As the massive oil slick moves closer to the mouth of the Mississippi
River, the grain trade is growing uneasy about what that might mean for U.S. grain exports. To date, the massive oil slick hasn't impacted the trade, but if it does, we should know in the next couple of days, says Cash Grain Bids CEO Kevin McNew.
"Obviously the markets are watching it and today's sell-off in the futures was in anticipation of what could happen,” he says. "But in terms of actual grain movement, we're not seeing any impact right now.”
On his daily recording on AgWeb, Mark Gold said in his pre-open commentary Tuesday morning that the port is watching it closely in case it does happen. "I talked to one of the spokesmen in New Orleans (Monday) from the port authority. He was saying shipping traffic is relatively normal and no ships were denied entrance or the ability to leave the gulf area. The main channel is clear of oil for the moment, but they did request any ships coming in through light oil that they move slowly to keep the oil moved out of the main channel.”
If the slick does move into the Mississippi's channel, McNew says we should know in the next two to three days. In the event that does happen, it will put further pressure on an already deteriorating basis.
"A 6-cent to 9-cent swing in barge costs is sizable and it's having an impact on basis, but it's not unusual compared to what we've seen in the past,” McNew says. "I think we'll see them continue to creep up, but I also think we'll see some impact from the oil spill. It's hard to say how much and how long, but given what we're seeing the in the media, it's likely we'll see it shut down some export business.”
KEVIN MCNEW ON RISING BARGE RATES