39 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
During the reporting week, grain markets in the southern regions, following the global commodity exchanges, felt speculative excitement amid growing rumors about the approaching second wave of the pandemic. This resulted in a spike in wheat prices in the Black Sea region; there, despite forecasts of a good harvest in the Russian Federation, producers were in no hurry to sell the product. Artificially inflated offers from sellers eventually led to a small number of new deals and the beginning of a price retreat. Freight followed the unmet aspirations of producers: reduced demand for grain voyages, the appearance of spot tonnage opening, and the decreasing working level of rates by an average of one US dollar (which was not observed over the past month and a half). The current rate on the basis of the voyage from Rostov to Samsun is about USD 20 per ton.
While wheat could not be quoted for concluding new contracts, many Traders showed increased interest in niche products: soy, sunflower seeds and meal, as evidenced by a number of confirmed deals. The fall in prices for these crops was the only positive driver of the Azov market. It should be noted that the main cargo flow of soy and soybean meal in the Region comes from the deep-water ports of Ukraine; there, unlike in Azov, the coasters market has shown growth. For example, a parcel of 5 thousand tons could be shipped to the Adriatic Sea for the low 20s.
The 39th week was quiet, including because of the International Grain Round, which was held from September 22 to 25 in Gelendzhik; there gathered a significant part of Traders who, while being at the event, did not show any business activity. Usually, the conference was carried out on the brink of the new season, which allowed participants of the grain and freight markets to conclude deals right off the bat. This year, the COVID-19 pandemic has deprived players of this opportunity, and therefore a sharp surge in activity on the 40th week should not be expected.
As of the 39th week, the market conditions of direct voyages from the river to the Black Sea and the Caspian Sea leave much to be desired. Significant volumes of wheat are shipped in cabotage to Rostov, or to the Kavkaz roads transshipment. According to Traders, new contracts are concluded on the same basis. Direct export voyages are performed much less than during the previous navigation, and the main reason for this may be a strong transit cargo flow of urea, which has busied a significant part of the Russian-flagged fleet. Amid this, additional transshipment at Rostov or on the Kavkaz roads looks like a forced alternative for grain Charterers who do not want to compete in freight with highly paid transit voyages.