.

June-loaded soybean barges, together with insurance coverage and freight, traded as excessive as 102 cents over the CBOT July futures contract, up 12 cents from Tuesday and the very best spot foundation since December, merchants mentioned.

The foundation response was extra tempered in corn as a result of the general variety of corn barges out there within the river market is seasonally a lot higher, they mentioned.

Corn barges represented practically 80 % of whole total barge actions within the week ended June 6, the latest USDA knowledge confirmed. Only 19 % had been loaded with soybeans.

If the halt in motion on the river drags on, elevators could have to droop purchases of crops from farmers as a result of they solely have restricted space for storing, mentioned Arlan Suderman, senior market analyst for Water Street Solutions. (Reporting by Tom Polansek and Karl Plume in Chicago; Editing by Marguerita Choy and Leslie Adler)