Safety of grain company workers following Ida
Global agribusiness and food ingredient businesses with holdings in the Gulf were focusing this week on staff safety and evaluating facility damage after Hurricane Ida interrupted the Gulf Coast’s grain and oilseed exports, which account for 60% of US exports.
After Hurricane Ida made landfall close to New Orleans on the sixteenth anniversary of Hurricane Katrina, some grain firms warned that it would take weeks to restore power to areas around the Gulf. Floodwaters rushed into the area, but in the years following Katrina, enormous infrastructure investments kept the potential damage to a minimum. Rebuilt levees around New Orleans kept the floods back from many residential neighborhoods.
When Ida made landfall in Port Fourchon, Louisiana, midday on August 29, just south of New Orleans, it was a category 4 hurricane with gusts as high as 150 mph and torrential rain. Following the hurricane, almost a million people in New Orleans lost electricity throughout the entire city. After reaching landfall, the storm quickly weakened and was reduced to a tropical storm, causing power outages for 133,000 people in Mississippi.
Several of the area’s grain facilities were under water, while others lacked electricity. According to company representatives, employee safety was their first priority, and Milling & Baking News was not informed of any employee fatalities. Emergency personnel and Louisiana state government representatives urged anyone who could stay at home to avoid falling trees and hazardous roads on August 30, as Tropical Storm Ida continued to bring heavy rain. Following the verification of worker safety, agricultural enterprises commenced evaluating facility damage.
According to an experienced commodities trader, “the biggest thing is the power, but if a facility is full of water, they are shut down for a few weeks to see how quickly the water recedes and only then can they assess what damage, if any, took place.”
Four grain elevators and port activities are operated by Chicago-based ADM in the area; these are situated at Ama and Destrehan, La., which is located just west of New Orleans. The commodities trading and food processing corporation closed all of its locations before to Hurricane Ida’s landfall. By August 31, ADM had verified the safety of every worker in the area and had started evaluating the damage to its facilities.
ADM spokeswoman Jackie Anderson stated, “We are sending volunteers and supplies to support our teams on the ground, and we are working hard to restore operations as quickly as possible.” “We are currently assessing the damage to our facilities. Although there is still no discernible structural damage, the area’s power is still out. As soon as we ascertain when complete power restoration or temporary generator service will occur, we will have an estimate for reopening.
On September 1, Bunge Ltd. informed Milling & Baking News that there had been little harm to its facilities.
The St. Louis-based company’s global media relations manager, Daiana Endruweit, stated, “There is no significant structural damage to our facilities, but they are not operating due to the lack of power and we have not received an estimate from the utility on when it may be restored.”
Cargill, a Minneapolis-based company, operates a facility in Westwego, Louisiana, near New Orleans, as well as a terminal in Reserve, Louisiana, which is upriver from the city. According to April Nelson, senior director of global communications and problems management at the corporation, both locations incurred damage.
On September 1, the firm announced that despite the area’s continuous power outages and flooding, staff safety remained its top priority.
We are only now able to begin evaluating the storm’s effects on our operations and the river system because this region of southeast Louisiana is still dealing with serious power outages and worries about human safety, according to Ms. Nelson. We don’t yet know when operations will start up again. Communications with personnel on the ground have been scarce because the area’s power hasn’t been restored yet.
Images that went viral on Twitter revealed the Reserve location’s facade damaged and jumbled, with its grain conveyor system partially collapsed in the wake of Hurricane Ida. Following Ida’s landfall, Cargill’s animal nutrition and salt plants were able to restart operations within 24 hours, according to Ms. Nelson. Although there was some physical damage at those locations, operations were initially delayed.
Ida damaged a transmission line, leaving CHS Inc.’s Myrtle Grove Terminal in Belle Chasse, Louisiana, without electricity.
According to John Griffith, executive vice president at CHS Global Grain & Processing, “estimates as to when power will be restored at the terminal are in the two-to-four-week range” (Reuters).
According to an experienced commodities dealer, businesses that suffered substantial damage and had to wait a long time for power to be restored were turning to their other export markets.
She claimed that in an attempt to reach China and other destinations, they were “trying to run supplies through the Texas Gulf or forcing the Pacific Northwest to pick up more exports.” Facilities that are accustomed to handling just one commodity may be required to take on more, which reduces their efficiency because they must switch from one commodity to another and back again. When a place is managing more commodities than what they were designed to handle, it takes longer and their efficiency suffers.
Instead of using the Gulf route for September export shipments, CHS Inc. wanted to use Washington state.
A commodities analyst stated, “They have been searching for alternatives.” For instance, CHS’s joint venture with Cargill in Tacoma processes maize and soybeans, whereas the facility in Kalama, Washington, only handles wheat. However, Kalama might wind up running beans and/or corn. There are rumors that exports could be diverted through the St. Lawrence Seaway or out of the Texas Gulf, Beaumont, and Galveston.
While ADM “has a broad transportation network and we are arranging different shipment arrangements as necessary to meet customers’ demands as we manage through this challenging situation,” Ms. Anderson said, the business did not provide many specifics of workarounds under place.
Cash premiums for grain supplied by barge to Gulf terminals fell precipitously the day after Ida crossed from southeast Louisiana into southern Mississippi, as terminal managers became increasingly anxious about a protracted recovery. In the upcoming days, more ideas for alternative grain flow routes were anticipated. However, researchers predicted that grain transportation costs would rise along with the amount of time it took to get to destinations.
A trader stated, “Transportation from anywhere that’s a tributary to the Mississippi River is going to get pretty expensive.” “We predict that barge freight values will increase significantly. Rail cargo will travel faster. There is a lot of discussion over the difficulty in obtaining vehicles, and truck freight has already been in high demand. If truck drivers were to retire anytime soon, it would only make things more difficult. Although the refineries in the Gulf of Mexico shut down early and did not appear to be seriously damaged, economists predict that gas prices would rise, at least temporarily.
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On the Minneapolis foundation, a seasoned market observer likewise predicted reduced premium ranges for hard red winter wheat.
“The basis in Minneapolis will weaken,” she predicted. “There is a demand, but grain might back up if they can’t load and remove it as fast. If there is nowhere for it to go, it simply stops.
Simultaneously, a reduced spring wheat yield is anticipated in a year with plenty of storage space, which could lead to possible grain blockage.
“Given the dryness, this year might not be the worst if this was going to happen at some point,” the woman stated. “Every crop is more than anticipated but smaller than the average crop. Consider wheat as an example. Farmers in South Dakota, North Dakota, and western Minnesota believed there would be no bushels. However, they have begun to harvest, and they do have some bushels—between 15 and 20 and between 20 and 25. A few locations have 30 to 40 buses, whereas further east there are 50 to 60 and 60 to 70 buses. Though some places only received five to ten busses, overall the spring wheat crop is larger than anticipated yet still below the five-year norm. Good grade but thin kernels. Thus, there is initially less grain, but there is still plenty of storage. Producers have the option to throw all items in a bin if prices drop and they are unhappy with the pricing; everything that doesn’t fit in a bin will end up in the incredibly plentiful elevator storage.