Bigger Shortcut for U.S. Soy Exports Could Grow Demand

Soybean checkoff study predicts changes that could increase demand for U.S. soy abroad

Over a century ago, U.S. President Theodore Roosevelt championed a shortcut between the Atlantic and Pacific oceans. The United States helped Panama achieve independence from Colombia, then struck a deal with Panama to finish what France had started but later abandoned: construction of the Panama Canal.

In 2014, some 100 years after the first ship passed through the canal, Panama could complete a $5.25 billion effort to expand it and, according to a soybean checkoff-funded study, eventually alter how U.S. soy and other crops reach export markets.

“Much of the talk about the impact of the Panama Canal expansion has been speculation,” says United Soybean Board (USB) Vice Chair Vanessa Kummer, a soybean farmer from Colfax, N.D. “The soybean checkoff initiated this study to assemble credible data and scenarios that will allow U.S. soybean farmers and the rest of the U.S. soy industry to better understand and prepare for what may result from a much larger Panama Canal.”

The study, recommended by the checkoff-funded Soy Transportation Coalition and coordinated by USB’s Global Opportunities program, which Kummer chairs, expects a bigger Panama Canal to:

• More than double the average area that draws U.S. soy and grain destined for international markets to the Mississippi River for barge transit to central Gulf of Mexico ports. Currently at 70 miles, the area could expand to 150 miles.
• Increase by nearly a third the total volume of U.S. soybeans and grain moving through the Panama Canal to export markets.
• Result in an approximate 35-cents-per-bushel savings for elevators within the range of central Gulf of Mexico ports, assuming the ports will dredge to ensure at least a depth of 45 feet to handle larger ships capable of moving through the expanded Canal.

Bottom line: Soy customers in China and other Asian countries currently command a majority of U.S. soy exports. The study concludes canal expansion “…will lower the price to the end user and increase demand.”