Storm wreaks havoc for US Gulf logistics, raises force majeure fear
Heavy snow across parts of the southern US has brought chaos to logistics in the key export hub of the US Gulf and is likely...
Heavy snow across parts of the southern US has brought chaos to logistics in the key export hub of the US Gulf and is likely to bring further delays, particularly to a tight corn export programme, as snowmelt raises river levels and complicates loading.
The weather has sparked reports of forces majeures being declared in the region, with traders forced to trigger a Clause 20 claim under North American Export Grain Association (NAEGA) rules.
“Loading operations in New Orleans and Houston have been adversely affected by the cold and ice. There have been some NAEGA Clause 20 claims applied for - this is our form of force majuere,” one trade source said, amid the closure of key waterways like the Houston shipping channel.
A polar vortex has brought extreme low temperatures and heavy snow to large parts of Texas – where a significant portion of US wheat exports originate – and along the New Orleans coast, hitting the primary US export hub as it gears up to handle a huge corn export slate.
“Traffic resumed yesterday in most areas. The worst is behind us now. But for certain there were a few days of disruption,” the source said.
Large parts of Texas remain without power, however, with a second source saying, “everything is a mess.”
US logistics have been stretched in recent months by its record export pace, first for soybeans but increasingly now for corn as a huge slate of buying from China has brought bumper exports.
Against that, the Gulf is the fulcrum for much of those exports and is the primary hub handling the bulk of the movement.
USDA data showed the hub handled over 900,000 mt of corn in the week to February 11, a second consecutive weekly record pace, alongside 350,000 mt of soybeans, and 60,000 mt of wheat.
The USDA has also called for a record export total for corn at 66 million mt, with 21.5 million mt of exports currently executed – a 32.5% conversion rate versus the outlook with 28 weeks of the marketing year left.
That means the US needs to hit an export rate of around 1.5 million mt of corn per week between now and the end of the marketing year if it is to hit that estimate – a stiff target, but one that sources are confident can be reached if logistics perform flawlessly.
Trade sources also warned that as the snow melts, river levels – key components in the supply chain connecting the Midwest growing regions with the US Gulf export hub – are likely to rise, raising fresh fears of further delay in the weeks ahead.
“Gulf loadings have certainly been impacted along with interior loadings along the river segment. Boat lineups in the Gulf will likely be 3-4 days behind after poor weather late last week,” a third source said, with key river and harbour links closed.
“It is quite a mess, but the weather does look to warm up and improve next week. We have heavy snow cover in most of the Midwest, so high water levels in the river segments will likely be the next issue,” the source said.
Any delay to loadings could upset the export expectations and cycle more corn back into the global ending stocks.