September 25, 2014

Once the Panama Canal expansion is completed in early 2016 shippers will likely need to source grain from deeper inland in the U.S. to fill the larger ships, resulting in increased competition and higher basis bids.  However, because the number of foreign grain buyers that can handle the massive volumes of grain needed to fill the larger ships is limited, price gains will be limited. Currently only four ports in the world can handle the biggest ships, three in China and one in Rotterdam.  The wider canal will cut the cost of shipping grain from the U.S. Midwest to Asia by 12%, helping to improve the U.S’s position against Brazil, Argentina, and Eastern Europe, but South American soybeans will still have a price advantage.  The expansion will benefit U.S. Midwest farmers in a second way; because there will be more transportation pressure in the region from barges, rail rates are predicted to fall to stay competitive.  To read more:

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