Agro Perspectiva

Oil spill not slowing US ag shipments

15.06.2010 11:42 "Agro Perspectiva" (Kyiv) — THERE has been plenty of criticism of the government’s handling of the oil spill in the Gulf of Mexico, but when it comes to agricultural shipments, the government has helped keep the stream of goods flowing. More than 60 per cent of US grain goes through the port of New Orleans, La., according to Chad Hart, extension economist at Iowa State University. Right now, the oil spill is moving mainly to the east, so there has been little impact on the shipping lanes, which are to the west of the slick. The main shipping lanes are 45 miles away from the source of the spill. The concern is that if the oil slick gets into the Southwest Passage — the canal that runs from New Orleans to the Gulf of Mexico — it could create severe delays in exporting corn and soybeans shipped overseas. Ships can sail through the oily water but would need to be cleaned when they enter port. «When a ship comes into port, it would have to be cleaned if it went through the oil slick,» said Hart. «Then, when it goes to its destination, it would have to be cleaned again when it arrives.» Hart said if the oil slick starts to camp more around the passage and begins to build up on ships, it could significantly delay movement out of the ports. «If we start to stack up boats and have to clean boats, delays could be sizeable,» he said. The government response has been quick in relation to shipping needs with a contingency plan in place, Hart explained. Port authorities are setting up cleaning stations, so if ships need cleaning, the system is in place to do that as quickly as possible. «(The government) has been preparing throughout all of this to keep shipping lanes open as long as they can,» he said. «If we end up with a bottleneck down there, we could see (grain) prices in the US fall from 10 cents to 50 cents (per bushel). (Hurricane) Katrina had a similar impact. If that happens, people will start to look at alternative shipping routes,» Hart said. «For instance, right now, most of our soybeans that are going to China go through New Orleans. People may start shipping overland to the Pacific Northwest by rail to ship over to China. That is more expensive, but it is an alternative if the Gulf slows down,» he explained. As long as the spill stays clear of shipping lanes for the next few months, Hart doesn’t feel that there will be a huge impact on prices. «In some ways, we were lucky on the timing,» Hart said. «We ship most of our grain earlier in the year, so right now, there are smaller amounts of grain moving.» John Cripe, director of MID-CO COMMODITIES INC., is keeping a weathered eye on the horizon for hurricanes. The National Oceanic & Atmospheric Administration last month predicted an «active to extremely active» hurricane season this summer. «If the upcoming hurricane season is as bad as predicted, then the hurricanes will push the oil slicks up through the Mississippi River into the Delta region. We do a lot of irrigating with water from the marshes of the Mississippi River down in the south Delta regions,» Cripe said. He estimated that approximately 70 per cent of the Mississippi Delta region receives irrigation water from these marshes. If hurricanes push oil slicks into the marsh waters, it could potentially shut down Delta irrigation. «There are still reasons to stay optimistic and hopeful,» Cripe said. «It’s important to remember that oil does evaporate and decompose over time. If agriculturalists can keep it from causing initial damages, then it will eventually break down.»