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on September 4, 2013

Corn study shows impact of Mississippi River closure due to drought

Study documents event simulating prolonged river interruption

Due to the drought-induced low water levels on the Mississippi River in 2012 and early into 2013, farmers experienced on average $0.45 lower cash corn prices, according to a study funded by the Illinois Corn Marketing Board, Iowa Farm Bureau and Iowa, Indiana and Missouri corn check-off programs.

The purpose of the study, conducted by Informa Economics, was to document an actual event simulating a prolonged river interruption. Instead of an economic model, the real-world event of low water on the Mississippi River between St. Louis and Cairo, Ill., was examined. The study revealed that, as a consequence the unavailability of river shipping, diversion to rail was at a 45 cent-per-bushel premium to barge rates. The 45 cent-per-bushel premium to barge rates encouraged the storage of grain until the river market stabilized, or its use elsewhere in the marketing chain.

The study results were presented during a public hearing held by the Mississippi River Commission on August 16 in Alton, Ill. 

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