Cross-border railway closures weighing on Midwestern agriculture officials

Industries that use the railways to transport goods to Mexico, including agriculture, urged the government to reopen the lines to avoid a disruption of international trade. Illinois Corn Growers Association penned a letter to lawmakers expressing their concerns over the closures, saying its “reputation as a reliable trading partner hangs in the balance.”

According to the group, Illinois transports more grain than any other state via rail, with 26% of all exports to Mexico traveling by train. Illinois exported more than 150 million bushels of corn to Mexico in 2023, according to the United States Department of Agriculture.

Collin Watters, director of exports and logistics, said the reopening of the lines was a “positive development.” The disruption still had some impact on the market despite its brevity, though Watters said it could have been worse.

“When the closure was announced, there really wasn’t much lead time given to the industry,” he said, “so on Monday morning, we found out about it.”

Joe Camp, a broker for Commstock Investments, said that rail travel was the number one transportation method for Midwestern grain, with farms being especially reliant on trains as of late. Factors like low water levels and higher barge freight rates made river system shipping less appealing to growers, he said.

The largest effect that the shutdowns had on the market was an “injection of uncertainty,” Camp said, about how widespread an issue they would become. That uncertainty could raise questions about reliability and increased costs of transportation, he said, which could create doubts about whether or not growers wanted to sell grain into the railway system.

“It caused some concern that we would have reduced export demand following from these closures if they persisted or expanded,” Camp said.

Watters said it was difficult to say with certainty how a longer rail closure would affect farmers, but noted that any disruption in demand or reliability would eventually push back on both farmers in the U.S. and customers in Mexico.

A hit to demand would mean that grain elevators would have to pay farmers less for their product, Watters said; meanwhile, Mexican producers such as feed lots and poultry operations did not operate with much storage capacity for grain, instead relying on regular grain deliveries via train or boat.

“When something like this happens, it might just seem like kind of a hiccup at the border,” he said, “but that has a much longer tail, and it can really affect things throughout the entire supply chain.”

Illinois Corn would continue to monitor the situation with the rail crossings, Watters said, as though he was “hopeful” that the U.S. and Mexican governments would be able maintain rail movement, another closure was still possible. Camp said the fact that a closure happened at all meant it was still “a potential threat” for the market. A hypothetical shutdown would not need to be very long for it to have some kind of impact on decision making, he said, something that would likely not change until changes to immigration were made.

“It doesn’t take much just for the perception of a problem to weigh on the market,” Camp said.

Watters hoped that the closures made lawmakers understand the importance of rail travel to farmers in the Midwest. Illinois Corn understood that the federal government was responding to an “emergent situation,” he said, but Illinois still remained one of the top exporters of grain to Mexico. The state’s rail system allowed it to move grain in “every direction,” he said.

“Maybe the one silver lining, if we look for them in this situation,” Watters said, “is that we were able to kind of highlight the importance of exports and highlight the importance of this incredible freight infrastructure that we have in Illinois.”