Grain freight rates go down

10.08.2016

Grain freight rates decreased last week. On the one hand, the overall weakening of dry bulk market (Panamax sector lost more than 11% over the reporting week), decrease in bunker fuel cost, as well as reduction of trading activity contributed to freight rates decline.

In the south of the Atlantic grain offers for shipment decrease amid expectations of lower production. The information on China’s refusal to take two soybeans lots from Brazil due to presence of dioxins also pressured the market. In general Chinese importers are now more interested in purchasing new crop soybean and negotiating deals for delivery mainly in September – October.

In the northern part of the region, a shortage of cargo offers, especially on spot/promt dates was observed, despite the start of a new grain season in the USA. A significant worsening of market conditions in the northern part forced local ship owners to consider a possibility to transfer fleet in ballast to the US Gulf, which put additional pressure on transportation cost from the United States.

Demand for Panamax/Kamsarmax fleet decreased in Europe as well. Time-charter and freight rates went down following the overall trend in the Atlantic basin. Shippers actively speculated for the fall, and it was difficult for shipowners to maintain their positions, especially given the reduction of bunker fuel cost.

Meanwhile, freight rates strengthened slightly on transatlantic routes, as many ship owners preferred to stay in the European region.

 

 

UkrAgroConsult


 

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