US Gulf logistics facing weeks of disruption after Hurricane Ida hit
The destruction brought about by Hurricane IdaвЂ™s landfall on New Orleans and the US Gulf has brought about industry uncertainty...
The destruction brought about by Hurricane Ida’s landfall on New Orleans and the US Gulf has brought about industry uncertainty regarding the level of damage and timeframe expected for logistics to resume, meanwhile hindering exports.
The resounding theme among some key industry players with locations in Louisiana is that they continue to evaluate the damage to their facilities, with the power being out proving to be the biggest roadblock to resuming normal operations.
To start, Hurricane Ida, now demoted to a tropical depression, has devasted the labor force responsible for operations at the port, adding to an already present labor shortage.
Hurricane Ida damaged a grain export elevator of Cargill, one of the world’s largest US agriculture players, and one of rival shipper CHS, ranked the number one national farm cooperative.
“At present, Cargill Reserve and CHS Myrtle Grove appear to be the only two elevators that sustained major damage that will keep them offline for the indeterminate future,” noted Sean Mulford, grain broker at Agniel Commodities.
“Cargill reserve is out of service for weeks, possibly months,” he further noted, with other industry sources claiming the Cargill reserve appears in the worst shape.
“Cargill in particular will be shifting their program around to account for their bean sales. So Houston area will see a lot of beans... this will put a strain on the potential for wheat to load out of the Gulf,” a second trade source said.
John Griffith, executive vice president at CHS Global Grain & Processing confirmed a similar timeline for CHS.
“Electrical power is down throughout the region, including the transmission line over the Mississippi River, which serves the Myrtle Grove facility. Best estimates as to when power will be restored at the terminal are in the two to four week range,” Griffith said.
Jackie Anderson, an Archer-Daniels-Midland Company (ADM) spokesperson, told Agricensus that in preparation for Hurricane Ida’s arrival, ADM had shut down four grain elevators and port operations and that they are currently in the process of assessing damage.
“We will have an estimate for reopening once we can determine the timeline for full power restoration or temporary generator service,” Anderson continued.
Daiana Endruweit, global media relations manager at Bunge, shared with Agricensus that there was no significant structural damage to their facilities but that “they are not operating as there is no power.”
No estimate of when power will be restored has been provided to Bunge by the utility company.
As the power remains out at these key elevator facilities, grain supplies remain with nowhere to go backing up exports and leaving the industry on standby amid the uncertainty.
Both Tuesday and Wednesday’s close resulted in a quiet US Gulf FOB market with no offers shown as participants await a more detailed assessment of damages incurred.
The Pacific Northwest FOB market followed suit, with sellers also hesitant to offer until Mississippi River logistics become clearer.
Depending on how long the uncertainty lingers, corn, soybean, and wheat importers may look to other ports or to competing origins, like Brazil and Argentina, although to date, those countries also face their own logistic challenges.