Major rivers which now direct a lot of agricultural trade and provide irrigation for crops are falling to record low water levels.
Agricultural economist Dan Basse told the Barnett Hall conference last week that on Wednesday 24 October, “there were 84 ships stacked up in the Panama Canal because there’s not enough water. This is usually the wettest time of the year for the Panama Canal, and it’s not raining,” he said.
As a result, the price to travel through the water body is three times higher than normal, creating a problem, as it is a major access-point to get grain out of the US gulf to Asia.
In the US, the Mississippi River is also at record low levels.
“This directs 47% of agricultural trade in the United States. It is the artery of our profitability and, yet, as of Monday [23 October], we are sitting at a record low. The flow has never been lower and this is the second year that this has happened.
“Exporters are struggling to get grain down that mighty artery to export. We have trains that run alongside the rivers, but logistically, it’s far more efficient to use the barge traffic of the Mississippi than putting it in a hopper car and moving it south,” he commented.
Basse explained that the River Danube and the River Rhine are also sitting at record lows.
He said that, on the Danube, if you’re exporting grain out of eastern Europe or Ukraine, you’re loading barges in some of those areas at only 40% to 60%, depending on different factors.
Looking at the Amazon in South America, he said that traffic is still going normally out of the Northern Arc.
That’s a set of ports, which now exports nearly 40% of Brazil’s soybeans. However, he commented that “there are tributaries [to the Amazon] showing some of their lowest levels in the last 120 years”.
Water temperatures in the Amazon are at record highs, he said, and it’s an issue to watch.
Soybeans are only 60% planted in the Mato Grosso region of Brazil and rainfall is low, so keeping an eye on levels as the crop is ready to export will be important, as the river is needed to get product to the report efficiently. The same goes for all of these trade routes.