Posted on October 5, 2023
Weeks of little to no rain are compounding barge problems on the Mississippi River, and the drought-like conditions that have dried up the river’s tributary system throughout the upper and lower Delta region are predicted to worsen.
Barge rates near Memphis have yet to hit the heights of October 2022, but the rates did see significant increases at the end of August. A slight retreat during the first week of September was promptly erased by an increase the week of Sept. 12.
Last year, the river level sank to a record minus 10.81 feet at Memphis during harvest time, stopping barges for two days and sending barge freight rates to a record high of nearly $90 per ton of grain. As of Sept. 5, the river level declines have caused barge rates to increase to $30 per ton.
With drought up and down the Mississippi Basin, the river is shrinking again, falling to minus 10.6 feet on Sept. 28. In addition to fears over barge traffic, the reduced volume of water is expected to allow saltwater intrusion at the mouth of the Mississippi.
“Current weather forecasts look dry, and without sufficient rainfall, barge freight rates may increase similar to last year, causing another situation in which commodity basis drops,” said Hunter Biram, extension economist for the University of Arkansas System Division of Agriculture.
River water levels are likely to continue to plummet, according to the U.S. drought monitor. Nearly every adjacent county along the river, stretching from the upper-Midwest to the Gulf of Mexico is abnormally dry or in some stage of drought. In the upper-Midwest there are pockets of exceptional drought, the highest classification along with nearly the entire state of Louisiana, the monitor reported.
“As river levels continue to drop and barge freight prices increase, the 2023 basis has started to widen again in the districts bordering the Mississippi,” said Grant Gardner, assistant extension professor at the University of Kentucky. “The impacts vary drastically by region; however, as of Sept. 12, the average weekly basis is between 3 and 21-cents under the five-year average.” That five-year average contains basis for marketing years 2017-2018 through 2021-2022.
The weather predictions for the region aren’t offering much hope in the short term. High temperatures are predicted to be in the low 90s through the first part of the week and there is only a moderate chance of rain on Thursday (Oct. 5) in parts of the mid-Delta region, according to the National Weather Service. Temperatures will drop as the weekend begins, but the chances of precipitation will not improve heading into next week.
“If heavy rainfall does not cause river levels to improve, Southern producers could again face unexpected losses due to the effects of falling river levels on barge freight rates and, thus, basis,” James Mitchell, extension economist for the Division of Agriculture, said. “If the basis continues to drop, hedging producers will likely experience prices below their expected price, which could have huge implications on farm profitability and cash flow Southern producers bordering the Mississippi River.”
