How the Mississippi River Drought is Creating a Bottleneck Effect with Newly Harvested Grain

Drought along the Mississippi River by the confluence with the Missouri River, St. Louis, Missouri.

The Mississippi River is at its lowest levels since 1988, which is significantly slowing down the transport of newly harvested grain to be exported overseas. It’s also creating a bottleneck effect with grain across Michigan and the Midwest.

“It’s certainly not business as usual that were used to going down the Mississippi River,” says Rick Hollister, Senior Merchant and Market Analyst with The Andersons. With fewer barges and lighter loads, some grain terminals along the river had recently stopped taking in corn and soybeans.

“You just wonder what it’ll take to get the water levels there in the Mississippi to recover,” says Hollister. “We have seen a couple of fronts move through. We were hopeful that they would at least have a little bit of an impact, but so far, it’s hard to see where that impact is.”

Rick says the slowdown of grain shipments along the Mississippi River means more pressure is being put on rail transportation.

“The market is finding a way around and getting some soybeans down to the Gulf of Mexico and other places, like Biloxi, by train car. There’s just not a lot of freight to be able to do that as well,” according to Hollister.

Another challenge with rail transportation is the possibility of a rail workers’ strike, since the labor unions have yet to ratify the agreement made over the summer between the National Railway Labor Conference and labor union representatives.

“It’s certainly concerning once again because we thought we sort of had it figured out and we’re past it,” says Hollister. “It does look like we get past harvest now before anything dramatic, like a rail strike, would happen. That would be good for the grain industry or growers who are trying to finish up harvest and get grain moved to town. You can only do that when the place you’re hauling into town has a place to go with it beyond.”

Because of the drought, the cost to ship a ton of corn or soybeans down the Mississippi River skyrocketed from $30 around Labor Day to $105 by mid-October.

Click BELOW to hear C.J. Miller’s news report and interview with Rick Hollister of The Andersons as he discusses the impact that the Mississippi River drought is having on grain shipments.

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