Page 144 - Food Outlook

Ocean freight rates
Contributed by the International Grains Council (IGC)
www.igc.int
OCEAN FREIGHT MARKET (OCTOBER 2016 - OCTOBER 2017)
The dry bulk freight market posted solid gains over the past six months, although trends were two-sided, with sectors for the largest vessels remaining distinctly volatile. Weakness initially reflected a seasonal slowdown in demand, coupled with uncertainties about global trade. However, markets edged higher since mid-July, with the Baltic Dry Index (BDI) – a composite measure of activity
on key routes – reaching its highest since March 2014, on broad-based gains across constituent segments. Reflecting cautious optimism among market participants against a
brighter economic backdrop and improved fundamentals, the BDI was up by 86% y/y.
Gains over the past six months were steepest for Capesize vessels, primarily associated with the shipment of heavy raw materials. Pressured by limited activity on key iron ore routes from Western Australia and Brazil, the corresponding Baltic sub-Index bottomed out in mid-July, dropping by more than two-thirds since late April. Values mostly soared thereafter on renewed buying interest from China, highlighted by record iron ore imports in September, with coal deliveries in the same month at
a near-three year high. With occasional support from strength on transatlantic routes and an upturn in period fixing, the sub-Index was 92% higher y/y.
Panamax rates also exhibited mixed trends throughout the period. With steep losses in May-June followed by volatile growth, average values firmed slightly since late April, but registered a sharp y/y increase. Initial declines mainly stemmed from limited activity out of South America, particularly for new crop grains and oilseeds. A weaker tone in Australia and Indonesia amid increasing tonnage supply in the Pacific also weighed on sentiment.
Despite occasional pressure from excess tonnage in some regions, the market staged a recovery in the period since, the sub-Index touching a near four-year high more recently. Dispatches from South America and the USA ramped up
in recent months, with Brazil a particularly active exporter
Baltic Exchange sub-Indices – Grains and oilseeds carrying sectors (20 October 2016 - 20 October 2017)
20 Oct 2016 = 100
200 175 150 125 100
75
50 N D J F M A M J J A S O
Market indicators
Summary of dry bulk freight markets
20 October 2017
1 578
Source: Baltic Exchange, * 4 January 1985 = 1000
Baltic Capesize sub-Index
(20 October 2016 - 20 October 2017)
20 Oct 2016 = 100
Baltic Dry Index (BDI)*
Sub-indices:
Capesize
Panamax
Supramax
Handysize 679 19
200 175 150 125 100
75 50 25
0
NDJFMAMJJASO 2016 2017
2016 2017
Supramax Handysize Panamax
138 FOOD OUTLOOK NOVEMBER 2017
3 145 1 643 1 126
58 6 25
Changes 6 months
y/y
86
92 82 63 60
27
%