Panama Canal Drought to Delay Grain Ships Well into 2024

• Bulk grain shippers hauling crops from the U.S. Gulf Coast export hub to Asia are sailing longer routes and paying higher freight costs to avoid vessel congestion and record-high transit fees in the drought-hit Panama Canal, traders and analysts said.
• The shipping snarl through one of the world's main maritime trade routes comes at the peak season for U.S. crop exports, and the higher costs are threatening to dent demand for U.S. corn and soy suppliers that have already ceded market share to Brazil in recent years.
• Ships moving crops have faced wait times of up to three weeks to pass through the canal as container vessels and others that sail on more regular schedules are scooping up the few transit slots available. Grain ships are often at the back of the line as they usually seek transit slots only a few days before arriving, while others, like cruise and container ships, book months in advance.
• The restrictions could continue to impede grain shipments well into 2024, when the region's wet season may begin to recharge reservoirs and normalize shipping in April or May, analysts said.
• "It's causing quite a disruption both in expense and delay," said Jay O'Neil, proprietor of HJ O'Neil Commodity Consulting. He added that the disruption is unlike any he's seen in his 50 years of monitoring global shipping. Wait times for bulk grain vessels ballooned from around five to seven days in October to around 20 days by late November, O'Neil said, prompting more grain carriers to reroute.
• While grain prices have fallen from 2020 peaks, higher freight costs will be passed on to grain and oilseed importers who buy human food and livestock feed.

 (Source: Reuters)