Cargill turns to capesize for Brazil-EU route amid panamax surge
Global agriculture giant Cargill has booked a capesize cargo vessel to ship dry bulk products out of Brazil to Europe to substitute...
Global agriculture giant Cargill is thought to have booked a capesize cargo vessel to ship dry bulk products out of Brazil to Europe, substituting the bigger vessel for the more typical panamax-sized ship after freight prices for smaller vessels jumped in recent weeks, trade sources said Wednesday.
Cargill is said to have booked the 180,000 mt MV Pacific Myra to carry grains out of Santos to Rotterdam in a move that is likely to save the company millions of dollars, according to sources.
The vessel is currently en route from the Chinese port of Ningbo and heading to Paranagua, where she is expected to arrive on March 23, according to tracking software.
Though the exact product type cannot be confirmed, many sources expect it to be carrying soybeans.
“The estimated savings in freight [costs] could be up to $13-15/mt,” one trade source said.
However, many sources expect this to be a one-time fixture as capesize vessels are typically used to ship coal and metal products, meaning extensive cleaning will be needed.
Ballasting an empty capesize cargo from China to Brazil costs about $10,000 per day while the costs would double for ballasting a panamax-size vessel for the same voyage.
Panamax, which typically carry up to 70,000 mt of products, and supramax vessels, typically 50,000-60,000 mt, are more widely used in shipping dry bulk agricultural products.
But prices for these two vessel types rose sharply in February amid strong short-covering demand from agricultural trading houses, with the rise in freight costs making their CNF trades unprofitable.
Hence, major players including Cargill have started looking for alternatives to replace panamax vessels where possible.
Spot outright price for supramax cargoes sailing from Brazil’s Santos port to the Netherlands surged by more than 35% during February to nearly $32/mt this week.
Agricensus approached Cargill for comment, but none had been received by time of publication.