① Agricultural products exported by the US via the Gulf of Mexico face delivery problems due to congestion in the Panama Canal, which greatly weakens demand for them in the Asian market; ② Many traders choose to divert transportation through the Suez Canal or export from the west coast of the US, but these measures have agreed to increase grain costs and reduce the appeal of US agricultural products.
Financial Associated Press, December 13 (Editor Maran) The Panama Canal continues to be congested. This is undoubtedly a blow to US agricultural products that have already entered the peak harvest and export season.
Traders and analysts said that bulk grain shippers from US Gulf Coast export centers to Asia are using longer routes to avoid flow restrictions in the Panama Canal and will pay higher freight for this.
However, rising costs have greatly weakened the appeal of US agricultural products, and the Asian market is increasingly favoring supplies from major South American agricultural countries such as Brazil.
Currently, crop merchants have to wait at least three weeks in the Panama Canal to pass through the canal. However, according to analysts, merchant ships will not see an improvement in traffic conditions until Brazil's abundant season in April or May 2024 at least.
Jay O'Neil, head of HJ O'Neil Agricultural Consulting, pointed out that this has greatly troubled the cost and delivery of agricultural products in the US, and that its impact has been rare in his 50-year career.
left and right are difficult
A large number of US grain traders are already planning to bypass the Panama Canal, but the longer routes have led to soaring costs for fuel, crew, and freight leasing. The Baltic Sea dry bulk freight price index, which is regarded as the benchmark for bulk grain shipments, has already soared to a new high in a year and a half on December 4, more than double that of a month ago.
Food vessels crossing the Panama Canal usually only look for suitable transit times a few days before they arrive, while cruise ships and container ships generally need to be booked months in advance. However, in the face of limited flow in the canal and long queues, this practice placed the food ships last in the queue.
Any of the available scheduled slots are already up for auction, and demand is unusually high. In some periods, prices have even reached more than 1 million US dollars per ship, making it impossible for grain traders who follow a low-profit sales path to participate in the competition at all.
Mark Thompson, senior trader at Orland Agriculture, said the grain trade and bulk shipping sector will be the last group of customers to pass through the Panama Canal. He claims he will no longer rely on the Panama Canal.
Also, according to a report from the US Department of Agriculture, in the second half of October, only 5 US food ships bound for East Asia passed through the Panama Canal, while 33 grain ships circled east through the Suez Canal. In the same period last year, 34 food ships passed through the Panama Canal, and only 7 ships circled the Suez Canal.
Other traders choose to export crops from America's west coast, but this means they can no longer transport domestically through cheap rail services, which also increases the cost of grain exports.
According to data from the US Department of Agriculture, only 56.8% of total US corn exports in October this year were shipped from Gulf Coast ports, far lower than 64.9% in the same period last year.