River Water is the New Gold

November 28, 2012 06:45 AM

River levels continue to decline on the Mississippi and input pricing could be dramatically affected. Barges traveling the river have already lightened loads to increase clearance under themizzuriver water. But that requires more trips with less payload, adding up to extra transport costs.

Meanwhile, in an effort to combat low reservoir levels elsewhere, the Army Corps of Engineers is implementing its annual, seasonal plan to redirect Missouri River waters from running into the Mississippi River to recharge these reservoirs. Much of the river water that flows down the Mississippi this time of year comes from the Missouri River. Once that avenue is redirected, Mississippi River levels will fall even more.

This has some experts suggesting a hike in inputs pricing of up to $50 per tonne on imported urea, UAN and phosphates in wake of ballooning transport costs.

Reducing the flow of water to the Mississippi may also have an effect on natural gas pricing. One of the reasons for diverting the Missouri is to ensure that sufficient quantities of water are available for hydraulic fracking. Fracking has softened natural gas prices which, in turn, softens nitrogen fertilizer pricing.

River water is the new gold, it would seem. If the nation's rivers are left to themselves, reservoirs are at risk, putting fracking on the chopping block, raising inputs prices. If the Army Corps of Engineers divert the Missouri River to replenish reservoirs, as planned, Mississippi River levels will fall in a hurry, interfering with much needed barge traffic -- raising inputs prices.

Much of the fall application season has been serviced by downstream inventories, and many retailers are watching the global players for the next buy opportunity. If river and reservoir levels do not improve with some big snows upstream this winter, the implications have input pricing spiking -- be it on increased transport fees, or increased natural gas costs.


Photo credit: Kansas Poetry (Patrick) / Foter / CC BY-ND

Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by QTInfo.com
Brought to you by Beyer