Red River floods disrupt rail shipments of grain
Source: Reuters
Published: March 23rd 2009

SASKATOON, Saskatchewan, March 23 (Reuters) - The rising Red River, still days ahead of cresting at its headwaters, already is forcing some grain shipments by rail to find new, slower paths to market.

Burlington Northern Santa Fe (BNI.N) has already seen washouts along its north-south line in North Dakota ahead of the Red River crest, forecast to hit Fargo, N.D. Friday.

The washouts are causing one- to four-day delays for shipments of agricultural products coming mainly from Canada, said Suann Lundsberg, spokeswoman for Burlington.

"It's not a huge problem now, but obviously it can change," she said.

The flood outlook for the Red River, which runs north between Minnesota and North Dakota into the central Canadian province of Manitoba, may worsen depending on how much more rain falls in the next few days. Flooding is forecast to rank among the worst years on record on both sides of the border.

The valley is a key grain-growing region. Rail shipments are relatively light in spring, but the flood may affect the western flow of corn and soybeans to the U.S. Northwest or the eastern path of wheat to Minneapolis, said Dan Mack, vice-president of transportation for CHS Inc. (CHSCP.O), which has a large number of grain elevators in the Red River valley.

"Typically, you won't flood every rail line but you'll have interruptions of service," Mack said. "Some areas may be completely severed."

The length of the rail disruption depends on the flood's severity, Mack said. Washed-out roads will also delay grain shipments.

Logistic constraints can drive up the cash prices of farm commodities if they result in a temporary shortage, Mack said.

The key grain-moving lines in North Dakota and western Minnesota are Burlington's north-south line and Canadian Pacific Railway's (CP.TO) east-west line, Mack said.

CPR spokesman Mike Lovecchio said he does not expect problems with that line, which mainly runs west of the expected flood zone.

A greater concern is CP track south of Manitoba's largest city of Winnipeg, directly through the Red River valley, Lovecchio said. CP has increased its checks for washed-out track and soft rail beds as it waits for the river crest to move north.

Most grain elevators on the Canadian side of the valley are above the flood plain, said Bruce Burnett, director of weather and market analysis for the Canadian Wheat Board, which markets Western Canadian wheat and barley.

Transportation in the flooded area will be difficult but there are alternative paths for grain shipments to enter the U.S. by rail, Burnett said.

Fargo-based U.S. Agriculture Department official Dale Ihry has predicted that at least 1 million acres won't be planted this spring in North Dakota.


 

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