Trading activity in the Azov-Black Sea region began to decline again, but this fact does not particularly affect freight rates, as they already are on the fringes of profitability. Most Owners continue to search for cargo on a long distance amid hopes for combining a direct voyage with a back haul. Firstly, such strategy would increase the transit time, which would allow Owners to wait through of the low season, and secondly, it would allow keeping variability in regard to cargoes not only from the Azov Sea. In the meantime, on 21-22 weeks it is expected to open a large number of vessels which have been loaded on May holidays, and now returning for cargoes to the Azov Sea, so market insiders predict an increase in spot tonnage in the region.
Many Owners, whose fleet opens at the end of the month, are looking for voyages to bypass Turkey in order not to be trapped on Eid al-Fitr. On the 23rd week, Turks and Turkish banks will not work from Tuesday to the end of the week, which can lead to long delays at ports, difficulties with money transfers and low business activity generally, so Owners will be ready to make concessions on voyages to other destinations.
The Caspian market continues to decline, the problem with payments from Iran has not yet been solved, and there are no prognoses relating to the end of its settlement. This fact makes many Shippers to look for new contractors and try to sell goods through the major international Traders who still have options to trade with Iran. According to information from Shippers, the number of direct contracts with Iranian importers is close to zero, or they have to agree to long delays in payments, which can negatively affect the turnover and the ability to buy new crops in the required volumes at the forefront of the new season.
State trading corporation of Iran announced that the wheat harvest in the country is expected to reach 11 million tons. This means that Iran will not import wheat this year either. Only corn and barley will continue to be shipped to Iran mainly. However, in the light of the problems with payments from the Iranian side, the freight flow of corn and barley may slow down, which will inhibit the growth of freight rates in the Caspian region.
Average prices for domestic wheat of the new crop are growing against the background of poor yield in the United States and of concerns about the quality of American winter crops. At the beginning of the new season we can expect an increased demand for wheat from Russia and as a result, a growing demand for the fleet, which can lead to sharp spikes in rates in mid-July.