Currently, Panel cloth is not compatible with Niagara. Despite Panel Cloth using skeletal meshes and Static meshes to create the simulation, it is ultimately a Skinned Mesh Component. Currently there is no Niagara Data Interface for Skinned Mesh Component so using Niagara with Cloth Panel meshes is not possible atm.
Previously, I used my skeletal mesh to create body vfx using Niagara such as spawning particles off of the vertices (ex: Fire sprites to simulate burning effect.). It would awesome if there was a new interface for the cloth panel inside of Niagara, or even just a new data interface for the Skinned Mesh Component.