Rail tested by “soaring” export wheat demand

The Surface Transportation Board announced Friday that is has scheduled a meeting of the National Grain Car Council for Sept. 16 to discuss the readiness of U. S. railroads to move export grain to ports in quantities far higher than earlier expected.

The agenda includes “a report by railcar manufacturers and lessors on current and future availability of various grain-car types; presentation and discussion of developments regarding Positive Train Control; discussion of export grain in intermodal containers; and an open forum on BMNSF Certificates of Transportation for Processors; weather’s effect on supply/demand of equipment; and export market impact on U.S. grain car supply.”

While Friday’s STB announcement did not allude to it, expectations for a significant increase in world demand for U.S. wheat were examined in the latest monthly Wheat Outlook, released Aug. 16, by the U.S. Department of Agriculture’s Economic Research Service. 

“This month’s changes,” said the report, “feature a dramatic 13.5 million-ton reduction in wheat production forecast collectively for Ukraine, Russia, and Kazakhstan, three companies that together produce more than 85% of ESU-12 wheat. Wheat production for EU-27 for 2010-11 is projected down 4.3 million to 13.5 million.”

What this means to U.S. wheat exports and the need forgrain-carrying railroad cars or containers is this, says the USDA report: “U.S. exports are expected to reach 33.0 million tons for July-June marketing year 2010/2011, up 6.0 million from last month’s projection. This forecast is 8.8 million tons, or 36.5%, more than U.S. exports in the 2009/10 year. The main U.S. competitors in the lower protein wheat market are the EU-27 and the three countries of the FSU 12 … With all of these main competitors’ wheat projections down this month, and with the announcement of the Russian export wheat ban, U.S. export prospects soar.”