47 week: Russian River, Azov Sea, Caspian Sea; Coaster shipments
The struggle between Traders and shippers for non-TMO deliveries has led to a slight stagnation on the freight market. At the beginning of the week, the rates on the basis of the voyage from Rostov to Marmara were at the level of USD 24 per ton of wheat; at the end of the week, the working level was already USD 22-23. As at the first half of December, the market has not yet formed, since deals were actively concluded on the last dates of November/first days of December, and there are not much new contracts at the moment. The most active companies are those that have a large supply chain without reference to a single region and that are able stay in tune with their customers in terms of conditions and volumes.
Problems with processing of phytosanitary documents for sunflower seeds make it difficult to work with this crop: the wait may take up to 15 days. Amid this, hope for the fact that shipments of sunflower seeds will support the low wheat market is vain. Market participants expect that rates will remain at the current level or slightly decrease in the short term. However, due to upcoming ice situation in the region, the cost of voyages from the Azov ports will grow, therefore even a small decrease in the freight level becomes quite sensitive for Owners.
The Black Sea coasters market is showing steady increase. It is safe to say that on the 47th week, the freight rate on the basis of the voyage from Kherson to Marmara was about USD 20-21 per ton of grain, which is quite a high level for this region. The growth dynamics is on, and Owners believe that the positive mood will continue until the end of the year. It is worth noting the variety of cargo nomenclature and wide geography of destinations, which makes trade from Ukraine look more ‘marketable’ than shipments from the Russia.
If the export quota will be introduced in Russia, the number of active market participants will certainly decrease. Based on the experience of the April-June period, producers will have a narrower market place, and the conditions for discussing of prices will become tougher. At the same time, Exporters will be more aggressive when entering into foreign contracts. Therefore, for those companies that clearly expect to receive the quota, working on the spot is not a priority to this date.