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Market Chatter: US Grain Rail Fuel Surcharges More Than Double to Raise Farmer Costs

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US grain shipments are facing more than double the railroad fuel surcharges from a year ago, increasing transportation costs for farmers already reeling under higher production costs, Reuters reported Monday.

In the second week of September, average rail fuel surcharge for grain shipments rose to 48 cents per mile per rail car, up 153% from a year earlier, the report said, citing US Department of Agriculture data.

Higher per-mile rates pushed fuel surcharges to 11% of total rail transport costs for corn and soybean shipments, up from 5% a year earlier, the report said, citing a Sept. 10 USDA report.

The development comes at a difficult time for farmers, with the corn and soybean harvests just starting. Higher crude oil and refined products prices associated with the Iran war are raising diesel surcharges just as demand for grain transportation increases.

When railroads pass these higher costs on to grain shippers, farmers typically receive lower crop prices or a weaker basis, the report added.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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