33 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The Azov region met the 33rd week with bad weather and falling grain prices. However, both of these factors could not negatively affect the freight market. At the beginning of the week, many vessels were delayed in the Black Sea at discharging and in waiting for the Kerch Strait passage due to unfavorable weather conditions, and some Charterers tried to take advantage of this situation. During the negotiations, they appealed to the fact that a wave of cancellations is expected, in consequence of which tonnage will open in spot looking for cargo, and rates will fall. Amid this, some of them offered USD 14-15 per ton of wheat from Rostov to Samsun. However, the situation developed exactly the opposite. The period of bad weather was not long enough for Buyers to cancel contracts against the background of declining grain prices. The rate of USD 15 from Rostov to Samsun was low; the working level was USD 1-2 higher. In addition, due to the fact that the vessels were delayed, there was observed the lack of spot tonnage.
The arrival of the new crop continues to put pressure on the market; Shippers are interested to make shipments at the earliest possible time, which is why spot vessels are very popular. Amid the falling grain prices, Buyers are trying to revise contracts in every possible way by using any excuse. Companies that purchased in early August, but did not confirmed the deals with Owners and Buyers, have found themselves at a disadvantage. Having misjudged the market movement, they thought that the decline in grain prices would stop, so now they are eager to make shipments as quickly as possible in a bid not to lose money.
For Owners, the trend of working in spot will continue for a long time. This will be of interest to both Owners, who see the market growing due to a large number of requests for different dates, and Buyers, who, amid the falling prices, benefit from making shipments of contract parcels promptly. That being the case, Shippers and Producers will take the fall. Of course, it would be possible to assume that they would try to collude and set any price they want, but this scenario is unlikely. Market insiders understand that talking about new quotas on grain exports is not coming out of the blue. Starting from January, if restrictions will be imposed, Exporters will buy grain at an even lower price, and the domestic market is risky enough to build long-term plans based only on it. For example, we see that Russian processing companies are already trying to lobby for restrictions on the export of sunflower seeds and other oilseeds.
On Russian inland waterways, freight rates are growing rapidly, which may be explained by the lack of vessels to fulfill contracts signed earlier. At the same time, the main part of the fleet is switching from the North-West to the South; rates on the basis of the voyage from Samara to St. Petersburg have increased from USD 19 to USD 27 per ton. In the meantime, Producers continue to keep domestic grain prices at the high level, while on the global market the cost of wheat fell from USD 212 to USD 205 per ton amid the increasing forecasts of grain yield in Russia.