30 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
On the 30th week, the Azov region freight market had finally revived. Despite all the prerequisites to keeping high grain prices, there was a slight decline in quotations on commodity exchanges due to the strong euro, China’s purchase of large volumes of grain from the USA, as well as due to forecasts about the establishment of food stocks amid the ongoing pandemic. This had driven sales from the dead-lock. Buyers were forced to close the needs for production in grain anyway, so they went for deals. As a result, rates fell by USD 1 to the market’s working level, and the voyage from Rostov to Samsun was traded at USD 14-15 per ton of wheat. However, due to high prices and the forecasts difficulty on the commodity market, sales are still made in spot and prompt, with shipments for a maximum of a week or two ahead. A long-term grain program has mostly not being formed yet.
In general, the mood is such that there is expected an active growth in sales volumes on the commodity market starting from the second half of August, and hence an increase in rates and in number of shipments. However, there should not be much hope for the market revival. There are a number of inhibiting factors. Firstly, this is competition from Ukraine, where the market for cereals and their exports is quite heavily monopolized. Secondly, the structure of the Russian domestic market has changed somewhat. Domestic producers are starting to take more careful and subtle approach to the grain sale; they do not rush and hold it in case of fluctuations in quotations or exchange rates. In the last year or two, they have got an alternative to exports by means of domestic sales. Thirdly, for some time now, VTB group has gained quite significant power on the market; the company is strongly lobbying for its own interests and forming the favorable conditions for the purchase and transportation of grain. As a result, there is expected that rates will rise to USD 20+ to Marmara in August.
After August 4, when the celebration of Eid al-Adha in Turkey ends, there is expected a mass purchase of the new crop grain for deliveries in the Turkish direction. About the same time, the new crop of wheat should arrive at the elevators and warehouses. During the reporting week, there has increased the number of requests for shipments from the deep water: from the Novorossiysk port and the Kavkaz roads to Iran, Iraq and India in parcels of 20,000 to 40,000 tons.
A large number of requests for transportation of grain from the river, mainly from the Middle Volga region, have appeared on the market, and this is grain from the new crop already. It is worth mentioning that shippers in the Caspian region are currently more interested in shipping by inland waterways to Astrakhan in order to get a low freight rate, and not to fall for “hot” offers from Owners promising freight to the Iran ports. A small amount of grain will still be transported from the river to Iran, but Charterers will try to avoid the hype. On the market, there is the cargo in the Black Sea direction already, but Owners still prefer to work from ports of the Lower and Middle Volga area in order to reduce transit time amid the expectations of the growing market.