Page 145 - Food Outlook

Freight: share of C&F price on selected routes* (20 October 2007 - 20 October 2017)
Summary of freight rates on selected routes
Market indicators
percent
25 20 15 10
5 0
07 08 09 10 11 12 13 14 15 16 17
* Nominal average weekly freight rates as a percentage of calculated cost and
freight (c&f) export quotations. Source: IGC.
of maize and soyabeans. Underpinned by robust soyabean demand from China, nominal rates for trips from Brazil and the USA (Gulf) rose by 13% and 18%, respectively, during the past six months.
Ocean freight rates for smaller Supramax and Handysize vessels followed the broader market trend, with initial declines in late spring and early summer being more than offset by increases in more recent months. A build-
up of tonnage in the Mediterranean, the USA and South America, coupled with reduced shipments of minerals
in the Pacific, weighed on sentiment initially, although markets drew some support from brisk demand for scrap and fertilizers in Europe and the Baltic, as well as firmer interest in soyabean shipments from Brazil and Argentina.
Losses were reversed in recent months on the back of new crop grains business out of the Black Sea region and improved demand at the US Gulf and South America, with occasional support, too, from cement and clinker business in the Mediterranean. Over the past six months, the Baltic Supramax and Handysize sub-Indices rose by 25% and 19%, respectively, translating into increases of around 60% y/y in each sector.
Long-term dry bulk freight market developments
Ocean freight rates have posted notable gains over the past year, including particularly sizeable increases across the grains and oilseeds carrying segments. However, over the same period, average grains and oilseeds export quotations have firmed only slightly, as highlighted by a net 1% gain in the IGC Grains and Oilseeds Index, a trade-weighted
%
OJFOJFOJFOJFOJFO
US Gulf - China (soyabeans)
Brazil- EU (soyabeans)
EU (France) - Algeria (wheat) Australia - Indonesia (wheat)
24 18 16 21
4 2 2
20 -4
-4 13
7 7 6
39 33
36 9
USD/t
US (Gulf) to:
EU (ARAH)
China (Dalian)
Japan
Mexico
Canada (St. Lawrence) to: EU (ARAH)
Mexico
Japan
Argentina to:
EU (ARAH)
Mexico
Brazil to:
EU (ARAH)
China (Dalian)
EU (France, Rouen) to: Algeria
Egypt (Mediterranean) Morocco
Black sea to:
Egypt (Alexandria) Tunisia
Australia (East Coast) to: China (Dalian)
Yemen
20 Oct. 2017
31 45 43 29
26 45 43
24 25
26 34
30 31 34
25 28
19
37
Changes 6 months
y/y
55 36 34 61
86 29 30
60 19
18 100
67 55 55
39 33
46 19
EU (ARAH) refers to Antwerp, Rotterdam, Hamburg
composite index of physical cash values, spanning eight commodities. Accordingly, the average share of freight in calculated c&f prices has increased over the past twelve months, to around 10%, making transportation costs an increasingly important consideration in the trade in grains and oilseeds.
Underlying this trend are reports of a shift in soyabean shipments from Gulf to Pacific North West ports in the USA. However, despite higher rates, freight costs as a share of c&f values are still well below the peaks of 2007-2008, as the accompanying graphic illustrates for key selected routes.
FOOD OUTLOOK NOVEMBER 2017
139