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A massive fall in grain freight rates from Ukraine’s deep sea ports has failed to stimulate activity in the country’s main ports. Inspection delays along the grain corridor and ongoing uncertainty related to the agreement continue to make trade difficult, trade sources have told Fastmarkets Agriculture.
Initially, after the agreement to extend the corridor deal was confirmed on November 17, sources reported still relatively high freight prices, but as the delays cleared, price levels started to soften.
That comes as the grain market trade remained slow. A catalog of issues continues to cloud outlooks and complicate trade, including the fact that many buyers are thought to be fully covered for nearby loading dates.
Freight rate levels for a panamax cargo of corn to China have now dropped to around $52-57 per tonne, down from a high of $80 per tonne circulated by traders just after the corridor was re-confirmed.
The shipping rate for a 50,000 tonnes cargo from Ukraine to Spain was said to be possible to fix at $30 per tonne compared to ideas heard at around $48-50 per tonne in late November.
But as the slow inspection pace at Istanbul continues to cause delays, traders have been forced to factor in additional costs for possible delays and demurrage, as only the first seven to ten days’ waits are usually included in freight costs.
Currently, delays are approaching up to three weeks for inbound vessels – ships arriving at Istanbul en route to Ukraine’s ports – with some reporting even longer delays.
Delays for outbound vessels laden with Ukrainian product are said to extend for another week.
“You still have to build in demurrage risk that inbound vessels could wait 20-40 days,” a trader said.
Trade sources also said that inspections were still slow for several reasons, mainly as a result of bad storms in the region, but there were also allegations that Russian authorities could move more quickly to complete inspections.
Under the JCC corridor agreement, joint inspections are undertaken by a team of Russian, Ukrainian and Turkish inspectors – with sources suggesting that the Russian side has not increased the number of teams available to undertake the inspections.
For now, there are around 70 inbound vessels that are still waiting for inspection.