US railroads to suspend grain shipments ahead of possible shutdown – farm sources

CHICAGO, Sept 13 (Reuters) – Some U.S. railroads will begin halting crop shipments on Thursday, a day before a possible work stoppage, an agricultural association and sources at two grain cooperatives said on Tuesday, threatening exports and producers. livestock feed deliveries.

As farmers begin harvesting fall crops that are shipped to meat and biofuel producers, transportation disruptions could add to already high inflation. Farmers also plan to add fertilizer to fields after harvest, and fertilizer deliveries are delayed.

Max Fisher, chief economist at the National Grain and Feed Association, which represents most U.S. grain handlers, said railroad customers have reported that at least one railroad will stop taking grain shipments. Thursday morning.

Most major U.S. railroads have already stopped accepting new shipments of ammonia-based fertilizers and other potentially hazardous materials, said Justin Louchheim, senior director of government affairs at the Fertilizer Institute, an industry group .

Louchheim said fertilizer producers are currently assessing how much storage they have for ammonia that cannot be transported by rail and whether some can be transported by truck.

The potential rail closure looms just six weeks before most farmers in the Midwest begin applying fertilizer, said Josh Linville, director of fertilizer at StoneX Group. About 40% of America’s fertilizer supply sits on a wagon at some point before it arrives on a farm, he said.

The railways have until one minute after midnight Friday to strike tentative deals with holdout unions representing around 60,000 workers. Read more

Concerns about service outages have pushed up corn-based ethanol prices in several hubs and kept sellers out of the market, said Josh Pedrick, editor of S&P Global Commodity Insights.

The Association of American Railways (AAR), which represents railroads, did not immediately respond to requests for comment on grain transportation.

The work stoppage would be keenly felt in states like North Dakota, South Dakota, Minnesota and Nebraska, from which grain is transported by rail to ports in the Pacific Northwest for l export, said Thomas Lahey, inland freight manager at grain merchant Columbia Grain International. Grain elevators in the upper Midwest move soybeans to the PNW primarily via the BNSF Railroad, Canadian Pacific Railroad (CP.TO) and Union Pacific (UNP.N), he said.

US Class 1 railroads moved nearly 1.5 million railcars of grain in 2020, including 691,000 railcars of corn, 340,000 railcars of soybeans, and 248,000 railcars of processed soybeans such as soybean meal and soybean oil, the AAR said.

ENOUGH PET FOOD?

U.S. chicken farmers rely on about 27 million bushels of corn and 11 million bushels of soybean meal each week to feed their birds, the National Chicken Council said. Much of it is transported by rail.

“Any disruption in service could negatively impact bird welfare and ultimately production at a time when Americans are already facing record food inflation,” the spokesperson said. advice, Tom Great.

In North Carolina, a pork and poultry producer, local grain farmers don’t produce enough corn to feed all the farm animals, said Bob Ford, executive director of the North Carolina Poultry Federation.

“We would be in trouble if they went on strike for very long,” Ford said. “We would run out of corn.”

Wayne-Sanderson Farms, a Georgia-based chicken company owned by Cargill Inc and Continental Grain, is working with local corn growers to boost much-needed feed supplies during rail disruptions, spokesman Frank Singleton said.

The start of the corn harvest in the southern United States, a major poultry region, will “relieve some of the pressure” on feed supplies, he said.

Some rail customers who feed livestock don’t have enough soybean meal, said Fisher of the National Grain and Feed Association. In the worst case, this could force some producers to cull animals.

Railroads also ship hexane, a chemical solvent that grinders use to extract oil from soybeans, said Mike Steenhoek, executive director of the Soy Transportation Coalition.

“Any slowdown or stoppage of rail service – particularly on the eve of harvest – would have a significant impact on farmers’ ability to meet customer demand – both domestically and internationally,” Steenhoek said.

Reporting by PJ Huffstutter and Tom Polansek in Chicago; Additional reporting by Karl Plume in Chicago, Rod Nickel in Winnipeg, Canada and Stephanie Kelly in New York; Editing by David Gregorio

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