5 | What goes up must come down

Ethanol has all but lost its year-long run at an extreme discount to gasoline. The collapse in gasoline has left futures trading at their smallest premium over ethanol since October 2023:

4 | Top Four

Putting 2023/24 exports in perspective, you can see two things:

1) anything was better than last year’s decade-low & 2) the rebound was with no help from China.

3 | 'Tis the season

Did you know U.S. soybean exports are as seasonal as pumpkin spice taking over the country as soon as the first leaf hits the ground each fall?

More than one-third of annual exports are shipped in October and November - two months critically important to the success of the U.S. program each marketing year.

Unfortunately for the third year in a row, low water conditions on the all-important Mississippi River are limiting October shipments out of the US Gulf and cutting directly into the 2024/25 program.

2 | When subtraction adds up

Reduced drafts (meaning barges must be light-loaded otherwise they risk running aground in low water conditions) are the one instance where subtraction adds up… and it is not a good thing.

Low water conditions on the Lower Mississippi are limiting loading capacities to 10’ drafts throughout the system, reducing each barge’s carrying capacity by nearly one-fourth:

A line boat pushing a full sized 25-barge tow at full drafts can carry two million bushels of soybeans to the US Gulf in one trip. 

At current (reduced) drafts, it takes 33 barges to transport the same amount of bushels and requires an extra boat as tow sizes have been reduced as well.

1 | The Driver

Big changes in the eastern half of the country the past six weeks as a total absence of precip has left areas along the Mississippi River, Ohio, and farm southern states with major moisture deficits and intensifying drought conditions.

Not only has limited precip hurt crop finishing but it is the predominant driver behind lower water conditions that are impacting river logistics and hurting US competitiveness in world export markets.

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