Friday, June 2, 2023
HomeEconomyCoal, lumber and food under threat from potential U.S. railroad strike

Coal, lumber and food under threat from potential U.S. railroad strike

(Bloomberg) – Commodity groups are sounding the alarm as a potential rail strike threatens to cripple the movement of vital goods from food to lumber to coal.

Freight railroads and unions passed the strike that could cost the U.S. economy every day, although there wasn’t much sign of progress ahead of the September 17 strike over $2 billion. When food inflation soars, the strikes will threaten the shipment of agricultural products, grains, energy and fertilizers.

As Russia’s war in Ukraine intensifies, the world is increasingly turning to the US for food supplies, potentially causing disruption to commodity markets and disrupting vital grain shipments from the Black Sea, the world’s breadbasket one. Global food prices have hit record highs in recent months as inflation rips through economies and hunger levels rise. It will also have a major impact on the U.S. coal industry, as the vast majority of the fuel is transported by train.

“Coal will stop,” said Ernie Thrasher, chief executive of Xcoal Energy & Resources LLC, the largest US exporter. “There will be no coal movement until these people go back to work.”

Lumber prices, already reacting to potential labor threats, have surged to levels not seen in a month due to shipping issues s level. The CBOT futures contract rose 9.6% on Monday to reach the exchange rate limit per $1 559.80, 000 Board feet, the highest price since August. 000.

“Potential rail strikes will be an issue” as most of the lumber is produced in western Canada and traveled by rail, BMO Capital Markets analyst Mark Wilde said in an email. market.

Fertilizer shipments may already be affected.

“The rail network is complex, and carriers must be prepared in advance of possible outages to ensure that certain types of cargo are safe and secure,” said Corey Rosen, CEO of Fertilizer Institute Busch said in a statement Saturday. “Fertilizers fall into this category and are being phased out. This is bad news for farmers and food security.”

Any industrial action comes at a critical moment in the global food supply chain as U.S. farmers Crops are being harvested, including record soybeans.

“The possibility of a slowdown in service or a shutdown before harvest is unbelievable,” said Wendy Brannan, a spokeswoman for the American Soybean Association.

Coal-fired power plants will continue to operate, drawing from on-site inventories, but utility reserves fell to 24 year lows a year ago and have not since increase too much. Miners may continue to mine for fuel, as long as their facilities have enough room for it to pile up.

©2022 Bloomberg LP



Please enter your comment!
Please enter your name here


Featured NEWS