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Dry bulk Atlantic: Panamax freight rates firm; Brazil soybean exports seen higher

With Brazil’s projected soybean exports for 2015-2016 revised up by the US Department of Agriculture (USDA), front-haul rates have firmed for July, sources said.

Brazilian exports of soybeans and soybean meal for the 2015-2016 season are now projected at 65.55 million mt, 1.02 million mt higher than the 64.53 million mt forecast in June and 4.1 million mt higher than the figures for the 2014-2015 season, according to the USDA.

China is the biggest global importer of soybeans and is expected to take 77.5 million mt of soya beans in the 2015-2016 season.

Freight rates have reflected this level of demand over the last two months, with the rate to take a 60,000 mt grain stem from Santos, Brazil, to Qingdao, China, up $3/mt from $21.75/mt on May 13 to $24.75/mt on July 13, according to Platts data.

Shipping sources are anticipating a fall in levels for August dates though, due to inbound ballasters, with August-dated cargoes heard fixed at $23/mt.

The freight forward market is also showing this backwardation and according to Freight Investor Services data, at the end of business on July 13, Panamax paper for July closed at $8,450/d while August paper closed at $8,150/d.

According to the latest USDA data for July, total US grain exports for the 2015-2016 season, including wheat, coarse grains and rice, are projected to reach 362.61 million mt, a slight increase on June’s estimate of 360.65 million mt.

However, July’s figures are 12.93 million mt lower than last year.

The grain export season typically begins in September and runs until January, sources said.

Many charterers are already fixing forward stems from New Orleans, Louisiana to Qingdao for loading dates from September to December, with bids heard at $32.5-33/mt.

This level is higher than the spot rate to take a 60,000 mt grain stem from New Orleans to Qingdao, which was assessed at $32.25/mt on July 13.

The reason that the spot rate is lower is because there is an element of uncertainty when fixing forward stems, and owners receive a premium as a result, according to a shipbroker.
Source: Platts