The Panama Canal is a crucial component in U.S. agricultural exports, valued at nearly $200 billion annually. Grains such as corn and soybeans are among the country’s top exported commodities, and rely on a global shipping industry, which is becoming increasingly vulnerable to geopolitical instability and climate change.
However, the Panama Canal is facing the worst drought in its 110-year history. The canal is a key piece of the journey for Midwestern grain on its way to Asian markets. More than 26% of U.S. soybeans and 17% of corn passes through the canal after traveling from the Midwest to gulf ports via a network of rails and the Mississippi River, according to farmdocDAILY.
The water levels in the canal are so low that the canal authority currently is restricting the weight of ships. Experts have projected that this could force some ships to reduce their loads by up to 40%. Shippers have adapted by taking longer routes across land or around the tip of South America or South Africa.
Throughout 2022 and 2023, drought also impacted Mississippi River cargo ships, stranding barges and prompting some shippers to reduce their load by 15% to safely navigate shallower waters. The U.S. Army Corps of Engineers routinely dredges the bottom of the river to accommodate vessels carrying agricultural goods.
