In this installment of the ‘Agronometrics In Charts’ series, Sarah Ilyas studies the impact of the drought in the Panama Canal. Each week the series looks at a different horticultural commodity, focusing on a specific origin or topic visualizing the market factors that are driving change.

Approximately 3% of global maritime trade volumes traverse the Panama Canal. Over 50% of the tonnage navigating through the maritime passageway originates from the trade lane connecting the East Coast of the United States to Asia, followed by South and Central America’s routes. Among the key commodities transported through the canal are agricultural products. Though Panama has an equatorial climate that makes it one of the wettest countries, rainfall there has been 30 percent below average this year, causing water levels to plunge in Gatun Lake, which forms a key stretch of the canal system and provides fresh water for its locks.

The immediate cause is the El Niño phenomenon, which initially causes hotter and drier weather in Panama, but scientists believe that climate change may be prolonging dry spells and raising temperatures in the region. Consequently, the Panama Canal Authority has implemented substantial measures in response to this climatic challenge. The number of permissible daily transits for ships has been significantly curtailed, decreasing from an average of 36 to 38 in the past to an anticipated 18 in February, representing half of the customary allowance.

Concurrently, The authority also reduced draft levels — how low a vessel can sit in the water — meaning some ships must carry less cargo. Even if the rains return on time next year, traffic congestion and draft restrictions will linger long into 2024.

For Chile, exports transiting through the canal have declined in the past five seasons, yet they still represent 48% of the country’s total exports. Cherry season in Chile will start to peak in January, and grapes, plums, nectarines and blueberries all could have a hard time reaching market, says Ignacio Caballero, director of marketing for Frutas de Chile, a trade group representing Chilean fruit growers. According to a report by Rabobank, ​​Vessels loading table grapes, berries, and stone fruit in Chile can be affected by any number of predictable and unforeseeable variables at both ends of the chain. These include weather-related picking and packing delays, inaccurate crop timing and volume estimations, berthing issues and port congestion in Valparaiso, and port congestion and delays in the Delaware River prior to a return voyage.

Source: USDA Market News via Agronometrics.

(Agronometrics users can view this chart with live updates here)

85% of Peru’s mangoes, blueberries, grapes, avocados, and citrus on average are exported to the US East Coast. Considering that the peak seasons for mangoes and grapes occur in January, these commodities could be affected. The window for the export of Peruvian mangos begins in October and ends in April, the peak goes through December to March. The US is the second-largest export market for Peruvian mangos. Given that Peru plays a pivotal role as a supplier of mangos during the winter months, any delays or shortages have the potential to exert a direct and substantial influence on the United States' mango market during this season.

Source: USDA Market News via Agronometrics.

(Agronometrics users can view this chart with live updates here)

In addition to booking restrictions, vessels are expected to lighten their loads to adhere to draft reductions. This, in turn, may lead to longer delays, with vessels unable to secure a booking or those that missed their booking experiencing waiting periods of up to two to three weeks for a new slot at the canal. The increased waiting time for transit is projected to tighten vessel capacity, consequently causing an anticipated rise in spot rates, particularly along the route from the East Coast of the United States to Asia. In cases of re-routing, supplementary costs will be incurred due to the additional two weeks of sailing for the alternative route around Cape Horn. 

In our ‘In Charts’ series, we work to tell some of the stories that are moving the industry. Feel free to take a look at the other articles by clicking here. All pricing for domestic US produce represents the spot market at Shipping Point (i.e. packing house/climate controlled warehouse, etc.). For imported fruit, the pricing data represents the spot market at Port of Entry.

You can keep track of the markets daily through Agronometrics, a data visualization tool built to help the industry make sense of the huge amounts of data that professionals need to access to make informed decisions. If you found the information and the charts from this article useful, feel free to visit us at www.agronometrics.com where you can easily access these same graphs, or explore the other 21 commodities we currently track.