Mississippi River Traffic Returning To Normal; Freight Rates Double Over 2004 Levels

Dow Jones Newswires reports that last week daylight-only running restrictions have been lifted on ships traveling the lower Mississippi River to and from Louisiana ports, allowing 24-hour traffic. The restriction was lifted because the electronic navigation beacons that bring ships safely through the lower Mississippi River have been fully replaced, according to a Coast Guard spokesman.

Meanwhile, barge freight continues to be hampered by a vacuum of barges on the Upper Mississippi River, with freight rates running more than double year ago levels and as much as three times average levels for this time of year.

Forward freight rates are still strong and are not expected to fall back toward perceived historical seasonal patterns. Perhaps the earliest that rates will achieve some level of normalcy would be after the first of the year. Beginning December 15, navigation will be shut down at Lock and Dam 19 at Keokuk, Iowa through March 15, 2006, effectively closing navigation upriver from Keokuk. During this time barge traffic will find relief repositioning fleets.

WTO Ruling On EU GMO Laws Delayed

A World Trade Organization dispute panel ruling on the EU’s alleged moratorium on market authorizations for new genetically modified products is being put off until after the WTO’s Hong Kong ministerial conference in December. The panel has informed the EU and the three complainants in the dispute – the United States, Argentina, and Canada – that its preliminary ruling, which had been due October 10, will now be postponed until the first week of January 2006. No date was given for the release of the final ruling to the parties, although that normally takes place a month after the preliminary findings have been issued.

The panel cited scheduling conflicts as the reason for the delay. The chairman of the panel, Christian Haberli, is a senior negotiator on agriculture for the Swiss government. Although the panel did not explicitly link the delay with Hong Kong, it has been noted that the postponement will allow the WTO to avoid having the dispute become an issue at the ministerial conference, which is expected to be targeted by thousands of anti-globalization protestors.

The panel, which was established back in August 2003, has been asked by the three co-complainants to rule on what they claim is the EU’s illegal de-facto moratorium on the approval of products containing GMOs. The three also accused Austria, France, Greece, and Italy of prohibiting the importation and marketing of GMO products, even though those products have already been approved for sale within the EU.

ADM And Bunge Close Crushing Plants

Archer Daniels Midland has closed a soybean crushing plant in southern Brazil due to tight margins following last season’s severe drought. Lack of raw material has led crushing plants to move operations to other regions of Brazil as well as to neighboring Argentina. A severe drought, which wiped out up to 80 percent of soybean production in the south of Brazil last season, is still having repercussions for the region.

Last week Archer Daniels Midland closed its soybean crushing plant at the southern port of Paranagua. The plant, which had crushing capacity of 1,300 tonnes a day, was closed due to a lack of raw material and tight crushing margins. Earlier this year the company shut its 1,000 tonnes per day crushing plant in Tres Passos, Rio Grande do Sul, for similar reasons.

Crushers traditionally close for maintenance at this time of year, as Brazil’s planting season begins, and ADM said it will reevaluate the situation next year when the new crop arrives. Many believe, however, that the plants will remain closed.

Meanwhile, Bunge has suspended soybean-crushing activities at its plant in the Brazilian city of Cuiaba due to the limited soybeans supplies on the local market, said a company spokeswoman. The company moved up the scheduled maintenance of the plant by a month and also fired a number of staff as high local soybean prices are making it unprofitable to process as Brazil enters its inter-harvest period.

Farmers in the top-producing center-west region, where the Bunge plant is based, still have beans from the 2004-05 crop, but many are holding on to stocks amid a negative outlook that includes depressed international prices and four-year highs on the Brazilian real.

Brazil Fears China Will Target Soybeans In Trade Dispute

Brazil’s soybean industry is concerned it would suffer retaliations should the government here chose to impose sanctions on China goods, according to Sergio Mendes, executive secretary of the Brazilian Cereal Exporters Association (ANEC). Brazil wants limitations on textiles, footwear, toys, tires and auto parts, among other products. But just as Chinese shipments have grown, so have Brazilian soybean exports to China.

China has a track record of stopping Brazilian soy shipments. In 2001 and 2002, China delayed imports ostensibly because shippers had no safety certification, but traders suspected it was because they wanted to stem the flow of Brazilian produce. Meanwhile, in 2003 it complained of impurities in Brazilian shipments and banned local exports from some companies. “We are the obvious target. Should there be a problem with these shipments, the impact could be terrible on the local industry in the current depressed price environment,” said Mendes.

Soy Complex Mostly Higher On Support From Energy Prices

The soy complex closed mostly higher on October 6. Prospects for a big increase in USDA’s production forecast and slow start for 2005-06 U.S. exports suggest that futures should continue to trend lower. While soybean supplies look to be big enough to pressure futures below $5.00, it would appear to be difficult for soybean prices to drop that low because of the support that soybean oil has garnered from high energy prices and the potential that farmers become reluctant sellers. November bean futures closed up $0.26 finishing at $207.31; January was $0.37 higher, closing at $211.64; and March gained $0.31 ending at $214.43. October meal was up $2.90, closing at $182.43; December was $2.65 higher, finishing at $185.74; and January increased $2.31 to finish at $187.61. October oil closed $8.38 lower to finish at $514.42; December decreased $11.42, closing at $521.39; and January lost $11.02, ending at $526.90.