42 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
During the reporting week, freight rates have showed the expected, albeit moderate growth. The prospects for further market recovery, which Owners are counting on, are not likely to be clear until 43-44 weeks. The matter is that Traders are waiting for the results of the next Turkish tender with shipment dates for the first half of November, which will be published on October 22. Until then, no cargo offers with laycan at the beginning of November would be expected: on these dates, there will be worked only those parcels of grain, which were already delivered to ports and have not been shipped in October. At the moment, the rate level is about USD 20 on the basis of the voyage from Rostov to Marmara per ton of wheat. At the same time, Charterers are ready to pay USD 1-2 more for spot tonnage.
Wheat from river is still mostly shipped to the Kavkaz roads transshipment. Direct export voyages are performed significantly less compared to last season, despite the fact that freight from the Volga elevators to the Black Sea exceeds the figures for the same period in 2019 by an average of USD 5 per ton. Besides, the work of Traders is complicated by the procedure for the formation of the commodity market: the period of updating prices and rates is on average two to three weeks (in accordance with the TMO tenders, which have recently been held more often and for small parcels); this is comparable to the transit time of a voyage from river ports to Turkey.
Amid news about the drought in Argentina and Australia, grain prices on commodity exchanges of the USA and Europe are showing dynamic growth. The price of 12.5% wheat on FOB basis from the Black Sea ports is also steadily rising. Producers are in no hurry to sell grain remainings in November and December; they hope that the demand will only increase amid dry weather forecasts and disturbing rumors about the food security policy in the face of the pandemic. A high stable demand for goods is already being formed on the Black Sea region’s domestic markets; therefore producers have an alternative to export. For the Azov freight market, this means a smooth growth in rates by USD 1-2 per week.