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Market Matters Blog           12/11 11:15
Long Trains Get Longer; Time to Put the Brakes on Size? 
DDG Prices Climb Higher
DDG Prices Higher 
Five-Year ELD Exemption for 'Small-Business' Truckers Sought
2017 HRS Wheat, Durum Crop: Survival of the Fittest 
DDG Prices Jump Higher 
Divergence and the Rubber-Band Principle
China Cracks the Door Open for US DDGS Exports
DDG Prices Sharply Higher
Study Released on Impacts of Unscheduled River Lock Outages

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Long Trains Get Longer; Time to Put the Brakes on Size? 

   Long freight trains have continued to get longer. Has the time come to put 
the brakes on how long these trains are allowed to be? That's a question two 
members of the U.S. House of Representatives Committee on Transportation and 
Infrastructure have asked the federal Government Accountability Office (GAO) to 
help answer.

   Committee ranking members Peter DeFazio, D-Ore. and Michael E. Capuano, 
D-Mass., have asked the GAO to study the effects of longer freight trains, the 
International Association of Sheet Metal, Air, Rail and Transportation Workers 
(SMART) noted in a recent news story on their website. Currently, the length of 
trains is not regulated.

   Jen Gilbreath Adler, communications director for the House Transportation 
and Infrastructure Committee, sent DTN a copy of the letter, dated Nov. 7, 
2017, that DeFazio and Capuano sent to the GAO. In it, the two started out by 
noting, "On August 2, 2017, a CSX train consisting of five locomotives and 178 
rail cars of mixed freight, including flammable and hazardous liquid, derailed 
in Hyndman, Pennsylvania." This derailment was one of the many reasons the two 
said they were asking GAO to do this study.

   "Recent press reports indicate that some railroads are now operating trains 
with close to 200 or more cars that are more than 2 miles long," they wrote. 
"We have concerns that longer trains can create unusually long delays at grade 
crossings and may pose safety risks to train crews and the public." (To read 
the full letter, visit https://goo.gl/gbn5in)

   "We appreciate that these congressional leaders have asked for a review of 
these dangerously long trains," said SMART Transportation Division President 
John Previsich. "This issue was also addressed by John Risch, our national 
legislative director, at a recent STB hearing."

   In the news release on the SMART website, it was noted that Risch appeared 
Oct. 11 in Washington, D.C., before the Surface Transportation Board (STB) at a 
listening session focused on problems with CSX's service. "Urging CSX to do 
better will not fix the problems that excessively long trains cause," Risch 
said during his testimony.

   In his testimony, Risch asked the STB to immediately restrict train lengths 
to not exceed the length of the sidings on lines these trains operate on. Or, 
at the very least, conduct an investigation on the effect train lengths have on 
service and safety in the industry, he said. 

   "I wrote the FRA last April asking for action on this issue and they have so 
far not even responded to my letter. They have no Administrator and are 
reluctant to do anything until they do," said Risch. 

   Here is a link to Risch's full testimony in which he points out how 
excessively long trains "cause all sorts of logistical problems that cause 
tremendous amounts of delay wherever they go." (https://goo.gl/zH2dz7) 

   The STB is unlikely to take action on this issue any time soon. They are 
currently down to two members, and until they add three more, their hands are 
pretty much tied as far as major decision-making. They still have a few very 
"hot-button" issues that have been hanging in the balance for well over a year 
that need to be resolved before adding anymore on their plate.

   I spoke via email with Chuck Young, managing director of public affairs for 
GAO, and he confirmed that, "We received a request from Congressmen DeFazio and 
Capuano to look at safety and other impacts of longer trains. We accepted their 
request and the work is expected to get underway in February." The study will 
include the CSX, the Union Pacific and all other major railroads who have been 
adding more cars to a "single" train for the sake of adding to their profits.

   I can't help but note that this Doobie Brothers song rang through my head as 
I wrote this story: "Down around the corner, half a mile from here... You see 
them long trains runnin'....."

   And they get longer and longer.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

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DDG Prices Climb Higher

   OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from 
the 39 locations DTN collects bids from was $131 for the week ended Dec. 7, 5 
cents higher than two weeks ago. 

   Merchandisers noted that supplies are "very tight" right now, and prices are 
"well supported," which is pushing the market higher. The California market has 
also moved higher with one merchandiser noting the latest round of wildfires is 
slowing commerce in some spots. There is still very strong demand for rail 
shipments to the Pacific Northwest, California and Mexico.

   Based on the average of bids collected by DTN, the value of DDG relative to 
corn for the week ended Dec. 7 was at 108.28%, and the value of DDG relative to 
soybean meal was at 39.28%. The cost per unit of protein for DDG was $4.85, 
compared to the cost per unit of protein for soybean meal at $7.02. DDG has a 
per-protein unit cost advantage over soybean meal as meal prices rose faster 
than DDG, according to the U.S. Grains Council (USGC).

   The USGC said in their weekly price update that merchandisers are reporting 
DDGS shipments to Vietnam are slowing in December as all Midwest loading points 
are too cold for the required fumigation. However, merchandisers told DTN that 
the recent uptick in shipments to Vietnam in October and through November were 
part of the reason domestic supplies have been tightening.

   Prices for 40-foot containers to Southeast Asia rose $6/metric ton (mt) on 
average this week, with prices for Shanghai, China, and Taiwan increasing the 
most. "The forward curve for DDGS to Southeast Asia is relatively flat, meaning 
the market appears to be well-supplied but in balance with demand," said USGC.

   Earlier in the week, USDA reported that U.S. exports of distillers grains 
totaled 1,027,051 mt in October, up 6% from a year ago. Mexico once again was 
the top importer in October, accounting for 20% of the total, followed by 
Turkey and then four countries in eastern Asia. In the first 10 months of 2017, 
exports of U.S. distillers grains were down 3% from a year ago. With Vietnam 
back in the picture, we should see exports begin to recover. China is still not 
much of a player, coming in at No. 19 on the list of export destinations in 
October. 


                                              CURRENT      PREVIOUS     CHANGE
COMPANY   STATE                              12/7/2017    11/30/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
          Missouri             Dry             $148          $140         $8
                               Modified         $73           $70         $3
CHS, Minneapolis, MN (800-769-1066)
          Illinois             Dry             $130          $122         $8
          Indiana              Dry             $130          $122         $8
          Iowa                 Dry             $125          $123         $2
          Michigan             Dry             $120          $115         $5
          Minnesota            Dry             $128          $125         $3
          North Dakota         Dry             $140          $140         $0
          New York             Dry             $132          $132         $0
          South Dakota         Dry             $137          $135         $2
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
          Kansas               Dry             $140          $135         $5
POET Nutrition, Sioux Falls, SD (888-327-8799)
          Indiana              Dry             $125          $122         $3
          Iowa                 Dry             $120          $120         $0
          Michigan             Dry             $125          $122         $3
          Minnesota            Dry             $120          $120         $0
          Missouri             Dry             $140          $135         $5
          Ohio                 Dry             $125          $122         $3
          South Dakota         Dry             $130          $130         $0
    `              `
United BioEnergy, Wichita, KS (316-616-3521)
          Kansas               Dry             $142          $140         $2
                               Wet              $55           $60        -$5
          Illinois             Dry             $144          $140         $4
          Nebraska             Dry             $142          $140         $2
                               Wet              $55           $60        -$5
U.S. Commodities, Minneapolis, MN (888-293-1640)
          Illinois             Dry             $135          $122        $13
          Indiana              Dry             $130          $112        $18
          Iowa                 Dry             $125          $120         $5
          Michigan             Dry             $125          $112        $13
          Minnesota            Dry             $118          $118         $0
          Nebraska             Dry             $145          $135        $10
          New York             Dry             $140          $130        $10
          North Dakota         Dry             $145          $145         $0
          Ohio                 Dry             $130          $115        $15
          South Dakota         Dry             $125          $120         $5
          Wisconsin            Dry             $125          $120         $5
Valero Energy Corp., San Antonio, TX (402-932-5901)
          Indiana              Dry             $125          $120         $5
          Iowa                 Dry             $125          $120         $5
          Minnesota            Dry             $120          $120         $0
          Nebraska             Dry             $140          $130        $10
          Ohio                 Dry             $130          $130         $0
          South Dakota         Dry             $120          $110        $10
          California                           $195          $195         $0
Western Milling, Goshen, California (559-302-1074)
          California           Dry             $210          $210         $0
*Prices listed per ton.
          Weekly Average                       $131          $126         $5
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.


                     VALUE OF DDG VS. CORN & SOYBEAN MEAL
                        Settlement Price:   Quote Date      Bushel  Short Ton
                                     Corn      12/8/2017   $3.4000      $121.43
                             Soybean Meal      12/8/2017   $330.00
            DDG Weekly Average Spot Price        $131.00
                                  DDG Value Relative to:   12/7       11/30
                                                    Corn   108.28%      103.23%
                                            Soybean Meal    39.28%       38.83%
                               Cost Per Unit of Protein:
                                                     DDG     $4.85        $4.67
                                            Soybean Meal     $7.02        $6.83
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com    

   Follow Mary Kennedy on Twitter @MaryCKenn 

******************************************************************************
DDG Prices Higher 

   OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from 
the 39 locations DTN collects bids from was $126 for the week ended Nov. 30, 2 
cents higher from two weeks ago. 

   Based on the average of bids collected by DTN, the value of DDG relative to 
corn for the week ended Nov. 30 was at 103.23%, and the value of DDG relative 
to soybean meal was at 38.83%. The cost per unit of protein for DDG was $4.67, 
compared to the cost per unit of protein for soybean meal at $6.83. Price wise, 
DDG still remains a good choice for feed inclusion over soymeal.

   Cold weather demand and a shortened holiday week were responsible for the 
uptick in prices again this week. Merchandisers noted demand keeps rising in 
certain rail markets, most notably for delivery to the Pacific Northwest and 
California as well as for shipments to Mexico. 

   The U.S. Grains Council (USGC) reported in their weekly price update that 
prices at the U.S. Gulf firmed slightly from the prior week. Containers to Asia 
were mixed, with increases seen for Indonesia, Malaysia and Japan and decreases 
for containers to the Philippines and Bangladesh. Merchandisers also reported 
an uptick in interest from Korea, Indonesia and Vietnam.

   DDGS NEWS

   Ecuador's imports of U.S. distillers grains with solubles (DDGS) increased 
296% year over year to 22,200 metric tons in 2016/2017, the direct result of 
the U.S. Grains Council's work to introduce the feed grains co-product to the 
nation's livestock sector, according to the weekly USGC newsletter. 

   The Ecuadorian government has a corn self-sufficiency policy, effectively 
meaning any product labeled with the word "corn" in its description is subject 
to import restrictions into the country. However, in the past few years, the 
local corn crop has not been enough to cover domestic demand, resulting in 
expensive prices for local corn and the government issuing limited import 
permits.

   However, U.S. DDGS is still allowed to be imported into Ecuador and is still 
a relatively undervalued feed ingredient in this market. To seize this 
potential demand, the council conducted a series of activities to introduce 
DDGS to the industry. The council noted it will continue supporting increased 
use of DDGS in Ecuador by executing additional programs to provide nutritional 
information to livestock producers in the poultry, dairy and beef sectors.


                                              CURRENT       PREVIOUS    CHANGE
COMPANY   STATE                              11/30/2017    11/16/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
          Missouri             Dry              $140          $132        $8
                               Modified         $70            $68        $2
CHS, Minneapolis, MN (800-769-1066)
          Illinois             Dry              $122          $122        $0
          Indiana              Dry              $122          $122        $0
          Iowa                 Dry              $123          $120        $3
          Michigan             Dry              $115          $112        $3
          Minnesota            Dry              $125          $125        $0
          North Dakota         Dry              $140          $135        $5
          New York             Dry              $132          $132        $0
          South Dakota         Dry              $135          $135        $0
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
          Kansas               Dry              $135          $130        $5
POET Nutrition, Sioux Falls, SD (888-327-8799)
          Indiana              Dry              $122          $125        -$3
          Iowa                 Dry              $120          $120        $0
          Michigan             Dry              $122          $125        -$3
          Minnesota            Dry              $120          $120        $0
          Missouri             Dry              $135          $135        $0
          Ohio                 Dry              $122          $125        -$3
          South Dakota         Dry              $130          $130        $0
    `              `
United BioEnergy, Wichita, KS (316-616-3521)
          Kansas               Dry              $140          $140        $0
                               Wet              $60            $60        $0
          Illinois             Dry              $140          $140        $0
          Nebraska             Dry              $140          $140        $0
                               Wet              $60            $60        $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
          Illinois             Dry              $122          $120        $2
          Indiana              Dry              $112          $110        $2
          Iowa                 Dry              $120          $118        $2
          Michigan             Dry              $112          $110        $2
          Minnesota            Dry              $118          $115        $3
          Nebraska             Dry              $135          $135        $0
          New York             Dry              $130          $125        $5
          North Dakota         Dry              $145          $130        $15
          Ohio                 Dry              $115          $115        $0
          South Dakota         Dry              $120          $120        $0
          Wisconsin            Dry              $120          $115        $5
Valero Energy Corp., San Antonio, TX (402-932-5901)
          Indiana              Dry              $120          $120        $0
          Iowa                 Dry              $120          $115        $5
          Minnesota            Dry              $120          $120        $0
          Nebraska             Dry              $130          $130        $0
          Ohio                 Dry              $130          $130        $0
          South Dakota         Dry              $110          $110        $0
          California                            $195          $188        $7
Western Milling, Goshen, California (559-302-1074)
          California           Dry              $210          $206        $4
*Prices listed per ton.
          Weekly Average                        $126          $124        $2
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.


                     VALUE OF DDG VS. CORN & SOYBEAN MEAL
                        Settlement Price:   Quote Date      Bushel  Short Ton
                                     Corn     11/30/2017   $3.4175      $122.05
                             Soybean Meal     11/30/2017   $324.50
            DDG Weekly Average Spot Price        $126.00
                                  DDG Value Relative to:   11/30      11/16
                                                    Corn   103.23%      103.18%
                                            Soybean Meal    38.83%       39.94%
                               Cost Per Unit of Protein:
                                                     DDG     $4.67        $4.59
                                            Soybean Meal     $6.83        $6.54
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com    

   Follow Mary Kennedy on Twitter @MaryCKenn 

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Five-Year ELD Exemption for 'Small-Business' Truckers Sought

   On Monday, Nov. 20, the Federal Motor Carrier Safety Administration (FMCSA) 
announced a 90-day exemption for truckers hauling agriculture loads and 
livestock to comply with the U.S. Department of Transportation (DOT) electronic 
logging device mandate (ELD). The mandate is set to go in to effect December 
18, 2017.

   The Owner-Operator Independent Drivers Association, perhaps the loudest 
opponent of the ELD mandate, wants more. On Nov. 21, the group stated in a news 
release that they submitted an exemption request for a five-year delay to cover 
small-business truckers. The OODIA has long contended that smaller, safer 
carriers should be completely exempt from the "costly, unproven" regulation.

   "Small-business truckers that have already proven their ability to operate 
safely should not be subject to purchasing costly, unproven and uncertified 
devices," said Todd Spencer, executive vice president of OOIDA. 

   OOIDA noted in the news release that the request is for at least a five-year 
exemption for motor carriers classified as small businesses according to the 
Small Business Administration and with a proven safety history with no 
attributable at-fault crashes, and who do not have a Carrier Safety Rating of 
"Unsatisfactory."

   Among the numerous concerns cited in the request, self-certification of 
vendors is one of the biggest issues brought up by OOIDA. FMCSA has stated that 
they do not know if the self-certified ELDs listed on their website fulfill 
regulatory requirements in the mandate. At present, none of the 193 devices 
listed have been validated by the agency or any unbiased, third-party testing 
program.

   "Most small-business motor carriers can ill afford to make these purchases 
only to learn later that the ELD is non-compliant. Yet they are required to do 
so or risk violation," said Spencer. 

   Another major concern expressed by OOIDA in the exemption request includes 
cybersecurity. At two recent cybersecurity conferences, a leading research firm 
released a summary of their findings after analyzing three ELD providers 
currently listed as self-certified on the FMCSA website. Their general 
conclusion was that all three devices did very little, if anything at all, to 
follow best practices and were open to serious compromise, according to OOIDA.

   The request was submitted to the agency that regulates motor carriers, the 
Federal Motor Carriers Safety Administration. (https://goo.gl/xuP1hk)

   AGRICULTURE HAULERS, SMALL TRUCKING FIRMS CAN'T ABSORB COSTS

   I asked Mike Steenhoek, executive director of the Soy Transportation 
Coalition, what he thought of the mandate for truckers who haul grain and other 
ag commodities.

   "Many agricultural haulers are concerned due to the cost of purchasing the 
equipment," he said. "Many who transport agricultural products are small 
trucking firms or owner-operators who are less able to absorb such an expense 
in such a tight-margin industry. Many are arguing that those small businesses 
who have a track record of safety, who maintain a paper record of their 
operations should not have to incur such a cost."

   Steenhoek told me, "There is a concern that this mandate could drive certain 
small trucking firms out of business, which will reduce the capacity and amount 
of competition within agricultural shipping."

   I also spoke to an owner-operator from Texas who said that he has many 
friends in all parts of the trucking industry, from agriculture to oil. "This 
mandate is going to cause some real headaches on this country as we don't have 
the infrastructure for this yet..."

   "The funny thing is the trucking alliance puts all these numbers out about 
accident reduction, and so forth, and most large carriers are on ELD, but they 
have the most accidents anyway," he said. "It's also been proven that most 
truck accidents happen on two-lane highways, not the interstate, so where does 
the ELD help with that? It's not the machine that is the problem, it's the 
humans that are making all the rules and overregulating one of the most 
important industries in our nation. Without drivers like me and other small 
operators, America will stop functioning as we know it." 

   U.S. Rep. Brian Babin, R-Texas, who on July 19 already introduced a bill 
titled "H.R. 3282, the ELD Extension Act of 2017," said on his Facebook page: 
"I sent a letter on Nov. 9 to President Donald J. Trump with a plan for him to 
use an Executive Order to delay the Electronic Logging Device (ELD) mandate, 
and urged him in the strongest possible terms to do so. Millions of Americans 
will be affected by this regulation that was written by the Obama 
Administration that will go into effect this Dec. 18 unless we act."

   "Millions of hard-working American truckers, farmers and small businesses 
need you to take immediate and decisive action to protect them from a massive 
new regulation that is scheduled to go into effect just 39 days from today," 
Babin said in the letter. 

   "I am writing on their behalf with a plan to help you do just that. 
Accordingly, I respectfully request that you issue an Executive Order as soon 
as possible, instructing the Secretary of Transportation to provide an 
immediate waiver for all trucking sectors and operations subject to this 
mandate, until such time as it can be certified that implementation will not 
cause economic or other harm to the millions who are subject to it," Babin 
wrote. 

   Here is copy of the letter: 
https://babin.house.gov/news/documentsingle.aspx?DocumentID=1591 

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
2017 HRS Wheat, Durum Crop: Survival of the Fittest 

   The 2017 U.S. hard red spring wheat crop may have been lower in production, 
but overall, it featured a high grade profile, high protein content and very 
good functional performance, according to the North Dakota Wheat Commission 
(NDWC) 2017 U.S. Hard Red Spring Wheat and Durum Regional Quality Report.

   The report noted that production was down 21% from 2016 due to lower planted 
area, and severe drought conditions across the western portion of the main 
four-state production region. The impact from drought offset production gains 
in the Pacific Northwest and eastern half of the four-state growing region, 
where a more favorable growing season produced above-average to record yields.

   The spring wheat crop averaged a No. 1 Northern Spring protein compared to a 
No. 1 Dark Northern Spring (the preferred flavor of top exporters) a year ago, 
as average vitreous kernel levels fell from 77% to 71%. Protein averaged 14.5%, 
which was higher than the five-year average. Drought conditions and 
above-average temperatures led to the higher protein, with the most notable 
gains in protein in drought-affected areas, noted the report.

   I spoke to shippers and farmers in the key growing areas of Montana and 
North Dakota, as well as western Minnesota and South Dakota. With the severity 
of the drought varied in all of the growing areas, results were mixed.

   Perhaps the hardest-hit area of the spring wheat growing states was Montana. 
Todd LaPlant, elevator manager at EGT LLC in Glasgow, Montana, told me, "We 
estimate yield for northeast Montana spring wheat at 17 bushels per acre, down 
from 40+ bpa last year. We also estimate abandonment at 25%. Most of the spring 
wheat that wasn't worth harvesting was also too thin to bale in our area."

   Tim Luken, manager of Oahe Grain in Onida, South Dakota, told me, "In 2016, 
our elevator took in 720,000 bushels of spring wheat, grading 60.9 test weight 
(tw) and 14.4% protein (pro). In 2017, we took in 224,000 bushels grading 60.9 
tw and 15.6% pro." Luken told me that the lower grain intake was due to drought 
and acres lost to corn and soybeans in 2017 -- maybe 15% to 18%.

   "I would say our yields in our trade territory will average somewhere in 
that 47-bushel-per-acre area," said Jeff Kittell, merchandiser for Border Ag 
and Energy in Russell, North Dakota. "Quality was good with no vomitoxin, and 
our protein will average 14.0%. We had no significant amount of wheat acres 
abandoned."

   Keith Brandt, general manager of Plains, Grain and Agronomy in Enderlin, 
North Dakota, told me, "Spring wheat yields ended up at 65 bu/acre. Good 
quality, 14.0 pro. Nothing baled up in southeast North Dakota. Look for about 
10% increase in planted acres in 2018. Part of this is price related because 
wheat will cash flow, but maybe a bigger part is getting wheat in the rotation 
for weed control and getting a crop harvested earlier, so they can come back to 
do ditching, tiling and/or make effective use of cover crops -- all beneficial 
ways to improving soil conditions."

   A shuttle loader in eastern North Dakota told me that his area had an 
average crop of wheat with protein about a half of a percent over the average. 
"We were hurt by some dryness, but nothing was wiped out in the valley. The 
area in east-central North Dakota averaged around 75 bpa and 14.2% pro." He 
also noted that early talk is for a little more wheat planting intended and 
less corn, but "it's still early."

   In northwestern Minnesota, Tim Dufault, who farms in the Crookston, 
Minnesota, area said his wheat was "right at 75 bushels per acre, about the 
third-best-ever yield. Quality was good also. One variety of seed was under 14% 
protein, but for the whole crop, I would estimate my pro will be a hair over 
14%. Test weights and color were also good."

   "I am a board member of the Minnesota Wheat Research and Promotion Council," 
said Dufault. "That is the group that takes the checkoff fee and promotes our 
wheat through the U.S. Wheat Associates. At our board meeting Nov. 16, the ones 
that were there said they expect there would be a lot more spring wheat planted 
next year (we are a nine-person board and not everyone was at the meeting). A 
lot of them also said this year's wheat crop was their best ever. Those present 
farmed from west-central Minnesota all the way up to the Canadian border."

   Next, let's take a look at how North Dakota farmers did on their durum... 
what there was of it. 

   According to the NDWC Quality Report, the 2017 northern durum crop averaged 
a No. 1 Hard Amber Durum grade with an average protein level of 14.5%. While 
average vitreous kernel content is at 88%, rains in areas did adversely affect 
the color on a portion of the crop. Also, effects of the drought were seen in 
the lower thousand kernel weights (average is 38.4 grams) and larger percentage 
of medium-sized kernels.

   The report also stated that durum production in Montana and North Dakota in 
2017 is down significantly due to a small decline in acreage and to sharply 
lower yields, as the region was afflicted with serious drought conditions. 
Durum production in the two states combined is 41.5 million bushels (1.13 
million metric tons), less than half of 2016's production.

   HOW DID CANADA DO THIS YEAR?

   I asked DTN Canadian Grains Analyst Cliff Jamieson about Canada's 2017 durum 
and spring wheat crops. Here's his report.

   "The 2017 Canadian durum crop is of high quality, with the Saskatchewan 
government estimating that 95% of the crop will fall within the top two grades, 
well above the 10-year average of 57%," said Jamieson. "The Alberta government 
has estimated that 85% of the crop will fall within the top two grades, up from 
the five-year average of 71%. The ongoing harvest sample program conducted by 
the Canadian Grain Commission has so far posted test results for 1,442 samples, 
of which 1,313 samples, or 91%, have fallen within the top two grades.

   "Statistics Canada's most recent reports have estimated prairie durum yields 
at 31 bushels per acre, well below the five-year average of 41.8 bu/ac. With 
seeded acres expected down an estimated 16%, estimated production of 4.3 
million metric tons points to the smallest crop in six years. 

   "Provincial government crop estimates were more optimistic," said Jamieson. 
"The Saskatchewan government's provincial average is pegged at 36 bu/ac and the 
Alberta government's average at 35.8 bu/ac, which could point to high odds of 
an upward revision in production estimates when Statistics Canada releases 
their next round of estimates based on November surveys on Dec. 6."

   As for the spring wheat crop, Jamieson said, "Like durum, the overall 
quality of the wheat crop is extremely high. While the Canadian Grain 
Commission's harvest sample program does not provide an accurate reflection of 
grade distribution across the prairies, so far, 4,176 samples of the 4,454 
samples tested, or 93.8%, have graded either 1 CWRS or 2 CWRS. The mean protein 
is reported at 13.01% for all samples submitted, with the mean protein reported 
the lowest in Saskatchewan at 12.77%. The prairie average is down from the 
13.6% reported for all samples tested in 2016."

   Current estimates suggest that Canada's hard red spring production will 
reach 17.126 million metric tons, up 2.7% from 2016, but 4.5% below the 
five-year average. "It is interesting to note that hard red spring production 
is estimated to account for 75% of all wheat production in Canada (excluding 
durum), up from 69.6% in 2016 and the five-year average of 72.5%," said 
Jamieson. 

   According to Jamieson, wheat yields on the prairies were seen as highly 
variable in 2017, with the southern prairies facing drought conditions while 
many northern areas received excessive -- even record -- rainfall. "Crop 
quality is reported as well-above-average levels and has led to a rebound in 
exports from levels seen in 2016/17."

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn


******************************************************************************
DDG Prices Jump Higher 

   OMAHA (DTN) -- The DTN average dried distillers grains (DDG) spot price from 
the 39 locations DTN collects bids from was $124 for the week ended Nov. 16, 7 
cents higher from the prior week. 

   Merchandisers noted that markets have been climbing higher with the arrival 
of seasonal demand, which is catching some plants a little short of product. 
That is also due in part to the renewal of shipments to Vietnam after the 
fumigation issue was resolved in September, a market that exporters had been 
unable to partake in since one year ago. 

   Based on the average of bids collected by DTN, the value of DDG relative to 
corn for the week ended Nov. 16 was at 103.18%, and the value of DDG relative 
to soybean meal was at 39.94%. The cost per unit of protein for DDG was $4.59, 
compared to the cost per unit of protein for soybean meal at $6.54.

   CIF NOLA (New Orleans, Louisiana) prices for November were at $150 to $155 
per ton and December was at $152 to $156. Barges are in the process of heading 
south from the UMR to get downriver before locks start to close for the winter. 
Barges leaving St. Paul and south of there (MM857-MM640) need to be on their 
way by Sunday, Nov. 19, to make it past the final lock where the river closes 
for the winter. The last barges leaving the southern UMR down to MM240, need to 
be moving by Dec. 3.

   DDGS NEWS

   The U.S. Grains Council (USGC) reported that shipping containers containing 
7,850 metric tons of U.S. distillers dried grains with solubles (DDGS) arrived 
into the Port of Ho Chi Minh City, Vietnam, between Oct. 25 and Nov. 10, 2017, 
among the first orders filled following a September announcement by the 
Vietnamese government that it would lift its suspension of DDGS imports and 
ease fumigation requirements for U.S. corn and wheat imports. Manuel Sanchez, 
USGC regional director for South and Southeast Asia, was on site as the 
containers of U.S. DDGS arrived. 

   The containers were among the first to arrive in Vietnam following the 
government lifting a suspension put in place in October 2016. 

   "We are glad to see the first shipment and arrival of U.S. DDGS back into 
the Vietnamese market," said Sanchez. "The Council collaborated closely with 
our own government, the Vietnamese government and industries in both countries 
to resolve this trade disruption."

   Last week, DDGS imports into China saw a bit of good news when China's 
Ministry of Foreign Affairs said they would allow U.S. distillers dried grains 
with solubles (DDGS) to be imported without charging an 11% value added tax 
(VAT). While the VAT has been removed, the anti-dumping and countervailing 
duties remain, but shippers agree that this news may be one small step toward 
China possibly easing up on the current penalties.


                                              CURRENT       PREVIOUS    CHANGE
COMPANY   STATE                              11/16/2017    11/9/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
          Missouri             Dry              $132          $132        $0
                               Modified         $68           $68         $0
CHS, Minneapolis, MN (800-769-1066)
          Illinois             Dry              $122          $118        $4
          Indiana              Dry              $122          $117        $5
          Iowa                 Dry              $120          $116        $4
          Michigan             Dry              $112          $112        $0
          Minnesota            Dry              $125          $118        $7
          North Dakota         Dry              $135          $128        $7
          New York             Dry              $132          $122       $10
          South Dakota         Dry              $135          $118       $17
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
          Kansas               Dry              $130          $128        $2
POET Nutrition, Sioux Falls, SD (888-327-8799)
          Indiana              Dry              $125          $120        $5
          Iowa                 Dry              $120          $117        $3
          Michigan             Dry              $125          $120        $5
          Minnesota            Dry              $120          $115        $5
          Missouri             Dry              $135          $125       $10
          Ohio                 Dry              $125          $120        $5
          South Dakota         Dry              $130          $115       $15
    `              `
United BioEnergy, Wichita, KS (316-616-3521)
          Kansas               Dry              $140          $140        $0
                               Wet              $60           $60         $0
          Illinois             Dry              $140          $140        $0
          Nebraska             Dry              $140          $140        $0
                               Wet              $60           $60         $0
U.S. Commodities, Minneapolis, MN (888-293-1640)
          Illinois             Dry              $120          $120        $0
          Indiana              Dry              $110          $110        $0
          Iowa                 Dry              $118          $118        $0
          Michigan             Dry              $110          $110        $0
          Minnesota            Dry              $115          $115        $0
          Nebraska             Dry              $135          $135        $0
          New York             Dry              $125          $125        $0
          North Dakota         Dry              $130          $130        $0
          Ohio                 Dry              $115          $115        $0
          South Dakota         Dry              $120          $120        $0
          Wisconsin            Dry              $115          $115        $0
Valero Energy Corp., San Antonio, TX (402-932-5901)
          Indiana              Dry              $120          $115        $5
          Iowa                 Dry              $115          $112        $3
          Minnesota            Dry              $120          $115        $5
          Nebraska             Dry              $130          $128        $2
          Ohio                 Dry              $130          $118       $12
          South Dakota         Dry              $110          $105        $5
          California                            $188          $188        $0
Western Milling, Goshen, California (559-302-1074)
          California           Dry              $206          $215       -$9
*Prices listed per ton.
          Weekly Average                        $124          $117        $7
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and
California are not included in the averages.


                 VALUE OF DDG VS. CORN & SOYBEAN MEAL
                                  Settlement Price:     Quote Date              Bushel    Short Ton
                                               Corn          11/16/2017        $3.3650          $120.18
                                       Soybean Meal          11/16/2017                         $310.50
                      DDG Weekly Average Spot Price                                             $124.00
                             DDG Value Relative to:                         11/16            11/9
                                               Corn                            103.18%           95.93%
                                       Soybean Meal                             39.94%           37.52%
                          Cost Per Unit of Protein:
                                                DDG                              $4.59            $4.33
                                       Soybean Meal                              $6.54            $6.56
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com    

   Follow Mary Kennedy on Twitter @MaryCKenn 

******************************************************************************
Divergence and the Rubber-Band Principle

   I like the social media site Twitter. It brings a world of people sharing 
the same interests -- though not necessarily the same opinions -- to your 
computer screen opening the door to discussions on an untold number of topics. 
Recent examples, in my case, have covered behavioral economics in trading, the 
benefits of climate change and much discussion regarding the flow of money out 
of (and possibly into) grain and oilseed markets. 

   It's the latter I want to discuss in this blog post, following a question I 
received earlier in the week. I was asked, "Why did the (soybean) market not 
really do anything the day of the (USDA) report (Thursday, November 9) and are 
now down 20 cents this week?" This question came in Tuesday, when the January 
soybean contract was near its low for the week (so far) of $9.67, off 20 cents 
from last Friday's settlement of $9.87. My response was, "I see a collapse in 
the divergence between commercial and noncommercial traders. Last week's USDA 
numbers were "carp": Nothing bullish or bearish. However, Jan beans break below 
4-week low and sell orders are triggered this week." 

   Do you see now why I need more than 280 characters for this particular 
question? 

   Let's start with USDA's November numbers. In its monthly round of crop 
production and supply and demand guesses, USDA decreased 2017 production by 6 
mb, despite leaving harvested area and national average yield unchanged, 
resulting in a 5 mb decrease in ending stocks and no changes made from previous 
demand guesses. Again, don't try to do the math. USDA's November ending stocks 
guess of 425 mb was well below its prognostication of 495 mb from last June. 
This keep the downtrend of USDA guesses in place, and in line with what is 
normally seen, and could ending with September 2018 quarterly stocks near 310 
mb. For the week, January soybeans closed up 1/4 cent, but 21 cents off its 
weekly high. 

   That means, using this week's low of $9.67, the January contract is actually 
down 41 cents from last week's high. In my opinion, it has more to do with the 
noncommercial side of the market trying to get back in line with a commercial 
view that has been growing more bearish since August. 

   Take a look at the accompanying chart. The blue line represents the 
noncommercial net-long futures position (long futures minus short futures) 
reported each week by the CFTC in its Commitment of Traders reports. I use the 
Legacy reports, futures only. Notice that the latest report showed this group 
holding net-long futures of 70,814 contracts, an increase of 2,942 contracts 
from the previous week (these reports run from Tuesday to Tuesday). Meanwhile, 
as mentioned before, the commercial view continues to grow more bearish. Note 
the green line representing the nearby futures spread (nearby futures contract 
minus first deferred contract). Notice that it has been trending down, showing 
a stronger carry (more bearish view of fundamentals), while the noncommercial 
position has been trending up (larger net-long futures position). 

   Given that a market has only two sides, and in this case those sides were 
moving in opposite direction or diverging, I call this type of situation a 
"divergence." I've also described it using the Rubber-Band Principle, meaning 
that you can stretch a rubber-band only so far before it breaks and snaps back. 
In the case of commodity markets, that break usually means noncommercial 
traders tend to move, eventually and quickly, back in the direction of 
commercial traders. In the case of soybeans, that means selling some of their 
net-long futures position, maybe all before it's said and done, or before 
commercial traders start buying again. 

   The key is the commercial side usually (similar to the old four out of five 
dentists) doesn't change its mind based on silly USDA reports. Commercial 
traders leave that for noncommercials to do. Therefore, with the carry in the 
nearby futures spread bearish for quite some time, it was no surprise when 
noncommercial selling began, then accelerated as January soybeans moved through 
technical (chart based) price support. 

   For more information on that development, see the most recently Technically 
Speaking post on DTN. 

   To track my thoughts on the markets throughout the day, follow me on 
Twitter: http://www.twitter.com/DarinNewsom 

******************************************************************************
China Cracks the Door Open for US DDGS Exports

   China's Ministry of Foreign Affairs announced on its website that it would 
again allow U.S. distillers dried grains with solubles (DDGS) to be imported 
without charging an 11% value-added tax (VAT), the U.S. Grains Council (USGC) 
reported Nov. 9. The announcement was made in a report of key areas of 
consensus between the United States and China during President Donald Trump's 
official visit that week. 

   I spoke to USGC President and CEO Tom Sleight about this latest news, which 
had been rumored since June. He said China's statement to remove its VAT on 
imports of U.S. DDGS "opens the door a little" for U.S. imports. "We are 
pleased to see this move, which we've been working toward for months," said 
Sleight.

   However, while the VAT has been removed, the anti-dumping and countervailing 
duties remain, noted Sleight. China's Ministry of Commerce began anti-dumping 
and countervailing duty investigations related to U.S. DDGS exports to its 
country in January 2016. Those cases resulted in a final ruling against the 
U.S. on Jan. 10, 2017, with China setting anti-dumping duties at a range from 
42.2% to 53.7%, while anti-subsidy tariffs were set between 11.2% and 12%. 

   Along with the Jan. 10 duties applied to U.S. DDGS, Sleight said that also 
meant an end to the "ongoing exemption from paying the VAT. The combination of 
the duties and the VAT made U.S. DDGS exports to China even less competitive, 
affecting market prices and export flows globally." 

   Those "penalties," applied to both U.S. distillers dried grains with or 
without solubles, caused U.S. exports to China to fall from 5.4 million metric 
tons in 2015 to 3.3 mmt in 2016 and just 739,000 tons so far in 2017, according 
to USGC. 

   The council's staff members in China and the United States have been working 
closely with the U.S government at the highest levels for nearly a year to 
emphasize the importance of this $1.5 billion market to the U.S. grains and 
ethanol industries.

   "This change will immediately improve the competitiveness of U.S. DDGS in 
what was once our top market, which is a very positive thing," said Sleight. He 
also noted that this may be a step, albeit small, toward a possible negotiation 
over the stiff duties and tariffs U.S. DDGS exports to China still face.

   DDGS PRICES GAIN ON CHINA NEWS, U.S. RIVER ISSUES

   Internationally, the Asian DDG market continues to firm with noted buying 
support. Prices to China and Vietnam are up $2 to $3 per metric ton while other 
destinations saw lower bids. On average, 40-foot containers to Southeast Asia 
were steady this week at $202 mt. Early week buying was attributed to President 
Trump's visit to Asia that was expected to improve trade relations, while 
late-week price increases were due to announced tax/tariff changes in the 
region, according to USGC weekly price update.

   In DTN's weekly DDG price update on Nov. 10, prices rose $4 mt in the 
domestic market on average, and some merchandisers were in agreement that some 
of the support for prices came from the China news. Here is a link to the 
update posted Friday: https://goo.gl/u2kuAm 

   CIF (cost, insurance and freight) NOLA (New, Orleans, Lousiana) barge prices 
rose $6.50 mt the past week and FOB (free on board) NOLA prices were up $7 mt 
due in part to issues on parts of the river system causing freight availability 
to be tight in spots. Stoppages and slowdowns continue on the Ohio River due to 
higher water and ongoing issues at Lock 52.

   Ceres Barge Line noted that Ohio River shippers were in the market, buying 
"on-station freight" for the end of the week, as the lock is still closed, 
keeping the empties from getting into position. The USACE reported that as of 
Nov. 10, the navigation pass remained open during daylight hours only for all 
navigation traffic southbound and all light boat northbound. The USACE expects 
to reevaluate the restrictions by Nov. 13.

   The Illinois River was also "very tight" for the end of week and was seeing 
a few barges trade on that segment if on station, noted Ceres Barge Line. For 
the upcoming week, freight on that segment still seems to be all offers. 

   On top of that, the current estimated date for all barges coming from St. 
Paul, Minnesota, Upper Mississippi River MM 857 through 640 that need to be 
loaded and released is Nov. 19. The final date for the last segment of UMR MM 
520 through 240 is Dec. 3, according to American Commercial Barge Line. 

   Once this portion of the UMR closes for the winter, shippers need to find 
other, likely more expensive methods to transport not just DDGS, but all other 
commodities from the Upper Midwest to St. Louis down to the Gulf until spring 
when the river reopens.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn

******************************************************************************
DDG Prices Sharply Higher

   OMAHA (DTN) -- The U.S. Grains Council (USGC) reported Nov. 9 that an 
announcement was posted on China's Ministry of Foreign Affairs' website that 
the country would again allow U.S. distiller's dried grains with solubles 
(DDGS) to be imported without charging an 11% value added tax (VAT), 
potentially altering global DDGS market dynamics for the better. 

   However, while the VAT has been removed, the anti-dumping and countervailing 
duties remain. But it's a start in the right direction.

   The DTN average dried distillers grains (DDG) spot price from the 39 
locations DTN collects bids from was $117 for the week ended Nov. 9, 4 cents 
higher from two weeks ago. Merchandisers noted that markets have been climber 
higher as demand is firming with the recent onset of colder temperatures, 
especially this week in parts of the U.S. where winter is expected to make an 
appearance through the weekend. 

   However, some merchandisers were in agreement that support for prices came 
from the China news. One merchandiser told me the China announcement "priced 
itself in this week," moving the market higher on top of the strength seen in 
the domestic market the past few weeks. 

   Based on the average of bids collected by DTN, the value of DDG relative to 
corn for the week ended Nov. 9 was at 95.93%, and the value of DDG relative to 
soybean meal was at 37.52%. The cost per unit of protein for DDG was $4.33, 
compared to the cost per unit of protein for soybean meal at $6.56.


                             CURRENT     PREVIOUS      CHANGE
COMPANY  STATE                          11/8/2017    10/26/2017
Bartlett and Company, Kansas City, MO (816-753-6300)
         Missouri           Dry            $132         $125     $7
                            Modified       $68          $65      $3
CHS, Minneapolis, MN (800-769-1066)
         Illinois           Dry            $118         $115     $3
         Indiana            Dry            $117         $115     $2
         Iowa               Dry            $116         $110     $6
         Michigan           Dry            $112         $110     $2
         Minnesota          Dry            $118         $110     $8
         North Dakota       Dry            $128         $120     $8
         New York           Dry            $122         $120     $2
         South Dakota       Dry            $118         $110     $8
MGP Ingredients, Atchison, KS (800-255-0302 Ext. 5253)
         Kansas             Dry            $128         $125     $3
POET Nutrition, Sioux Falls, SD (888-327-8799)
         Indiana            Dry            $120         $110     $10
         Iowa               Dry            $117         $105     $12
         Michigan           Dry            $120         $110     $10
         Minnesota          Dry            $115         $105     $10
         Missouri           Dry            $125         $115     $10
         Ohio               Dry            $120         $110     $10
         South Dakota       Dry            $115         $105     $10
   `             `
United BioEnergy, Wichita, KS (316-616-3521)
         Kansas             Dry            $140         $118     $22
                            Wet            $60          $50      $10
         Illinois           Dry             $0           $0      $0
         Nebraska           Dry            $140         $118     $22
                            Wet            $60          $50      $10
U.S. Commodities, Minneapolis, MN (888-293-1640)
         Illinois           Dry            $120         $115     $5
         Indiana            Dry            $110         $110     $0
         Iowa               Dry            $118         $110     $8
         Michigan           Dry            $110         $110     $0
         Minnesota          Dry            $115         $110     $5
         Nebraska           Dry            $135         $125     $10
         New York           Dry            $125         $125     $0
         North Dakota       Dry            $130         $115     $15
         Ohio               Dry            $115         $110     $5
         South Dakota       Dry            $120         $110     $10
         Wisconsin          Dry            $115         $110     $5
Valero Energy Corp., San Antonio, TX (402-932-5901)
         Indiana            Dry            $115         $110     $5
         Iowa               Dry            $112         $110     $2
         Minnesota          Dry            $115         $110     $5
         Nebraska           Dry            $128         $125     $3
         Ohio               Dry            $118         $115     $3
         South Dakota       Dry            $105         $105     $0
         California                        $188         $180     $8
Western Milling, Goshen, California (559-302-1074)
         California         Dry             $0           $0      $0
*Prices listed per ton.
         Weekly Average                    $117         $113     $4
The weekly average prices above reflect only those companies DTN
collects spot prices from. States include: Missouri, Iowa, Nebraska,
Kansas, Illinois, Minnesota, North Dakota, South Dakota, Michigan,
Wisconsin and Indiana. Prices for Pennsylvania, New York and

      VALUE OF DDG VS. CORN & SOYBEAN MEAL
                  Settlement Price:  Quote Date       Bushel  Short Ton
                               Corn     11/9/2017    $3.4150     $121.96
                       Soybean Meal     11/9/2017                $311.80
      DDG Weekly Average Spot Price                              $117.00
             DDG Value Relative to:                  11/9       10/26
                               Corn                   95.93%      90.27%
                       Soybean Meal                   37.52%      36.20%
          Cost Per Unit of Protein:
                                DDG                    $4.33       $4.19
                       Soybean Meal                    $6.56       $6.57
Notes:
Corn and soybean prices take from DTN Market Quotes. DDG price
represents the average spot price from Midwest companies
collected on Thursday afternoons. Soybean meal cost per unit
of protein is cost per ton divided by 47.5. DDG cost per unit
of protein is cost per ton divided by 27.

   Mary Kennedy can be reached at mary.kennedy@dtn.com 

   Follow Mary Kennedy on Twitter @MaryCKenn 

******************************************************************************
Study Released on Impacts of Unscheduled River Lock Outages

   An October study commissioned by the National Waterways Foundation and U.S. 
Maritime Administration (MARAD) was released on Nov. 1 "highlighting the 
economic benefits associated with reliable inland navigation." 

   The study focused on four geographically different locks on the inland 
waterways system: Markland Locks and Dam (Ohio River near Cincinnati), which 
opened in 1959; Calcasieu Lock (Gulf Intracoastal Waterway in Louisiana), which 
opened in 1950; LaGrange Lock and Dam (southern-most of the navigation 
structures on the Illinois River), which opened in 1939; and Lock and Dam 25 
(Mississippi River, north of St. Louis), which opened in 1939. These four locks 
support traffic on every segment of the Mississippi River system, according to 
the study.

   "The study underscores that if the inland waterways were unavailable to 
transport the nation's freight, the average number of trucks on rural highways 
would increase and result in significant impacts on safety, highway maintenance 
cost and fuel consumption. Increased rail transportation safety impacts may 
occur at rail crossings, especially in urban areas and in increased fuel 
consumption," said MARAD Executive Director Joel Szabat in a press release Nov. 
1. 

   On the same day the study was released, Agriculture Secretary Sonny Perdue 
posted on Twitter, "At the White House to talk to various stakeholders in a 
conversation about POTUS's infrastructure agenda. Important to rural America."

   The National Grain and Feed Association (NGFA) said in its weekly newsletter 
that Waterborne Commerce Chair Scott Leininger of CGB Enterprises, Inc., joined 
NGFA Director of Legislative Affairs and Public Policy Bobby Frederick at the 
White House "Rural Infrastructure Conversation" also on  Nov. 1. NGFA noted 
that the meeting featured remarks by Secretary Perdue, White House Deputy Chief 
of Staff Rick Dearborn, and DJ Gribbin, who is with the National Economic 
Council. 

   "During the conversation, Leininger thanked Perdue for shining a light on 
the dilapidated state of inland waterway locks and dams. Both Leininger and 
Perdue agreed that the U.S. transportation infrastructure provides a 
competitive advantage over foreign competitors, but that inland waterways must 
be bolstered to support Perdue's goal of growing American ag exports," said the 
NGFA.

   "The larger unknown is how improvements to these 1920s and 1930s locks and 
dams, which President Trump described as 'critical corridors of commerce' 
during his June visit to the Ohio River, will be funded," added the NGFA. The 
NGFA said it will continue to monitor and inform this debate, as well as "work 
with congressional partners who previously have helped defeat the concept of 
allowing for tolling or lockage fees on the inland waterways that would drive 
traffic off the river and increase the burden on U.S. highways and railways."

   The October study notes that on waterway segments where dams and locks are 
necessary, any disruption in a lock's operation can significantly inhibit barge 
transportation. In some cases, lock outages are scheduled to allow for 
necessary maintenance. These scheduled outages are announced months or even 
years in advance so that affected waterway shippers can adjust commodity 
inventories or otherwise prepare for the service disruption. 

   In other cases, however, "weather, accidents or mechanical failures" lead to 
unscheduled lock closures of varying durations. Because carriers and shippers 
have no opportunity to prepare for unscheduled lock outages, these closures can 
be tremendously disruptive to water-dependent commerce, according to the study.

   The most notable disruption recently was the multiple closures between 
September and October at Lock and Dam 52 and 53 on the Ohio River. These 
disruptions occurred at the worst time for farmers who were hauling their fall 
harvest to the river for shipment to the Gulf. Even though the river finally 
reopened there on Oct. 19, the backlog of tows is still an issue. 

   As of Nov. 3, Ingram Barge Co. noted on its website that Lock 52 had 27 
boats in queue, and informed shippers to plan for a one- to two-day delay 
transiting through there. All traffic is scheduled to transit the main (1200 
FT) lock chamber, while a contractor places stone above the wicket dam to 
facilitate repair efforts at Locks and Dam 52. The main lock chamber will be 
utilized in lieu of the navigation pass until river elevations exceed the 
maximum locking stage, 20.7 feet. Throughout the project, transiting the 
navigation pass will be evaluated based on river conditions, according to the 
river condition update on the website.

   One of the key findings of the study is that each of the four locks 
considered within the study "helps shippers avoid more than $1 billion in 
additional transportation costs each year." 

   Every time there are outages at Locks and Dams along the U.S. River system, 
barge freight increases in some of those cases. In turn, shippers may pass the 
extra costs to the farmer who hauls his grain to river terminals. Higher barge 
freight, and in some cases, the inability to haul grain due to river closures, 
can be detrimental to the farmer's bottom line and overall profitability.

   It's time the government takes action to help fix our waterways rather than 
continue to just talk about fixing them before it is too late and the whole 
system goes to ruins. 

   Here is a link to the National Waterways Foundation October study: 
https://goo.gl/M9KqLM

   Mary Kennedy can be reached at mary.kennedy@dtn.com

   Follow Mary Kennedy on Twitter @MaryCKenn

    

******************************************************************************

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