25-02-2017

Dry bulk: Panamax freight rates rise as South American grains season approaches

Panamax

Freight rates on the grains route from Santos, Brazil to the Far East have increased by $1.50/mt from the beginning of the week to $25.25/mt ahead of the imminent start of the main South American grains export season in March.

According to market sources, a surge in freight prices is likely to put shipowners in the driver’s seat, who are already seeing deals being done at $10,000/day plus $500,000 ballast bonus for a Kamsarmax from Brazil to China. This is a considerable improvement from $9,250/day plus $425,000 bb at the beginning of the week.

Ship-owners’ appetite was further fueled by the expectation that Brazil is likely to see another record year for the grains crops. According to AgRural, a Brazilian commodity consultancy, 26% of the Brazil’s soybean crop has already been harvested, compared with 23% at the same point last year.

“The good thing about this grains hype is that charterers are actually keen to fix even if rates are rather high,” said a shipbroker, adding that, “The rates that they are expecting for the months to come will be even more pricey, which is good news for the ship-owners.”

With the grain season heating up, the migration of tonnage towards South America also increased. According to cFlow, Platts trade flow software, there were approximately 30 unladen vessels anchored out of the Santos port. There are more ships already on the way from the Pacific, due to arrive in the next two weeks, sources said.

However, even the extra tonnage may not put a dent in rising rates, if exports keep going strong.

Big players such as ADM, Bunge and Dreyfus were positioning their ships ready for the new grains cargoes to be loaded while Cargill took six more vessels in the last 48 hours.

Source: Platts 

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