Changing Soybean Meal Freight Spreads Driving Delta Crush Econs

As mentioned in my previous 2 posts, a lot has changed since the wave of Delta soy crush closures circa 2000.  I’m making the case for another look at soy crush expansion in the Mississippi Delta.

Post 1 highlighted the Delta’s 235% increase in bean production to 318 mil bushels. It showed the Delta has outgrown its only viable market, exports. The result: cheap harvest basis levels and an explosion in on farm storage capacity (up 85% since 2000). 

Post 2 emphasized AR, MS, LA meal demand growth of 24% to 4.7 mil tons since 2000. These feed mills rely heavily on rail meal delivery from the Midwest. Additionally, 2023 NOLA meal exports of 7.6 mil tons are higher than available supply from today’s river crush assets. Any new NOLA exports need RAIL delivered meal supply. 

Today, I want to talk about changing freight dynamics. My source for freight cost changes come from the USDA’s Grain Transportation Report Datasets. These things are INCREDIBLE sources of free information that is a huge service to our industry. Thank you for the good work USDA. 

Additionally, I pulled current meal rail freight costs from the CN website. 

Here’s what’s happened to shipping costs since 2000: 

Barge UP 245%
Truck UP 264%
Rail Shuttle UP 261%
Rail Non-Shuttle UP 341% !!! 

Understandably, costs are up. But costs are up the most in the non-shuttle rail category. 

Who relies on this shipping method? Crush plants shipping meal from the Midwest. 

Who doesn’t? A Delta crusher shipping meal by barge or by truck to their local feedmills. 

Delta crush is staring at a significant advantage just by being close to demand and by NOT relying on manifest rail service. 

Look at the two images attached for more color.    

The first shows a MS Delta crusher gaining $15/ton in freight advantage since 2000 vs Midwest rail shippers heading to S Mississippi feed mills. 

The second shows Delta barge meal adding $29/ton in freight advantage vs Midwest manifest rail shippers headed to NOLA exports. 

Admittedly, there is an offset on the bean front. The relative value of beans on the river between IL and the Delta has grown. My math says Delta bean values have gone up by about 17 cents compared to IL due to barge freight changes. That’s about $8/ton in meal terms, less than the advantage gained in the meal markets. 

And don’t forget my first point of the series, Delta beans have outgrown their export market, and they don’t have a crusher every 50 miles like the Midwest to take up the slack. This pressure offsets a lot of that freight impact, especially during harvest time. 

Next post I’ll take a stab at the macro trends around bean and meal exports out of the USA. News flash, its bullish Delta crush margins too. 

Then finally, I’ll tackle the potential for swing crush or cover crop crush in the Delta.