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Freight rates recovered in the week to July 12, as rising Chinese demand for Brazilian soybeans helped to support rates.
Rates rose on the week to $35.10 per tonne from $33.90 per tonne for the Brazil-Northeast Asia route and to $46.20 per tonne for the US Gulf-Northeast Asia route from $45.10 per tonne.
Demand was partly stimulated by lower expectations for US soybean production, as the USDA unexpectedly reported planted area 5% down on the year, with market participants now expecting Wasde estimates to also be cut.
Another factor was a reported improvement in crush margins in China, fuelling greater interest in importing beans after several months in which lower downstream demand in China had weighed on margins.
Seaborne iron ore prices also strengthened as Chinese authorities signalled further support for the country’s property market, a key source of downstream demand for imported iron ore.
Brazilian soybean exports have strengthened, with ANEC data showing 3.6 million tonnes was shipped in the first week of July at an average pace of 720,811 tonnes per working day, up from the previous week’s 660,522 tonnes.
Stronger exports from South America may help to reduce excess shipping in the Atlantic, relieving pressure on rates.
In the US, crop conditions have improved after rain but remain worse than the previous year.
The latest USDA report assessed that 51% of the soybean crop was in good to excellent condition compared to 62% at the same time last year, while 55% of corn was in that condition compared to 64% rated good-to-excellent last year.
If fewer crops are exported from the US to China than usual, this may begin to have an impact on US rates.
The Black Sea market in Ukraine was thin, as since June 26 Russian inspection teams refused to inspect new inbound vessels.
Negotiations were continuing ahead of the deadline of July 17 for the Black Sea grain initiative, but it remained unclear if a renewal could be agreed upon.
Indications for handy-sized vessels from Romanian ports to Spain were heard at around $16 per tonne and at up to $18-19 per tonne into ARAG ports.
Meanwhile, in Russia, indications were broadly stable for the Egypt route, with handy vessels indicated at 16 per tonne, while for Panamaxes loading into the Persian Gulf, trade sources put indications at around $31-32 per tonne and at around $35 per tonne for Iran.
Azov rates declined somewhat through the week to $30-31 per tonne, and around $35 per tonne on the offer side.
Freight rates for vessels carrying palm oil to India and China from Southeast Asia firmed because of destination buyers replenishing inventories, leading to healthy interest in August shipments.
View our palm oil price trends data charts
Freight for 18,000-20,000 per tonne vessels from Southeast Asia to West Coast India rose to $47-49 from $46-48 per tonne a week ago, while rates for 10,000-12,000 tonnes vessels to East Coast India also held firm at $39-41 per tonne.
Freight rates to China were also up by $1 per tonne at $39-47 per tonne for 12,000-15,000 tonnes vessels, with shipbrokers citing limited vessel spaces for the second half of July.