- CSX’s Lonegro says good crop prices will boost shipments
- Falling coal stockpiles are also stoking investor optimism
CSX Corp., Norfolk Southern Corp., and Union Pacific Corp. climbed as lower coal stockpiles and a commodities rally led by grain and oil hinted that a cargo slump may have hit bottom.
Farmers, who have stored grain to wait for higher prices, may begin to ship more as prices for corn, soybeans and other crops begin to climb, said Frank Lonegro, chief financial officer of CSX said during a presentation at a Deutsche Bank AG conference in Wednesday. Since April, prices have risen 22 percent for corn and 29 percent for soybeans.
“The farmers collectively needed to see an uptick in the prices in order to unlock some of the grain that they had in storage,” Lonegro said. “So good crop prices are positive in terms of volumes.”
Railroads have been cutting costs and storing locomotives as lower shipments of coal, oil and grain cause a decline in freight. Carloads for the five major U.S. carriers fell 6.5 percent in the first quarter and so far have dropped 10.4 percent this quarter, according to the Association of American Railroads, a trade group that reports weekly shipments.
Coal stockpiles have declined in the regions served by CSX, the largest railroad in the eastern U.S., Lonegro said. In the North, there were 87 days of coal stocks and 113 days in the South, he said. That’s less than 105 days in the North and about 180 days in the South that Lonegro gave on May 24.
“The fact that coal stockpiles have been coming down is a good data point for people waiting for any inclination of a bottom for coal,” said Lee Klaskow, an analyst with Bloomberg Intelligence, in a telephone interview.
CSX gained 2 percent to $27.01 at 3:11 p.m. in New York and its main competitor in the east, Norfolk Southern, climbed 2.7 percent to $86.01. Union Pacific, the largest publicly traded railroad, rose 1.4 percent to $88.83. All three earlier posted their biggest intraday gains since April 22, the day after Norfolk Southern reported first-quarter earnings that beat analyst estimates.