"The peak shipping seasons for these two crops could overlap, spiking rail demand early in the fall shipping season," the US Agriculture Department and Surface Transportation Board said in a report dated Monday and released on Tuesday.

The report noted that the corn crop is maturing ahead of the five-year average and the soybean crop is progressing "only slightly" ahead of its five-year average, a trend that could send the two crops into harvest at the same time.

Grain transportation has been an issue that has drawn interest across the United States after congestion on railroads forced farmers to pile 93 million bushels of grain outdoors, endangering their crops. The USDA and STB created a task force in May to address grain transportation problems.

This year, the number of railcars onthe tracks has increased 4 per cent from the 1997 harvest, the report said, pointing out that rail transportation will be in even more demand due to high grain and soybean stocks and anticipated bumper crops.

The combined grain and soybean crop for the 1998/99 marketing year is forecast to be the second-largest US output on record.

"These combined volumes of beginning stocks plus production suggest that storage and handling capacity will be tight in 1998, particularly in the major producing regions," the task force said in its first report.

Demand will especially rise when producers seek to make room in storage for new crops, the report said.

"Particularly in the rail dependent areas of the Central Plains, Northern Plains, and Western Corn Belt, this supply-driven transportation demand will present problems for shippers and railroads in the coming weeks," the government agencies said.

The high production and stocks levels will make storage space "even tighter" in the Central Plains and Western andEastern Corn Belts than last year, the USDA and STB said.

The report also showed that grain car loadings on major railroads rose slightly in recent weeks due to strong demand in the US east, while demand for grain transportation in the west is weak due to low corn exports.