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SC Iowa | The last month's combination of heavy snow, cold temps, and strong winds have snarled rail transportation in the cornbelt and plains states to the point I am hearing one or more railroads may declare "force majeure", which essentially relieves them of liability to perform due to adverse conditions...
Cold weather robs performance, snow drifts stop/slow movement, and the entire system loses efficiency...
I've seen these situations develop before, and the frustrating thing is just how long it can take to get back to normal-----we're talking weeks, and maybe months, especially if we have further episodes of cold/snow later in the winter....
At the farmgate level this can both be problem and opportunity.....some users who source a portion of their needs by rail may be forced into the local truck market for short-term supply....while some with contracts to deliver to a rail shipper may be forced to wait on trains showing up......expect erratic behavior in basis for the near future..
Now---to explain how the last 2-3 weeks has affected a large user like us who runs on 100% truck.....we've not penalized those who didn't want to haul corn in bad weather, but that means we've had to step into the market several times to buy small chunks of corn (250-400,000 at a whack) to keep inventory above bare bones...
So here we sit on Jan 10, with very little corn left to buy for January and a huge deck of corn (5+ myn) that can/will be coming at us as weather improves.....all we ask of our corn suppliers is to have the same patience with us now that weather is improving as we had with them when the weather was bad...
As the polar jet moves back north, the weather may be improving, but the event will have a substantial hangover in the grain industry.
Ray J
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Transportation woes and basis....
