by Katie Micik, DTN Markets Editor
OMAHA (DTN) — The mighty Mississippi River may be no more than a trickle in mid-December if the U.S. Army Corps of Engineers goes through with its plan to reduce water releases from Gavin's Point Dam to near-record-low volume.
In an average year, the Missouri River provides 40{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} to 60{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} of the water flow at the confluence of the Mississippi and Missouri Rivers in St. Louis, and smaller releases from upstream threaten to shut down a section of the river to barge traffic between St. Louis and Cairo, Ill., by Dec. 10, according Mike Steenhoek, executive director of the Soybean Transportation Coalition.
The economic toll could be heavy for farmers and agribusinesses, and the Army Corps has indicated it needs direction from the president or Congress to alter its current plans for water releases, which are made in accordance with an annual operating manual.
“I try to explain to people that it's a busy time for soybeans in particular,” Steenhoek said. “Eighty percent of our exports depart from the U.S. or are marketed between September and March. So it's very similar if you had a supply chain disruption prior to Christmas. It has real ramifications on the industry.”
There are two things the Army Corps is trying to manage on the river right now: flow and the removal of rock formations that have become hazardous given the low water levels.
The Army Corps reduces flow from upstream dams in the third week of November each year, but this year it's only going to release 12,000 cubic feet per second (cfs) instead of the typical 17,000 cfs.
Runoff into the reservoir system has been below normal for the eighth consecutive month, and the Army Corps forecasts that the 2013 runoff season will start with water levels 8 million acre-feet lower than the annual flood-control level.
“We will be paying close attention to the amount of mountain snowpack we receive in Montana and Wyoming, as well as the Plains snow accumulation in the Dakotas, this winter,” said Jody Farhat, chief of the Missouri River Basin Water Management Division. “We will know more about potential impacts of dry conditions by the start of the runoff season when we can factor actual on-the-ground conditions into our forecast models, and we will include that information in our decision-making process.”
Steenhoek understands that the Army Corps can't manage the water it doesn't have.
“But the question is, when is the best time for that flow to be released? The argument that the agriculture and barge industries are trying to make is now would be the better time. If that means less flow early next year, that is something people are willing to live with,” he said.
Mississippi River water levels have been dropping steadily throughout the summer, taking a break for a month or so following Hurricane Isaac. But they've dropped steadily lower, and barges have been loaded lighter and lighter.
The low water also revealed columns of rock, called pinnacles, that are now protruding above the water's surface, making barge travel perilous.
“What might normally be a 25-barge tow may now be a 15,” Steenhoek said. “That adds substantial cost to the delivery, not only loading light due to depth but having smaller flotillas, or configurations, due to the obstacles that are in the river all of a sudden.”
The Army Corps knows of the problem, Steenhoek said, but presentations by corps officials have made it clear that the bidding and contracting process means that the rocks won't be destroyed before February.
“For a number of industries including the soybean industry, when we export 80{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} of our goods between now and March, that doesn't help us out very much,” Steenhoek said.
Barge movements on the river are already starting to slow, said DTN Basis Analyst Mary Kennedy. Barge movements of grain last week were 16{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} lower than the previous week and down 4.5{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} from the same period a year before.
And barge freight rates in the St. Louis corridor dropped 125{8a1275384cb93b18aa3d41af404144e37302a793dec468d70d54c97b65cfac05} from the prior week, Kennedy said. “This drop in freight and elsewhere along the river helped the national average soybean basis end the week of Nov. 10 3 cents higher than the end of the prior week.”
The soybean industry is far from alone in recognizing the economic peril of low river levels. The National Corn Growers Association Vice President of Research and Development Paul Bertels told NPR: “We oppose the curtailing of water discharges from the Missouri River until the corps has fixed the issues presented by rock pinnacles in the Mississippi River, thus decreasing the negative impact of lower water levels for traffic using the waterway.”
A press release from Waterways Council, Inc., an advocacy group for river users, noted that 150 million tons of agriculture production, 180 million tons of coal, 150 million tons of petroleum and all of the associated jobs will feel the effect of a closed Mississippi River.
“We need to find a way to keep commerce moving, and I am confident the government can do so without having a significant impact on the many other beneficiaries of our inland waterways system whose need for water we recognize,” said Michael J. Toohey, president and CEO of the Waterways Council.
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Posted with DTN Permission by Haylie Shipp
