Grain Bins


Oil continues to rule the rail

Posted on September 02, 2014


As family farmers, grain co-ops, ethanol plants and other agribusinesses continue to suffer from poor rail service for nearly a year now, oil shipments on the rails continue to climb. This is according to the United States Energy Information Administration whose data shows oil carloads topping 15,000 per week and continuing to rise.

How does this hurt farmers? As corn prices have already plunged to 1975 levels with another record crop being predicted, they are also faced with an enormous basis (fee to move the grain charged by buyer) that equals three to four times higher than what is typical at this time of year.

That record-high basis is due to the fact that buyers have to bid on rail cars whose prices are exceeding $3,000 per car, and some of the largest shippers in the state see no hope once the huge corn and soybean harvests begin.

Why are the rail car prices high? That depends on whom you ask. A long and cold winter, record grain production, staffing issues and increased oil production in the Bakken region all account for the ongoing backlog. But the problem started last year during harvest before the winter months just as oil shipments began to rise from 13,000 carloads a week to just under 15,000.

Rail backlogs remain in many areas of the Dakotas with farmers and cooperatives struggling to store spring and winter wheat during the heart of harvest with few rail cars in sight for relief.

This very issue in the Dakotas was reported on last week in the:

New York Times Grain Piles Up, Waiting for a Ride, as Trains Move North Dakota Oil

AgWeek With poor rail flow, SD farmers and elevators pile and bag grain

DTN Progressive Farmer SD Shipper: “No Train, No Grain”

Now as corn harvest rapidly approaches once again, BNSF VP John Miller has stated they will, “perform better than a year ago at harvest.” We hope he’s right, because the livelihoods of tens of thousands of family farmers in the upper Great Plains are depending on it.

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