Illinois River Lock Closure May Spur CME Grain Contract Tweaks

Posted by Eric Haun
Friday, July 11, 2014

An upcoming river lock repair project in south Chicago has attracted the attention of exchange operator CME Group because the lock's closure could disrupt deliveries against its Chicago Board of Trade grain and soybean futures contracts.

The U.S. Army Corps of Engineers will close the 64-year-old T.J. O'Brien lock and dam on the Cal-Sag Channel for two phases of repairs beginning on Nov. 3 and again on Jan. 19. It is the northernmost of eight locks on the Illinois Waterway system, near the entrance to Lake Michigan.

Each closure will halt traffic there for 47 days and could make it more difficult or costly for buyers of futures contracts to take delivery of grain housed in Chicago since the lock lies within the contracts' delivery zone 1.

The exchange has no plans in place yet to revise its delivery rules but is monitoring the situation, said David Lehman, CME's managing director of commodity research and product development.

Grain analysts said the closure is not likely to trigger a force majeure declaration by the exchange because grain housed in Chicago could feasibly be moved by truck or rail or shipped around the closure via Lake Michigan and the Chicago River via the smaller Chicago Lock.

But CME action cannot be ruled out, particularly if low cash market prices due to heavy post-harvest supplies spur deliveries, they said.

"This comes at a time when I think basis levels are going to be extremely depressed and deliveries may be the best sale for some guys. But I don't see shutting off the northern part of the river as being that important because the biggest share of the crop's going to be south of Chicago," said Roy Huckabay, analyst with The Linn Group.

The delivery period for November soybeans starts Nov. 3 and December corn and wheat deliveries begin on Dec. 1.

Difficulties taking delivery could widen spreads, analysts said. Full carry on the December/March corn spread, for example, is around 18 cents, and the spread itself was near 11 cents on Friday.

There have been no major objections to the timing of the lock project, which was announced this spring, said the Army Corps' Illinois River operations manager, Mike Zerbonia.

A month-long break between the project's two phases will allow cargo backed up by the closure to pass.

Repair work is needed to replace several worn components of the lock, which opened in 1960 and continues to operate with many original components.

If a part of the lock and dam structure known as a sheet pile cell were to rupture, navigation would be halted for at least 60 days, resulting in economic losses of $18.3 million, an Army Corps evaluation found.

While the vast majority of cargo passing through T.J. O'Brien is manufactured goods and energy products, as much as 15 percent of cargo can be food and farm products, according to Army Corps data.

(By Karl Plume; Additional reporting by Jo Winterbottom; Editing by Jonathan Oatis)

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Bulk Carrier Trends

Lerwick Harbor sees Seasonal Boost

The opening of the offshore season in northern waters has seen specialist oil industry vessels return to Lerwick Harbor during April to support subsea development projects.

India's Highest non-coking coal discharge at Gangavaram Port

Gangavaram Port, the deepest and the most modern port in the country, has created yet another historical milestone record by discharging 1,56,339 metric tons of Non-Coking Coal from the vessel M.

Baltic Index Down on Lower Capesize, Panamax Rates

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, slipped on Friday, as demand for capesize and panamax vessels fell.

Navigation

TEKEVER Develops Vessel Tracking for Small UAS

TEKEVER will present at Xponential/AUVSI its new vessel detection capabilities for its UAS product lines. Available for TEKEVER’s AR3 and AR4 product lines, the

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

Panama Canal Dismisses ITF Claims

The Panama Canal has dismisses claims by the International Transport Workers’ Federation (ITF) that questions industry standards and the operation of the Expanded Panama Canal’s new locks.

News

Cruise Ship Makes Historic Trip from US to Cuba

Cruise ship MV Adonia sailed into Havana this morning, completing the first leg of its historic inaugural voyage to Cuba that began on May 1, 2016, from Miami,

Allcargo Groups Subsidiaries as ECU Worldwide

ECU Line, Econocaribe and China Consolidators undergoes rebranding to build a Global Brand Connect   India’s integrated logistics solution provider Allcargo Logistics

Northwest Seaport Alliance Joins Green Marine

The Northwest Seaport Alliance has signed on to participate in Green Marine, North America’s largest voluntary environmental certification program for the maritime industry.

Logistics

Allcargo Groups Subsidiaries as ECU Worldwide

ECU Line, Econocaribe and China Consolidators undergoes rebranding to build a Global Brand Connect   India’s integrated logistics solution provider Allcargo Logistics

Abu Dhabi Ports Reports Q1 Volume Surge

Abu Dhabi’s RoRo volumes up 31 percent; general and bulk cargo increases 13 percent; container cargo edges up 5 percent   Abu Dhabi Ports, the master developer,

French PM: Aussie Subs to be built in Australia

French Prime Minister Manuel Valls said on Monday he was committed to building all of a new Australian submarine fleet in Australia, apparently contradicting the

Great Lakes

Great Lakes Inks M.E., N.C. Coastal Protection Project Deals

Great Lakes Announces $55 Million in Subcontract Work in the Middle East and Award of $38 Million for a Domestic Coastal Protection Project Great Lakes Dredge

USCG Uses Skiff Ice Boat to Rescue Injured Man

The U.S. Coast Guard medically evacuated a man off of a dredging barge in Lake Erie near Sandusky, Ohio, Wednesday evening. At approximately 5:45 p.m., a good

U.S. Challenged China, 12 Others on navigation Rights in 2015

The U.S. military conducted "freedom of navigation" operations against 13 countries last year, including several to challenge China's claims in the South and East China seas,

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Navigation Offshore Oil Pipelines Pod Propulsion Salvage Ship Repair Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0785 sec (13 req/sec)