Bumper grain harvests are sparking optimism among rail marketing executives who see traffic levels rebounding from a lackluster third quarter.
The grain has to be moved from growing areas to storage and there is the prospect of a second wave of traffic if exports pick up later in the fourth quarter.This would be welcomed by carriers, who saw September grain volume tumble 6.6 percent to 109,061 cars from 116,784 in September, 1991.
For the third quarter, railroad grain traffic was down 2.4 percent from a year earlier, but for the first nine months it is up 2 percent from 1991.
The U.S. Department of Agriculture expects U.S. grain production to increase substantially this year even though a cool, wet growing conditions delayed the harvest.
Burlington Northern Railroad said Monday it will add 1,400 leased covered hopper cars to its grain car fleet, bringing the Fort Worth-based railroad's managed fleet up to 25,000.
"BN's decision to increase its covered hopper fleet was made after shippers recently ordered BN's entire car supply for the next seven weeks," said Philip F. Weaver, vice president of agricultural commodities.
By leasing cars, Burlington Northern can expand or contract its fleet rapidly. The company had 27,000 covered hoppers under management earlier this year.
Union Pacific Railroad is experiencing heavy export traffic out through the Pacific Northwest, a spokesman said, adding that October is off to a good start.
"We all adjust our fleet sizes on an ongoing basis as necessary," said Donald G. Oman, a director in the grain business unit of Atchison, Topeka and Santa Fe Railway. "Our fleet size is pretty much where it was last year."
Mr. Oman said the former Soviet Union bought large amounts of U.S. grain on credit last year, with the shipments running from late November until March.
"The political situation makes it more complex this year," he said. Even though wheat crops in the former Soviet republics are expected to be larger than last year, the level of import demand may be affected by the ability of the republics to trade among themselves, he said.
"We will be busy for six weeks moving the harvest to storage terminals. Traffic in the last half of the quarter will be demand driven," Mr. Oman said.
The USDA estimates that corn production will increase by 17 percent; wheat by 22 percent, including spring wheat, which is expected to increase by 56 percent; sorghum by 46 percent, and soybeans by 5 percent.