Thursday, December 9, 2010

U.S. Closing Columbia River to Barges, May Affect Wheat Exports

Shipping on the Columbia-Snake River System, a major gateway to the Pacific Ocean for U.S. wheat and barley exports, will be halted until March as the Army Corps of Engineers replaces locks and dams built as long ago as 1957.

Barge traffic will be “effectively” stopped along a 365- mile (587-kilometer) stretch from tomorrow until March 18 as lock gates are replaced at the John Day, The Dalles and Lower Monumental dams, Army Corps spokesman Scott Clemans said. Five other dams will be repaired during the period, he said.

Traffic through the river-locking system is slowest during the winter, with five to 10 barges a day, Clemans said. Barges primarily carry grains, fuel and garbage. The four-month halt is unusual because shipping is normally closed for only two weeks a year for routine maintenance, he said. The U.S. is the world’s largest wheat exporter.

“We completely understand the impact this outage has on our navigation stakeholders, but if we do not replace these gates, these facilities eventually become unsafe to use,” Clemans said yesterday by telephone from Portland, Oregon. “The alternative to this planned, coordinated outage would be an unplanned emergency outage that might shut down the navigation locks and entire transportation system for maybe a year or more.”

The oldest of the dams, The Dalles, was built in 1957 and will be replaced with a new gate that weighs 1.5 million pounds (680 metric tons), Clemans said.

Rail, Trucks

The Pacific Northwest was second to the Gulf of Mexico for wheat exports last year, said Steve Mercer, a spokesman for U.S. Wheat Associates, an Arlington, Virginia-based trade group. The northwest ports are supplied by the river system, as well as by trains and trucks, he said.

Many importers have accelerated wheat purchases before the river closure to meet needs over the next three months, and others may rely on alternate transportation, Mercer said. Most northwest wheat exports go to Asia, Central America and South America, he said.

“The closure certainly may have an impact on getting wheat from point A to point B, but a lot of customers have bought ahead, and there are other ways to get it there other than barges,” he said.

The U.S. has exported 7.3 million tons of wheat out of Pacific Northwest ports in the marketing year that began June 1, Mercer said. Purchases have been ahead of last year’s pace as customers boosted buying before the river was closed, and as Russia’s export ban increased demand for U.S. supplies, he said. Russia, once the world’s third-largest exporter, has halted shipments through July 1 after drought this year ruined crops.

Prices for the grain have jumped 45 percent this year, touching a 23-month high in August. Wheat for March delivery closed at $7.84 a bushel yesterday on the Chicago Board of Trade.

Last year, the U.S. shipped 10.4 million tons of wheat through the Pacific Northwest, about 40 percent of total exports, Mercer said.

Written by Bloomberg reporter Whitney McFerron

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