An excavation system is disclosed for a machine having a work tool. The excavation system may have first and second actuators configured to move the work tool in first and second directions, at least a first valve configured to regulate fluid flow through the first actuator, and at least a second valve configured to regulate fluid flow through the second actuator. The excavation system may also have at least one sensor to generate a first signal indicative of a performance of the first actuator, and a controller in communication with the at least a first valve, the at least a second valve, and the at least one sensor. The controller may be configured to make a first determination that the first actuator is experiencing a stall condition based on the first signal, and to selectively command neutralization of the powertrain and movement of the second actuator based on the first determination.