Hurricane Set to Disrupt Global Supply Chain

Published 2021년 9월 7일

Hurricane Ida has caused flooding and damage to the US’s busiest agricultural port, which accounts for approximately 60% of the country’s exports. The US is the world’s largest corn supplier, and as the country approaches its corn and soybean harvest season, global supplies are limited and Chinese demand is strong. Grain elevators and port terminals are still dealing with outages and damage, and this could hamper exports.

Currently, the global supply chain is besieged with multiple problems, including extreme shipping delays, persistent product shortages, and rising costs. Construction teams in the affected areas are likely to struggle to acquire required goods. At the same time, the damage caused to critical industries in the Gulf Coast area, along with the need to rebuild, could cascade through the US’s strained shipping infrastructure. Hurricane Ida has severely affected Louisiana with high winds and heavy rain since Sunday, August 29, and could damage the Gulf Coast economy and potentially have economic consequences beyond the region.

Damage caused to grain elevators and port terminals

In the Midwest, farmers will soon begin harvesting corn and soybean crops. A significant percentage of the crops are transported down the Mississippi River and then shipped worldwide through the Gulf of Mexico. The US is the world’s largest corn supplier, and if grain elevators and port terminals continue dealing with damage and power outages, that could back up exports. Major trading houses such as Archer-Daniels-Midland Co. (ADM), Bunge Ltd., and Cargill Inc. are assessing the extent of the damage to grain elevators and port terminals after Ida tore through Louisiana and Mississippi. Global importers may soon resort to alternative suppliers such as Brazil and Argentina.

Due to the storm, ADM shut down four grain elevators over the weekend in New Orleans. The company also intends to use its transport network to make alternate shipping arrangements to meet client needs. Bunge shuttered a grain terminal and soybean crush plant in Destrehan, Louisiana. CHS is looking to divert export shipments scheduled for September to its grain terminal in Kalama, Washington, as the storm affected a transmission line that powers its Myrtle Grove facility south of New Orleans. According to CHS Global Grain & Processing, it may take two to four weeks to restore power at the company’s affected terminal. In Reserve, Louisiana, Cargill’s port facility sustained significant damage. One of the company’s two terminals along the Mississippi River near the Gulf of Mexico sustained damage from the storm.

According to the U.S. Department of Agriculture (USDA), a grain elevator damaged by Hurricane Ida in Reserve, Louisiana, is responsible for approximately 9% of the US’s bulk seaborne shipments of corn, soybeans, and wheat in 2021. The country’s grain and soybean futures dipped to their lowest in weeks on August 31, as Hurricane Ida led to power outages and damage to export facilities. The effects of the hurricane have led to concerns about the potential for extended disruptions to shipments.