The Panama Canal is a critical element in US agricultural exports, worth nearly $200 billion annually. Grains such as corn and soybeans are among the country's top exports and rely on a global shipping industry that is increasingly vulnerable to geopolitical instability and climate change.
However, the Panama Canal is facing its worst drought in its 110-year history. The canal is a key part of the journey for Midwestern grain on the way to Asian markets. More than 26% of US soybeans and 17% of corn pass through the canal after traveling from the Midwest to Gulf ports via a network of railroads and the Mississippi River. according to farmdocDAILY.
The water level in the canal is so low that the canal authority currently limits the weight of ships. Experts have predicted that this could force some ships to reduce their cargoes by up to 40%. Shippers have adapted by making longer overland routes or around the tip of South America or South Africa.
Throughout 2022 and 2023, the drought also affected Mississippi River cargo ships, grounding barges and prompting some charterers to reduce their cargo by 15% to safely navigate shallower waters. The US Army Corps of Engineers. regularly dredges the river bed to accommodate ships carrying agricultural goods.
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