Where does the 'El Niño trade' stand right now?

According to China Merchants Securities’ latest research report, El Niño impacts industries primarily through four channels: agriculture and biological resources; water resources and energy-intensive production; shipping and mining operations; and high temperatures driving electricity demand. So far, the two most clearly observable effects have already emerged: reduced anchovy catches in Peru have pushed up aquafeed costs, while declining water levels in the Panama Canal have further tightened navigation restrictions and curtailed effective shipping capacity. In contrast, the main impacts on palm oil, natural rubber, and backup power supplies across Southeast Asia are expected to materialize more prominently in 2027; copper prices, meanwhile, remain predominantly driven by its own industrial cycle. The report argues that El Niño functions more as an 'amplifier' of existing industry trends rather than an independent driver. Historical analysis shows that weather-related shocks only translate into sustained market moves when they resonate with underlying industry dynamics—such as supply contractions or improving sectoral fundamentals. Currently, livestock farming and shipping appear to possess relatively stronger medium-term support. In terms of climatic intensity, this El Niño event is still rapidly intensifying. The U.S. National Oceanic and Atmospheric Administration (NOAA) forecasts a greater than 90% probability of an extreme El Niño occurring during the Northern Hemisphere’s autumn and winter of 2026. There is approximately a 69% chance that the Relative Oceanic Niño Index (RONI) will exceed +2.5°C between October and December—surpassing all previous peaks since 1950. Financial markets have yet to coalesce around a unified 'El Niño trade.' Since the current El Niño episode was officially confirmed on June 11, sectors including agriculture, livestock farming, feed, aquaculture, crop cultivation, seed industry, tires, copper, and shipping have all outperformed the Wind Full A Index. However, their upward momentum stems from divergent drivers: livestock farming gains are largely underpinned by the hog cycle, while shipping benefits both from improving sectoral fundamentals and Panama Canal navigation restrictions. Markets are still awaiting clearer transmission of weather-driven impacts into pricing and profitability. First stop: fishmeal and the Panama Canal—impacts have already materialized. The earliest tangible effects of this El Niño relate directly to marine and water resources. Peruvian fishmeal supply contraction has already reached the Chinese market. For Peru’s 2026 first fishing season in the north-central region, the quota stands at 1.914 million tons; as of August 20, cumulative catch amounted to roughly 471,000 tons—just 24.6% of the quota. Sluggish progress has reduced Chinese fishmeal imports, steadily depleting port inventories and pushing up prices for high-protein imported fishmeal. Aquafeed producers are already experiencing tangible cost pressure. Next, resource assessments and quota setting for the second fishing season will become critical supply-side variables. For feed manufacturers, key considerations include existing inventory levels, procurement strategies, formulation adjustments, and pricing power…

Tariff implementation, Panama Canal restrictions, typhoon disruptions: Three pivotal nodes to watch for U.S.-bound shipping lanes

The U.S.-Canada tariff conflict has shifted from 'negotiation' to 'implementation': Canada’s retaliatory tariffs take effect on September 8—the next critical milestone. Meanwhile, Panama Canal restrictions, typhoon disruptions, and peak-season cargo surges are converging, making it highly likely that space availability and freight rates on U.S.-bound routes will continue rising in the near term. This article clarifies all three developments at once. I. September 8: Canadian retaliation takes effect—reassessing transshipment routing On August 22, the U.S. imposed 50% tariffs on approximately USD 20 billion worth of Canadian goods under Section 338 of the Tariff Act of 1930. Steel, aluminum, and auto parts—even those covered under the USMCA framework—are included. On September 8, Canada’s retaliatory list enters into force, imposing duties of 15%, 25%, or 50% on CAD 27.6 billion (approx. USD 20 billion) worth of U.S. exports across over 700 product categories; steel and aluminum tariffs, for instance, rise from 25% to 50% for most items. For freight forwarders and shippers serving North America, the real significance lies in routing: many customers previously avoided direct U.S.-to-Canada shipments by first landing cargo at U.S. ports and then trucking it across the border. After September 8, tariff costs on both the U.S. leg and the Canadian leg of such 'U.S.-transit' routes must be recalculated—any ambiguity regarding rules of origin, transit documentation, or tariff liability clauses could erase the entire cost advantage of this path. Also note: Canada’s retaliation targets consumer goods—including dairy, seafood, home appliances, and agricultural products—so a sharp contraction in U.S. exports to Canada is virtually certain. Cross-border trucking volumes and cargo composition between the U.S. and Canada will undergo noticeable shifts after September. II. Panama Canal restrictions: From 'congestion' to 'cost' Driven by El Niño, rainfall across the Panama Canal watershed remains persistently below average. The Panama Canal Authority has announced a phased restriction plan: September 2: Maximum draft for Neopanamax locks reduced to 48 feet (14.63 meters) September 3: Daily transits capped at 34 vessels (9 Neopanamax + 25 Panamax) September 15: Panamax lock slots further cut to 23, reducing total daily transits to 32 October 1: Maximum draft further tightened to 47.5 feet (14.48 meters) Each one-foot reduction in draft forces large container ships to offload hundreds of TEUs. Competition for priority passage has intensified dramatically: in August, the auction price for priority transit rights hit a record USD 5.3 million, with up to 18 vessels bidding for a single slot. Some carriers have already adjusted strategy—ONE has canceled three Panama Canal–based services, and several others have announced…

Panama Canal to Lower Neopanamax Maximum Draft Restrictions as El Niño Develops

Jul 6, 2026

The Panama Canal Authority will reduce maximum vessel drafts starting July 24 due to El Niño-related water level concerns. Adjustments aim to conserve freshwater while managing impacts on global trade routes for cargo.

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