World Grain - August 2010 - 51

FEATURE: FREIGHT RATES SOFTEN

Baltic Panamax Index

Baltic Handsize Index
2,000

5,000
4,000

1,500

3,000
1,000

2,000
500

1,000
0

7-6-10
6-22-10
6-8-10
5-25-10
5-11-10
4-27-10
4-13-10
3-30-10
3-16-10
3-2-10
2-16-10
2-2-10
1-19-10
12-22-09
12-8-09
11-24-09
11-10-09
10-27-09
10-13-09
9-29-09
9-15-09
9-1-09
8-18-09
8-4-09
7-21-09
7-7-09

7-6-10
6-22-10
6-9-10
5-25-10
5-11-10
4-26-10
4-12-10
3-25-10
3-11-10
2-25-10
2-11-10
1-28-10
1-14-10
12-23-09
12-9-09
11-25-09
11-11-09
10-28-09
10-14-09
9-30-09
9-16-09
9-2-09
8-18-09
8-4-09
7-21-09
7-7-09

Source: The Baltic Exchange

set a new record in 2009-10, totaling 40.3 million tonnes, and
corn (maize) exports forecast to be 3.6 million tonnes greater
in 2009-10 at 50 million tonnes.
"Some enthusiasm has emerged now that China has purchased more than one million tonnes of corn from the U.S.
for 2009-10," said Ken Eriksen, senior vice-president for
Transportation Services at Informa Economics. "Despite this
buying spree from China - they last purchased significant
quantities more than a decade ago - this buying is based on
economic opportunities that recently emerged. Certainly the
falling ocean freight rates have been important, offsetting corn
costs that turned higher in July in the U.S."
Eriksen predicted that falling ocean freight rates would
see exports to Asia again start to favor U.S. Gulf elevators
over Pacific North West (PCW) options. "With ocean freight
rates falling considerably, the U.S. Center Gulf has an advantage over the PNW elevators landing grain and soybeans into
Asia," he said. "This advantage for the Center Gulf will lead
to higher tonne miles since most of the grain and soybeans

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that would shift from the PNW are for destinations in Asia.
Speaking in mid-July, Eriksen explained that in the previous four weeks the Gulf-minus-PNW ocean freight rate spread
had narrowed more than $13 per tonne to about $24 per tonne.
"Meanwhile," he added, "the export value of corn between the
two port ranges narrowed nearly $4 per tonne.
"The freight rate has given the Gulf a considerable advantage. One month ago it cost $9 more to land corn in China that
originated out of the Gulf whereas in the second week of July
the Gulf had nearly a $10 advantage to land corn in China."
For panamax and smaller vessels, Norfolk predicted a quiet
summer. "There could be a boost later in the year from grain
and coal," he said. "But in the next couple of months, the market looks like it will be subdued."
Michael King, a freelance journalist and editor, has been writing about
shipping, transport and commodities for more than a decade. Currently
based in Indonesia, he can be reached at Michael@borderline.eu.com.
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