By P.J. Huffstutter
CHICAGO (Reuters) - Rail backlogs are disrupting export trade between the United States and Mexico and snarling agricultural supply chains as the fall harvest is under way, agriculture groups said on Friday.
A potential East and Gulf Coast port strike that could begin on Tuesday would exacerbate the problems, nearly 200 agriculture groups said in a letter sent to the White House on Friday.
While Mexico is the top U.S. corn export market, it's also been a key outlet this year for agricultural exporters looking to compensate for sluggish buying from China, a top commodity buyer.
Mexico's imports of U.S. agricultural products increased 27% in the first seven months of 2024 over the prior year, government data showed. But rail capacity cannot keep up with the demand, said National Grain and Feed Association President Mike Seyfert.
Union Pacific Corp (NYSE:UNP) and Berkshire Hathaway-owned BNSF Railway have stopped issuing permits for grain shuttle trains to Mexico because of congestion and a growing backlog of loaded trains, according to Union Pacific's website and the U.S. Department of Agriculture.
Ferromex, the Mexican railroad that interchanges with BNSF and Union Pacific, also has embargoed permits for grain trains at border crossings at Eagle Pass and El Paso, Texas, USDA said.
Union Pacific said it is working to facilitate smoother crossings and reduce congestion at the border. BNSF and Ferromex could not be reached for comment.
The situation has left some grain sellers scrambling to find new buyers for their crops and struggling to get empty rail cars back from Mexico for shipments, Seyfert said.
"When you're trying to make space for what is predicted to be a large corn crop and a large soy crop, the last thing you need is to try to find new business if you can't deliver to your customer," Seyfert said.