Ag Weather Forum

For the second time in three years, the development of El Nino in the Pacific Ocean raises concern about the potential impact on Panama Canal shipping volume. This is a major issue. Back in the 2023-24 transport year, storm track changes related to El Nino led to a harsh drought in Panama with the third-driest year on record. The lack of rain directly lowered the water volume in Lake Gatun, the large human-made reservoir created to supply the Panama Canal. As a result, Panama Canal authorities reduced canal throughput by as much as 40% below normal levels. A summary on Panama Canal conditions by Reuters reporter Jake Spring noted that ships had to wait as long as 21 days to go through the canal during the heart of the 2023-24 drought.

Now, in 2026, the U.S. National Oceanic and Atmospheric Administration (NOAA) declared on June 11 that equatorial Pacific Ocean temperatures had attained El Nino levels and that an El Nino event is occurring. And the Panama Canal authorities have taken notice.

A review of Panama Canal policies by NCB Capital Markets noted that "The Panama Canal Authority (ACP) announced on June 4, 2026, that it will reduce the maximum authorised draft for vessels transiting the Neopanamax locks beginning July 3, 2026, based on current and projected water levels in Gatun Lake and concerns that El Nino conditions could develop later in the year." The maximum permitted draft for Neopanamax vessels will be reduced from 15.24 meters (50 feet) to 15.09 meters (49.5 feet) of tropical fresh water. No change is indicated in the number of vessels per day going through the Canal.

These adjustments are minor, but the reduction is the first time in two years that any type of draft restriction on Panama Canal traffic has been order. This brings a reminder of how bad things got for Panama Canal shipping during the drought two years ago. At the height of that event, water shortages led to a reduction in canal throughput by as much as 40% below normal levels, according to the NCB summary. The cuts back then came through transit restrictions and vessel draft limitations.

No two weather years are exactly alike. That's true of the Panama Canal setup going into this El Nino as well. In this case, above-normal rainfall in Central America during the winter helped boost the volume of Lake Gatun ahead of the onset of El Nino. However, the rest of this year looks unfavorable for precipitation. DTN's long-range weather team calls for well-below-normal rainfall throughout Central America -- including Panama and Lake Gatun -- through the balance of this year. Prospects for near normal precipitation do not return until late winter-early spring 2027. Panama Canal transport conditions are favorable now, but will be closely watched as this El Nino event and its effects evolve.

More details on this year's arrival of El Nino are available here: https://www.dtnpf.com/….

Past coverage about how the Panama Canal low water levels developed and its impact on shipping in 2023-24 can be seen in several DTN Cash Market Moves columns by Mary Kennedy, DTN's analyst who covers cash grains and transportation:

-- "Low Water Levels Not Just a Concern on the US River System," https://www.dtnpf.com/… (7/10/23)

-- "Drought-Stricken Panama Canal Disrupts Global Shipping," https://www.dtnpf.com/… (9/5/23)

-- "New Restrictions for Panama Canal; US Rivers Still Face Low Water Levels," https://www.dtnpf.com/… (10/9/23)

-- "Panama Canal Water Source Gatun Lake Still Shrinking, Slowing Ship Traffic," https://www.dtnpf.com/… (11/6/23)

-- "No Relief in Panama Canal Water Levels Is Disrupting Grain Shipments," https://www.dtnpf.com/… (12/11/23)

-- Panama Canal Increasing Booking Slots Beginning Mid-May 2024, https://www.dtnpf.com/… (4/22/24)

Bryce Anderson can be reached at bryce.anderson@dtn.com

(c) Copyright 2026 DTN, LLC. All rights reserved.