Estimating a global demand model for soybean traffic through the Panama Canal

This study attempts to fit a global demand model for soybean traffic through the Panama Canal using Ordinary Least Square. Most of the soybean cargo through the interoceanic waterway is loaded on the U.S. Gulf and East Coast ports -mainly destined to East Asia, especially China-, and represented about 34% of total Panama Canal grain traffic between fiscal years 2010-19. To estimate the global demand model for soybean traffic, we are considering explanatory variables such as effective toll rates through the Panama Canal, U.S. Gulf-Asia and U.S. Pacific Northwest-Asia freight rates, Baltic Dry Index, bunker costs, soybean export inspections from the U.S. Gulf and Pacific Northwest, U.S. Gulf soybean basis levels, Brazil's soybean exports and average U.S. dollar index. As part of the research, we are pursuing the estimation of the toll rate elasticity of vessels transporting soybeans via the Panama Canal. Data come mostly from several U.S. Department of Agriculture sources, Brazil's Secretariat of Foreign Trade (SECEX) and from Panama Canal transit information. Finally, after estimation of the global demand model for soybean traffic, we will discuss the implications for future soybean traffic through the waterway, evaluating alternative routes and sources for this trade.