After a number of weather anomalies (drought, lengthy heavy rains, fires) and the all-round deterioration in forecasts of grain harvest in 2018, export prices have hit a three-year maximum both on the international and domestic market. Russian producers are confident that they will be able to sell goods at extremely high prices this year. In this context, there are very few contracts being concluded. It is due to the fact, on the one hand, the agrarians are reluctant to reduce the cost, and the buyers, on the other hand, are hesitant to pay excessively. Moreover, Importers are convinced that the grain cost will decrease in September when the spring crop harvesting starts. The Iranian Traders were the most sensitive to higher prices. Over a few years high grain season promised the fall in grain prices, but the usual pattern has been broken this year. The season started, and the commodities became more expensive.
In addition, after another imposition of U.S sanctions against the Iran, the export perspective with the Republic seems even more doubtful. Iran is expected to go through a new round of financial and political isolation. Russian business community is expressing their concern as a possibility to make deals in Iranian rials and U.S dollars is in questions. All these factors are ultimately putting business activity on hold: market participants will have to look for new transactional schemes in order to accommodate their work with Iranian partners under the conditions of the economic blockade.
The grain programs were carried out successfully last year; this fact is also warming up Caspian market. In the same period of 2017, the rates were increasing confidently every week. Thus, Ship Owners trust that such a trend might repeat. As soon as a significant part of the fleet had been relocated from the Caspian basin to the Black Sea region, there emerged hope that freight will have an upward trend in the near future. Now freight rates amount USD 28 pmt of wheat basis Astrakhan – Iran.
The rates are also falling in the Azov region. The last week demonstrated, even though the parcels with new harvest are already been exported to the import countries, yet the cargo is still not enough, and supply in free tonnage is exceeding demand. Nowadays the freight has reached USD 27 pmt of wheat basis Rostov – Marmara. It is USD 1 fewer than the level of week 30.
The Kurban – bairam is approaching and will take place on August the 22. Traditional preparations starts on Monday, and days off work last until the end of the week 34. It means the Muslim grain Importers will be out of touch within August 17 – 26. Due to this Ship Owners are planning their activities with Muslim countries (Turkey, Iran) in a way to avoid the holidays in port of discharge in the countries where Kurban – bairam is celebrated. Accordingly Mediterranean directions are becoming popular through weeks 31 – 33. Furthermore, long-term hauls allow Ship Owners while in operation, to wait until the moment when parcels with new harvest begin to arrive in the region and, consequently, demand for tonnage will grow.