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. 

What to read next
Fastmarkets launches MB-FEN-0008 nickel pig iron, high-grade NPI content 10-14%, cif China, yuan/nickel unit price on Friday August 15.
Steel’s future is being forged in a crucible of competing demands. As the global push for greener production gains momentum, today’s market continues to favor low-cost, lower-grade ores. This “iron ore paradox” puts producers, investors and policymakers at a pivotal intersection. While economic realities make lower-grade ores attractive now, the industry can’t ignore the drive to decarbonize steel production. 
The rationale for MB-IRO-0009 iron ore 65% Fe Brazil-origin fines, cfr Qingdao index on Friday August 8 had erroneously omitted the judgment for carry-over step. The rationale entry has been corrected as follows: Fastmarkets’ index for iron ore 65% Fe Brazil-origin fines, CFR Qingdao fell by $0.08 per tonne from the previous day. The price movement was […]
US corn futures were up on Thursday August 7 after falling for three consecutive sessions, but upside momentum was limited by sluggish weekly net sales and exports, along with adequate soil moisture supporting crop development.
The publication of the affected price was delayed for 29 minutes. The following assessment was published late: MB-ZN-0110 Zinc spot concentrate TC, cif China, $/per tonne This price is a part of the Fastmarkets Base Metals Physical Prices package. For more information or to provide feedback on the delayed publication of this price or if you […]
Rare earth permanent magnet producers outside China are securing critical materials through key deals and partnerships. These efforts aim to strengthen the global supply chain amid China’s export controls and rising demand for NdFeB magnets.