The situation in the Azov-Black Sea region has stabilized by and large, freight rates stopped at level of USD 27 on the basis of the voyage from Rostov to Marmara, avoiding sharp spikes, as it was on the previous weeks. The key reason for the decaying of rates was the growth of grain prices on global markets, especially against the background of negative forecasts of grain harvest published by the United States Department of Agriculture. Russian producers preferred to hold on to the goods at the prospect of better export prices.
Price increase trends are confirmed by the results of the fifth Egyptian tender, in which the price increased by USD 1-2 as compared with the previous tender and reached the level of USD 215.59 including freight. This tender also marked the return of Russian Traders to the Egyptian market (the previous two tenders were lost to Romanian and Ukrainian suppliers).
Cause for some optimism is the information of Turkish sources about the decline in forecasts of their own wheat harvest. Expecting a hefty increase of imports, some grain Traders have already started long-term contracts negotiations with Owners for shipments to Turkey.
Favorable weather conditions in May and June allowed farm units of the Southern and North Kavkaz Federal districts to secure a record quality harvest with an average protein grade of 18% (against 14-15% in previous years). This circumstance increases the competitive ability of domestic grain and may open new markets in theoretical terms. The extension of the zero export rate for wheat till July the 1st, 2021 was also an advantage factor. With great probability, all of these things make it possible to predict the growth of shipments from deep-water Black Sea ports and the increase in the demand for long-distance voyages (Italy, France, and Spain) from the ports of the Azov Basin.
The situation with the partial “freezing” of grain exports was used by coal Traders. Activated on the freight market, they kept rates at current level, which is USD 25 on the basis of Rostov/Azov – Marmara.
Freight rates show restrained growth dynamics in the Caspian region, in the span of one week they reached the level of USD 32 on the basis of the voyage from Astrakhan to Northern Iran. The key reason for the rise in the cost of freight was the high demand for tonnage caused by the occurring of the new crop barley. At the river elevators, there is an accumulation of grain parcels, so the demand for freight is comparably low in the Volga Basin. The main activity is concentrated in the Volgograd region: freight rates from the river ports of the lower Volga is growing in the wake of Astrakhan.
There has been some reinvigoration on the transit cargo market. The point is that a lot of cargo arrives to the ports of the Mediterranean and Black Seas in August, which are intended for transit to the Caspian Sea. Charterers schedule their shipment plans so as to have time to cover with the delivery of goods before the end of navigation. Experts anticipate an increase in demand for transit vessels in August and September and a corresponding growth of rates.