46 Follow us on Twitter: @PrairieFarming Better Farming | February 2024 Coast of the U.S. and Asia, with China being the biggest counterpart in Asia. North American grains and oilseed trade are the main ag commodities that go through the canal. Estimates indicate that the U.S. exported over 26 per cent of their soybean shipments and 17 per cent of corn using the Panama Canal in 2022, and it was mostly to Asia. South American grain trade, especially from Brazil, does not extensively use the trade route through the Panama Canal for their shipping. In the last quarter of 2023, dry bulk shipping through the Panama Canal dropped by about 60 per cent. As the normal dry season in the region is during the latter part of December till April/May, drought on the canal could continue to hinder shipping and make it a “costlier” route. This time period also coincides with when the U.S. export program picks up steam. The benchmark shipping index climbed due to these drought issues at the canal. Costs and transit times would also climb sharply if shippers were forced to seek out alternate routes for grain movement. Some exports will need to be rerouted through the Pacific Northwest. The U.S. export program kicked into top gear during the last quarter of 2023 and the Panama Canal drying up is something that the exporters would like to avoid, especially if China is back buying U.S. grain like they bought U.S. soft red winter wheat due to their crop failure and quality issues triggered by too much precipitation. Also, if the drought in South America persists, China may need to buy more U.S. soybeans and corn to manage the risk of a global production loss in 2024, even at higher costs. The drought on the Panama Canal is not a new issue but it seems to be getting worse after each episode. The dropping water levels in 2023 at the canal ties into similar drought issues at the aforementioned Mississippi River in the U.S. and the Amazon River. This triple threat to the grains industry is worrisome and seems to be setting a pattern that resonates with “dry ups” in prior years. U.S. grain exports could feel the pinch if the Panama Canal drought conditions deteriorate, opening the door for more sales from competing grain exporters. Some shippers may also need to opt for air cargo instead of using the Suez Canal (10 to 12 per cent of global GDP is estimated to be transacted through the Suez Canal and the Red Sea) as an alternative route to the Panama Canal because tensions in the Red Sea have been rising. BF Moe’s Market Minute ENJOY THESE FARMING & AGRICULTURE VIDEOS. VISIT FARMS.COM/VIDEOS Keeping carbon in the soil Girls just wanna have farms Cattle farming In Saskatchewan Improving soil health in 60-inch rows of no-till corn with cover crops Baling wheat straw What nobody told me about regenerative farming Everything you ever wanted to know about wheat 4 big things to consider when buying ag real estate Grain bin collapse and grain dust explosion MOE AGOSTINO & ABHINESH GOPAL Maurizio (“Moe”) is chief commodity strategist with Farms.com Risk Management and Abhinesh is head of commodity research.
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