Against the background of improving grain quality and price increase, producers have chosen the tactics of waiting. Therefore they are in no hurry to sell new volumes of goods. As a result, during the reporting week freight rates bounced off the maximum, despite the height of the grain season. A good many of the fleet are in the spot, including vessels which were previously employed on transshipment on Kavkaz roads, where feed grain is shipped mainly.
General forecasts for the Russian grain harvest were revised downwards again: from 121.9 million tons to 117.2 million tons. As of the 30th week of 2019, the crop yield is 36.2 cwt of grain per hectare. In 2018 an average of 36.9 cwt from one hectare was collected for the same period. Along with a decrease in the total harvest, forecasts for the grain supply for export are also reducing: from 52.5 million to 41.9 million tons. Such dark prospects, together with a relatively low dollar (which continues a slow decline), support grain sales prices at a fairly high level, which clearly does not help the conclusion of new deals.
On the back of this news, freight rates in the Azov slightly decreased instead of growing. This is very unusual for the market in late July, when the grain season is usually in full swing. On the 30th week rates for the voyage from Azov to Marmara are at the level of USD 26 per ton of wheat. Last year, on the 30th week, average rates for the same voyage were USD 28 per ton. Despite the fact that the difference is only +/- USD 2, it is unusual market move, as the last few years in a row rates never fell in mid-July, but only grew until the winter. There is still no roaring demand for vessels, there is a lot of spot tonnage. Despite the current market conditions, Owners expect a significant revival in August, when the main export volumes will be ready for shipment at ports.
From the August 11th till 15th, Turkey will celebrate Kurban Bayram. Usually, neither the Importers, nor the ports work during this period. Therefore, many Owners are trying to organize their work in such a way as to avoid a week of idlesse on discharging. Voyages to European destinations are in great demand.
In the Caspian region, rates remain at the level of the previous week. The balance on the market was achieved mainly due to the weather factor. The demand for the fleet remains stable, but due to heavy rains in the Stavropol region, part of the Charterers suspended their schedule performance, and the demand for tonnage aligned with the supply partially. Also in the region there is a problem with the extremely low nature of the new crop barley. In fact, the cargo is more cubic than usual, and the vessel falls short of about 200-250 tons, so the dead freight on conversion to ton reaches USD 4-5.
According to the data from market insiders, the renovation of the Garabogaz Fertilizer Plant was finally completed. The production startup is expected in the 31st week, which may enhance competition on the market of transit cargo from the Caspian Sea and river ports.