On the 24th week in the Azov region there was a tendency to increase freight rates at the end of June / beginning of July. According to the data of a significant part of Owners, there are already offers USD 26 per ton on the basis of wheat ex Rostov to Marmara on the market (which is USD 10 above the current working level). Therefore, Owners are trying to employ the fleet on short legs, so as not to miss the moment when a new crop will appear on the market and the rates will begin to grow actively. Long-distance destinations are already traded with an extra premium. Backhaul cargoes from the Mediterranean and Black Seas to Rostov also began to be quoted higher due to the lack of sea-river navigation tonnage in the Eastern Mediterranean.
From the perspective of Exporters, on the basis of prices in the domestic market and the fact that traditionally the grain from the southern regions of the Russian Federation is shipped mainly from Novorossiysk or the roads of Kavkaz, barley shipments from the Azov ports will not be enough to justify the Owners’ sentiment at the high rates in the first half of July.
Major Charterers continue to consolidate the fleet under their contracts for the grain season or negotiate several consecutive voyages at a fixed rate to protect themselves in case of a sharp spike on the market.
Business activity of Turkish Importers is still low. The reason for this is not only the native currency volatility, but also the decrease in demand for Turkish flour on the international market. The Turkish millers don’t need to purchase wheat yet.
The situation on the Caspian market is more complicated. Many players still have difficulties with settlements with Iran, so the grain prices are reducing. But those companies that have found ways to solve the problem with mutual payments, behave aggressively and with self-assurance on the commodity market, this affected the fact that the rates stopped reducing, and a slight growth dynamics is noticeable.
In the grand scheme of things, all players working in the Caspian region agree that the market will be unstable and exposed to high volatility for quite some time due to the strong uncertainty towards Iran and the geopolitical environment. Therefore, unlike the usual practice of long-term contracts, Charterers prefer to take the vessels on the spot basis.