CHICAGO | Wed Dec 26, 2012 7:55pm EST
CHICAGO (Reuters) - Commerce on a key stretch of the Mississippi River could "come to an effective halt" earlier than expected next week due to low water levels, disrupting shipments of billions of dollars of grain and other goods, a group of shippers said on Wednesday.
The Waterways Council, which represents shippers and receivers of commodities, said in a message to its members that it received an advisory from the U.S. Army Corps of Engineers on Monday that indicated water levels around Thebes, Ill., could be too low for most vessels to operate by January 3 or 4.
A spokesman for the Army Corps did not immediately return a call for comment about the forecast.
Shippers for months have been watching the stretch of the Mississippi River between St. Louis and Cairo, Ill., which includes Thebes, due to concerns about a potential closure.
A shipping superhighway that carries billions of dollars in grain, coal, steel and other commodities every year from the central United States to the Gulf of Mexico, the Mississippi is near record-low levels due to the worst U.S. drought since 1956.
"Water levels are falling quicker than we anticipated," Ann McCulloch, spokeswoman for the American Waterways Operators, a sister organization to the Waterways Council, said in an interview. "We were hoping not to reach this point until mid January."
The Waterways Council did not specify how long the river could be effectively closed.
Shippers have said previously that rain is needed to replenish water levels to keep the river open.
Recent snowfall in the central United States should help increase water levels on the lower Mississippi River, said Army Corps spokesman Mike Petersen earlier on Wednesday. However, "we would need a lot more" precipitation to see a significant improvement on key stretches of the middle Mississippi near Thebes, he said.
The Mississippi River is the main shipping waterway for grain moving from Midwest farms to export facilities at the Gulf of Mexico. Some 55 to 65 percent of U.S. corn, soybean and wheat shipments exit the country via the Gulf.
Exporters stepped up shipments of grain and soybeans to the Gulf Coast before water levels fell to critically low levels, forcing barges to take on lighter loads. They also resorted to loading more of their goods on rail cars.
The disruption of river traffic due to low water has pushed up export prices for grain, especially soybeans that are in strong demand from buyers like China.
ORDERS CANCELED, ORDERS CURTAILED
The latest forecast calls for the Mississippi River gauge at Thebes, to be at 3 feet on or around January 3-4, with vessel drafts limited to 8 feet, according the Waterways Council. The majority of vessels require a 9-foot draft to operate.
The draft is the distance from the surface of the water to a boat's lowest point.
"Our members have been preparing (for an effective closure) by investigating other options to move their products, either by rail or truck," said Debra Colbert, senior vice president for the council. "We've seen orders canceled; we've seen orders curtailed. We've seen companies looking at potential layoffs."
The Army Corps last week began clearing rocks from a shallow stretch of the drought-hit river near Thebes to maintain the flow of goods to Gulf Coast ports.
The low water level on the Mississippi River after this year's devastating dry spell was exacerbated by the Corps' decision to reduce by even more than usual the amount of water that flows into the waterway from the Missouri River. The Corps reduces the Missouri River flow every autumn.
The move raised protests from Midwestern governors and senators who urged President Barack Obama to rescind the decision for fear that badly needed income would be lost through the disruption of commerce that flows through the river.
The river groups met last week with White House staff "and continue to implore them and members of Congress and the Corps to release additional water to sustain navigation on the Mississippi River," the Council said.
(Reporting By Tom Polansek; Editing by Diane Craft)
