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In 2022, the US exported over 26% of soybeans and 17% of corn via the Panama Canal, much of which was destined for Asia. Despite its intention to reduce imports of US grains, China may need to slow the rollout of that strategy given that a smaller wheat crop is expected out of Australia and likely to extend China’s reliance on US grains and the Panama Canal. The grain export season in the US will begin in earnest in mid-October and last through May. Should water levels at the canal remain low, US grain exports would be heavily impacted.
If the situation at the Panama Canal worsens significantly by October, US exports of grains and cotton could be impacted, which could create opportunities for Brazil to export higher volumes in Q4 as an alternative supplier for Asian buyers. Brazil is on course to produce a record crop of soybeans, corn, and cotton during 2023, which means that it will have available supply should logistical problems at the Panama Canal drive additional demand from other regions later in the year.
This excerpt has been published with permission from Rabobank from the full report: The Panama Canal Needs a Rainy October: Impacts of Panama Canal Drought on Global Agricultural Trade
August 2023/ Rabobank.
https://research.rabobank.com/
