ANKENY, Iowa (RFD NEWS) — With harvest on the horizon, producers are shifting their focus to grain transportation, closely monitoring several potential issues across the agricultural sector.
Mike Steenhoek with the Soy Transportation Coalition (STC) joined us on Friday’s Market Day Report to discuss the proposed Union Pacific-Norfolk Southern merger, Mississippi River water levels and conditions at the Panama Canal.
Union Pacific-Norfolk Southern Merger
The proposed merger between Union Pacific and Norfolk Southern remains under review by the U.S. Surface Transportation Board, the federal agency that approves or rejects mergers and acquisitions in the rail industry.
In his interview with RFD News, Steenhoek said the railroads completed their application and provided additional information the Surface Transportation Board requested on July 27. The agency is now beginning its review process, which he expects to take at least a year.
If approved, the merger would create a single railroad providing service from the Pacific to the Atlantic, something that has never occurred in U.S. history.
While some in the agricultural sector support the merger, others have strongly opposed it.
“The key native word with this is, will it enhance competition?” Steenhoek said.
He said the central question is how creating the new railroad would enhance competition.
Mississippi River Water Levels
Mississippi River water levels have also become a concern heading into the fall.
Recent rainfall across much of the Midwest has raised water levels, but Steenhoek said questions remain about what will happen once that surge dissipates.
The Soy Transportation Coalition has compared current water levels with those seen at the same time during the previous five years, dating back to 2022. Steenhoek said water levels are currently lower than they were in many areas during those years.
He said the goal is to enter the soybean export season from strength rather than weakness, particularly as precipitation naturally declines during the summer and fall.
The peak period for soybean and grain exports is typically October, November and December.
Panama Canal Restrictions
The Panama Canal is another area being closely monitored because of its role in the supply chain for U.S. soybean exports.
Steenhoek said the Panama Canal Institute is already seeing some minor draft, or water-depth, restrictions.
He attributed the conditions to the El Niño pattern, which has contributed to a scarcity of precipitation in Central America.
While those restrictions are not currently affecting dry-bulk vessels, which are typically used to transport soybeans, Steenhoek said the situation could become an issue later this year if dry conditions persist.
Transportation Remains Key to Farm Profitability
Steenhoek said transportation alternatives are available when problems arise, but switching from one option to another can add costs.
He said having a variety of transportation and supply-chain options can make the agricultural supply chain more resilient and redundant.
As harvest approaches, Steenhoek said farmers need to make sure the supply chain is functioning properly.
“For farmers to be profitable, it is not just about growing the crop,” Steenhoek said. “We’re having demand for that crop. The third element is being able to connect it to supply with demand. That’s what our transportation system does.”
