Some U.S. railroad companies will begin halting crop shipments on Thursday amid a possible work stoppage, sources at the Farmers Association and two grain cooperatives said on Tuesday, livestock exports and feed shipments.
Transport disruptions could exacerbate already high inflation as farmers start harvesting fall crops to ship to meat and biofuel producers. Farmers are also planning to bring fertilizer to the fields after harvesting, and fertilizer shipments are delayed.
Rail customers are reporting that at least one railroad will stop accepting grain shipments Thursday morning, said Max Fisher, chief economist for the National Grain and Feed Association, which represents most U.S. grain traders.
Most of the major U.S. railroads have already stopped accepting new shipments of ammonia fertilizers and other potentially hazardous materials, said Justin Roachheim, senior government director for the Fertilizers Association, an industry group. Louchheim said fertilizer manufacturers are currently assessing how much ammonia they have in stock that can’t be shipped by rail and whether they have any that can be shipped by truck.
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Josh Linville, fertilizer director at StoneX Group, said the potential railroad closure is just six weeks before most Midwestern farmers start applying fertilizer. About 40 percent of U.S. fertilizer shipments are loaded onto railcars at some point before they reach farms, he said.
The railway company has until one minute after midnight on Friday to reach a tentative agreement with unwilling unions representing some 60,000 workers.
Josh Pedrick, editor-in-chief of S&P Global Commodity Insights, said concerns over business disruption have pushed corn-based ethanol prices higher in several hubs, crowding out sellers from the market.
The American Railroad Association (AAR), which represents railroad companies, did not immediately respond to a request for comment on grain shipments.
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U.S. Class 1 railroads transported nearly 1.5 million grain vehicles in 2020. This includes 691,000 units of corn, 340,000 units of soybeans, and 248,000 units of processed soybeans such as soybean meal and soybean oil.
Is there enough animal feed?
U.S. chicken producers rely on about 27 million bushels of corn and he 11 million bushels of soybean meal to feed their chickens each week, according to the National Chicken Council. Many travel by train.
“At a time when Americans are already grappling with record food inflation, this could adversely affect bird welfare and ultimately affect production,” said council spokesman Tom Super. In North Carolina, a hog- and poultry-producing state, local grain farmers aren’t producing enough corn to feed all their livestock, said Bob Ford, executive director of the North Carolina Poultry Federation.
“If they had been on strike for very long, they would be in trouble. They would have run out of corn,” Ford said.
Georgia-based poultry company Wayne-Sanderson Farms, owned by Cargill Inc and Continental Grain, is working with local corn growers to increase feed supplies as needed during rail disruptions, a spokesperson, Frank Singleton said.
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The start of the corn harvest in the southern United States, a key poultry region, “will relieve some of the pressure on the feed supply,” he said.
Some railroad riders who feed livestock don’t have enough soybean meal, said Fisher of the National Grain and Feed Association. In the worst cases, some producers may be forced to kill the animals.
Railroads are also shipping hexane, a chemical solvent that crushers use to extract oil from soybeans, said Mike Steenhook, executive director of the Soybean Transport Coalition.
“A slowdown or disruption to rail services, especially on the eve of harvest, would severely impact the ability of domestic and international farmers to meet customer demand,” Steenhook said.
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Source: TBS
