World Grain - April 2020 - 36

SHIPPING MARKETS
IN FLUX AMID
COVID-19 CHAOS

How the disease trends in key importing, exporting countries will be key
by Michael King

36

full as usual. There are just small delays in deliveries because of increased demand. The market was again and
again shaken by rumors that grain exports from Ukraine
might be restricted, but they were free of any administrative restrictions as of March 25."
SHIPPING SMOOTHLY; FUTURE UNCLEAR
On the high seas, dry bulk shipping freight rates fell initially as China quarantined large parts of the country in
February. However, shipping rates for vessels used in
grain transport (those below Capesize) recovered once
China got back on its feet. Exports out of the Black Sea
and Brazil also helped support freight rates for smaller
EXONFDUULHUVWKURXJKWKH¿UVWWKUHHPRQWKVRI$V
a result, the Baltic Dry Index (see chart, page 38) in this
\HDU¶V¿UVWTXDUWHUORRNVVLPLODUWRWKHVDPHSHULRGRI
when a season lull dragged down the cost of shipping.
:KDWKDSSHQVQH[WLVGL൶FXOWWRGLVFHUQJLYHQWKHZLGH
number of variables in play as a result of COVID-19, not
least the longer-term implications for production and consumption. As the International Grains Council's (IGC)
March market report made clear, making forward predictions is fraught with danger and uncertainty.
"While some commodities have seen a sharp upturn in
near-term demand, especially for rice and wheat-based
foods, weakening economic conditions could dampen usage in the longer term, particularly for industrial products
such as maize-based ethanol and starch," the IGC noted.
"Although import buying of some commodities has accelerated in recent weeks, logistical challenges are being reported as movement constraints and quarantine measures
become widespread.
"Transportation restrictions could also hamper the disWULEXWLRQ RI IDUP LQSXWV DQG GLVUXSW VSULQJ ¿HOGZRUN
Consequently, the Council's projections for supply and
demand are tentative until the progress and duration of
the pandemic become clearer."
April 2020 / World Grain / www.World-Grain.com

©Denys - stock.adobe.com

I

n time, it is likely we will divide the past into two
periods: before coronavirus and after coronavirus.
At the start of April 2020, however, it is all about the
here and now. And, as World Grain goes to press, the
here and now is something of a dystopian nightmare.
The spread of the coronavirus (COVID-19) initially
shut down huge areas of China through February and
into March, killing thousands and shattering exports,
imports and GDP growth. Since then, it has spread
to most corners of the world. Heading into April, the
death toll was pushing 36,000 worldwide, including
more than 10,000 in Italy, and infections had surpassed
770,000, including 145,000 in the United States.
As economic growth forecasts are downgraded almost
GDLO\LWVHHPVWKDWLIWKHZRUOGVX൵HUV21/<DUHFHVVLRQ
in 2020, we will have cause to be thankful. Most analysts
expect everything to get worse before it gets better.
As for the international trade in grains and soybeans,
well, it is a mixed picture. Physical and future pricing has
been highly volatile and currency markets have been in
YLROHQWÀX[3UHVVXUHVRQSURGXFWLRQDQGVXSSO\FKDLQV
have been tightening due to social distancing and selfisolation measures. And, in many countries, governments
are prioritizing domestic markets over exports as shoppers stockpile staple goods and borders are locked down.
However, thus far at least, although the nature of demand has changed, the physical movement of grains and
soybeans between buyers and sellers has continued relatively smoothly in terms of logistics and shipping. Mostly
this is because the transportation of commodities has, so
far, been excluded from COVID-19-related restrictions
by the governments of major exporters.
"Coronavirus provoked panic purchases in the consumer market (in the Black Sea region), but unlike in the
US or Europe, they did not become massive," Maksym
Kharchenko, freight market analyst at UkrAgroConsult,
told World Grain in late March. "The store shelves are



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World Grain - April 2020

Table of Contents for the Digital Edition of World Grain - April 2020

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