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Escalating Transportation Costs a Big Factor for Importers
Farmers love high wheat prices, but foreign buyers have a different opinion. After many years of relatively stable wheat prices, 2008
caught foreign wheat buyers by surprise. It was not just the increase in wheat prices that gave cause for alarm, but also increases in transportation expenses, especially ocean vessel rates.
The two tables show the cost of shipping wheat from a North Dakota farm to Japan via the Pacific Northwest . While farmers are
familiar with the large rally in wheat prices from 2005 to 2008, the shipping expenses also skyrocketed. In the first quarter of 2006, the ocean freight was $26.02 per metric ton, but in 2008 it hit $72.33. The good
news for wheat farmers is that ocean freight rates have dropped significantly from their peaks. From December 2007 to December 2008, ocean freight rates are down over 80 percent.
Source Data: USDA Weekly Grain Transportation Report
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