This article has been reprinted from the May 23 USDA Grain Transportation Report.

During the first quarter of 2019, transportation costs for shipping wheat from Kansas and North Dakota to Japan decreased from the previous quarter.

The costs for transporting wheat were down, except for rail rates from North Dakota to the Pacific Northwest (PNW), which increased from the previous quarter.

Significantly lower trucking and ocean freight rates contributed to a substantial decrease in year-to-year transportation costs for shipping wheat from each state through the PNW and Gulf (see tables 1 and 2).

Higher wheat farm values helped boost total landed costs for shipping wheat from Kansas. North Dakota wheat farm values were unchanged from year to year, with low trucking and ocean rates driving down landed costs.

First quarter exports of wheat to Japan were below the same time last year, while remaining well above the fourth quarter of last year.

Quarter-to-quarter transportation costs for shipping wheat through the PNW to Japan from Kansas decreased 7 percent.

North Dakota costs decreased 6 percent for the same period. Transportation costs to ship wheat through the Gulf decreased 11 percent for Kansas and 9 percent for North Dakota, quarter to quarter.

Year-to-year transportation costs for shipping wheat to Japan through the PNW were down 5 percent from Kansas and down 4 percent from North Dakota.

For the same period, transportation costs for shipping wheat through the Gulf decreased 7 percent from Kansas and 6 percent from North Dakota (see tables 1 and 2).

Quarter-to-quarter ocean freight rates for shipping wheat to Japan decreased 14 percent from the PNW and 16 percent from the Gulf (see tables 1, 2).

Quarter-to-quarter ocean rates in the PNW and Gulf remained low, as overall trade slowed down and coal trade started to decline (see April 25, 2019 GTR).

Compared to last year, PNW ocean rates for shipping wheat to Japan decreased 5 percent, while Gulf ocean rates decreased 8 percent.

Truck rates for transporting grain were down 27 percent from quarter to quarter, and down 37 percent from year to year due in part to lower diesel prices.

Quarter-to-quarter rail tariff rates for shipping wheat through the PNW to Japan from Kansas were down slightly, but up 3 percent from North Dakota (see table 1).

Year-to-year rail rates for shipping wheat from the PNW from Kansas were up 3 percent and up 5 percent from North Dakota. Rail rates for shipping wheat from each state to the Gulf remained unchanged (see table 2).

Year-to-year rail rates to the Gulf increased 3 percent from Kansas and 2 percent from North Dakota. During the first quarter of 2019, total landed costs for shipping wheat from Kansas to Japan decreased slightly from the previous quarter.

Landed costs for shipping wheat from Kansas, however, increased 8 and 7 percent from year to year.

Lower transportation costs caused a quarter-to-quarter decrease in landed costs from Kansas.

Higher farm values caused year-to-year landed costs from Kansas to increase.

Total landed costs for shipping from North Dakota decreased 2 and 4 percent from quarter to quarter. From year to year, North Dakota landed costs decreased 8 and 9 percent (tables 1 and 2).

Lower trucking rates and farm values caused year-to-year landed costs to decrease from North Dakota.

The total landed costs, for shipping wheat were below the $300 mark for each route (see figure), ranging from $275 to $297 per metric ton (tables 1 and 2).

First quarter Kansas transportation costs were below the previous quarter and last year and represented 34 and 33 percent of the total landed costs, respectively.

Transportation costs represented 34 and 37 percent of the total landed costs for shipping wheat through the Gulf from North Dakota, which were below the previous quarter but above last year.

According to the Federal Grain Inspection Service, first quarter 2019 inspections of wheat for export to Japan, totaled .651 million metric tons (mmt).

This is a decrease of 5 percent from last year but is unchanged from the fourth quarter of 2018.

First quarter wheat exports to Japan represented 14 percent of total U.S. wheat exports.

Total U.S. wheat exports in the first quarter reached 5.9 mmt, up 14 percent from last year, due to increasing global demand for wheat (April 18, 2019 GTR).

Currently, outstanding export balances of wheat are up 59 percent from the same time last year (GTR Table 12).

According to USDA’s World Agricultural Supply and Demand Estimates report in May, U.S. wheat exports for 2019/20 are projected to reach 24.5 mmt, down 3 percent from last year but unchanged from the April forecast.