Drought at Panama Canal to Delay Grain Shipments Well Into 2024

Grain shipments originating in the U.S. Gulf Coast headed for Asian markets are having to take longer sailing routes at higher freight costs in order to avoid bottlenecks and record-high fees at the drought-hit Panama Canal. 

The difficulties at the canal are hitting at the peak season for U.S. grain exports, and the higher costs connected to the necessary work-arounds are threatening to hit demand for U.S. corn and soy that have already lost market share to Brazil in recent years, reports Reuters. 

Only 22 daily transit slots at the canal are available (down from 35) and these are being quickly taken by container vessels and other ships that use the canal on a regular basis, leaving ships moving crops to have to wait up to three weeks to pass through. Compounding the situation, by February, only 18 daily transit slots will be allowed. 

It is believed that the current conditions will continue well into 2024 until Brazil’s wet season recharges the reservoirs in April or May, allowing for shipping to normalize.

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