The Dry Bulk Weekly Review in Shipfix Data
Against a background of declining global demand for seaborne transportation of agricultural commodities, cargo order volumes for oilseeds and grains loading in the US Gulf have seen a seasonal rebound over the past month. Shipfix’s forward-looking data sets highlight a shift among Chinese buyers, which could reduce the tonne-miles in the trade despite healthy cargo order volumes. The increasing focus on shorter voyages initially saw the smaller vessels benefitting from the past month’s rising demand.
Lower Chinese Demand Weigh on Global Cargo Order Volumes for Agricultural Commodities
Despite significant gains during the final stages of August, the grain and oil seed futures for delivery towards the end of the year remain well below the levels recorded at this time last year. While the wheat contracts for delivery in December have gained around eight per cent recently, they nevertheless ended last week more than seventeen per cent lower than a year ago. The recent gains for the soybean November contracts have been somewhat lower, contributing to the futures trading more than 22 per cent below the levels seen a year ago.
There were some concerns last week about adverse weather conditions affecting the harvests, but global supplies of grains and oilseeds remain robust and weigh on prices. In addition, demand, especially from China, has been facing headwinds and has contributed to lower prices over the past few months.
While cargo order volumes for agricultural commodities have been trending lower since the beginning of the year, the total for the past eight months is around 22 per cent higher than for the same period last year. Still, the aggregate for the previous month was seventeen per cent lower than in August 2023. The development in the spot market for seaborne transportation of agricultural commodities indicates a shift in Chinese demand compared to last year. Ordering activities for cargoes for discharge in Chinese ports were higher during the first quarter this year than twelve months earlier, while current demand levels point towards a year-on-year decline for the third quarter, highlighting a Chinese preference for shipments from the Southern Hemisphere.
The weak Chinese demand for seaborne transportation of agricultural commodities has seen some offset from rising demand from other parts of the world. However, the rebound in weekly cargo order volumes seen during the second half of August last year has yet to materialise this year. Hence, the recent recovery for the grains and oilseed futures will likely prove short-lived.
The USG Grain and Oilseed Trade Faces a Decline in Tonne-Mile Demand Despite Robust Volumes
As the cargo ordering activities for the US harvest season have been underway for the past month, spot order volumes for cargoes loading in the US Gulf have seen a seasonal recovery. The aggregate for August approached 13.3 million tonnes despite a drop during the month’s final week. While the week before last saw a sharp decline in demand, volumes rebounded during the past seven days.
Still, the seasonal recovery for the grains and oilseed trade in the US Gulf somewhat differs from what was observed a year ago. The demand for long-distance voyages to China and the Far East is lower than during the same period in 2023. While the overall demand rose by nearly ten per cent year-on-year in August, the volumes for discharge in China and the rest of the Far East declined by approximately eighteen per cent.
As demand for shipments to ports in eastern Asia has seen a relative decline, cargo order volumes for US agricultural commodities for discharge in the Mediterranean and other less distant destinations have more than made up for the shortfall. Hence, the trade is seeing a decline in spot tonne-mile demand, which will provide continued headwinds for the small and mid-sized vessel segments. In addition, the shorter voyages are likely to contribute to higher tonnage supply in the coming months.
Rising Demand for Panamaxes in the US Gulf Following Two Weeks of Headwinds
The seasonal rebound in cargo ordering activities for agricultural commodities due to load in the US Gulf ports has affected the mid and small-sized vessel segments differently. The rising demand primarily benefitted the smallest vessels, with the handysizes and handymaxes recording a volume growth of 39 per cent between them last month.
The increasing demand during the past week saw a renewed interest in the panamaxes. The mid-sized vessels have faced headwinds in recent weeks, but last week saw cargo order volumes jump nearly three-fold. The handysizes and handymaxes also experienced improving demand, but to a lesser extent at around 31 per cent. For the supramaxes and the ultramaxes, demand remained broadly in line with the previous week. However, compared to the demand situation during the middle of August, only the panamaxes were enjoying better circumstances.
If last year’s seasonal pattern for the US grain and oilseed trade repeats itself, the coming weeks could see cargo order volumes retreating temporarily. However, October and November should see robust weekly volumes. The panamaxes are likely to see an improving demand situation should cargo ordering activities pick up in line with recent years. However, as discussed in the previous section, Chinese demand for US agricultural commodities has come under pressure, with grains and oilseeds from the US Gulf increasingly heading for less distant shores. Hence, tonne-mile demand in the trade could come under pressure despite rising volumes and temper any gains for freight rates.
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