KSU’s Agriculture & Minerals revenues
In the previous article in this series, we discussed Kansas City Southern’s (KSU) Chemical & Petroleum revenues in 2Q16. This part covers the 2Q16 Agriculture & Minerals segment. KSU reported $115.1 million in Agriculture & Minerals freight revenues in 2Q16. This was up 10% compared with $104.5 million in 2Q15.
The carloads in this segment rose by 9% in 2Q16 compared with the corresponding period last year. Even revenue per unit increased by 1%. The rise in carloads was mainly due to higher volumes of grain, especially in the cross-border business. KSU’s strong customer relations are reflected in the incremental pricing benefits in this segment.
Kansas City Southern has a positive outlook for its Agriculture & Minerals segment. The company expects higher freight volumes of agriculture commodities, despite seasonality in the rest of 2016.
The USDA (U.S. Department of Agriculture) expects higher supplies and production of wheat in 2016–17. The agency anticipates record-high winter wheat yields. However, it also predicts higher global wheat supplies on account of the increase in production, especially in Australia, Argentina, and Canada. It also foresees higher usage of US corn in 2016–17, along with better prospects for corn exports.
The USDA expects increased rice supplies in the United States in 2016–17, along with more production of long-grain rice. Long-grain rice has less starch (INGR), which is why the cooked grains are drier and fragmented. It also projects higher production of oil seeds (ADM) in 2016–17 mainly due to increased soybean production. Canada (CP) is the world’s largest producer of flaxseed, canola, pulses, and durum wheat.
In the next part of this series, we’ll analyze KSU’s Energy freight revenues in 2Q16.