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Double-Wide: Who's Set to Benefit From the Expanded Panama Canal?

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The historic renovation could be a boon for US ports, but right now the US is falling behind other global players.

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Soybeans

While regional droughts have left US farmers facing some of the lowest crop outputs in decades, future competition from South American agricultural products may yield unfavorable competition as well.

"The Brazilians are able to grow soybeans without subsidies cheaper than we can grow them in the US with subsidies," Lax says of Brazil's agricultural advantages. "Once the expanded Canal is finished in 2014 it will not only allow Brazilian agriculture to continue, but also take advantage of their superior economies of scale and be able to underprice US agricultural goods."



With the expanded Canal, Brazilians will be able to better feed China's vivacious demand for soybeans and soy-derived products.

Brazilian sugar exports should benefit as well, Lax says.

According to a report released by the World Agricultural Outpout Board, Brazils soybean output is at a record high of 81 million, with their projected soybean exports boosted by a reduction in this years US crop.

As for the United States, three out of 10 bushels of domestic grain and 44% of total US soybean exports travel through the Panama Canal. A report titled "Panama Canal: Impact on US Agriculture" by Informa Economics, Inc., an agribusiness research and consulting company, details this and more on the potential impact of the expansion on US agriculture. Soybean exports are expected to grow from 365 million bushels to 750 million by 2020, and 11 new grain elevators recently have been put in place across the country in anticipation of increased volume. A larger Panama Canal can offer many opportunities to agricultural exporters -- larger export loads and lower transport costs among them. But these are met with various concerns over whether or not the US will be able to meet supply at more competitive global prices.

On the other hand, Brazil benefits from GDP growth over 4% and crop acreage that is not in production and available for development. This is in addition to Brazilian farmers forcing crop production out of their country quickly, because of lack of available storage and fewer hedging opportunities.

Twitter: @brokawbrokaw

No positions in stocks mentioned.
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