Another major shipping route is restricting traffic, this time because of drought, and the Panama Canal's cuts could weigh on Australia's red meat exports to the east coasts of the United States and Canada. The canal, which handles about 5% of world maritime trade, reduced maximum daily transits from 36 to 34 at the start of September and to 32 this week, and officials warn of further cuts without sufficient rain over the next three months.

The fourth quarter is normally the busiest for agricultural trade through the canal, said Rabobank senior animal protein analyst Angus Gidley-Baird, and delays and the cost of diverting ships could hit both South and North American farm trade.

For Australia the canal matters more than it looks: over the past five years more than 70% by volume of its US beef exports went to the US east coast and about 90% of its Canadian exports to the Canadian east coast. With the US taking about 29% of Australian beef production last year, roughly 24% of national output was heading to the east coast and most likely through the canal — more than the volume sent to China, Japan or South Korea, he estimated, allowing that some travels by air. MLA figures for August show 166,471 tonnes of red meat shipped by sea against 5,504 tonnes by air.

The canal's locks depend on fresh water from the rain-fed Gatun and Alajuela lakes; the last restrictions, in the 2023–24 drought, cut daily transits to 22. This time the squeeze comes with traffic through the Strait of Hormuz sharply reduced by the US–Israel war on Iran, and some vessels have paid more than $1 million at auction for a transit slot.

The estimates are a high-level assessment that does not separate air from sea freight, Mr Gidley-Baird noted — but with canal officials tying any further cuts to the next three months' rainfall, the question for exporters is how much of the fourth-quarter shipping peak will be affected.

Source: Beef Central