Grains shipments from Black Sea ports have slowly restarted, together with from Constanta in Romania and Varna in Bulgaria, on sub-Supramax vessels, market sources mentioned, as patrons search for alternate options to Ukrainian and Russian cargoes.
“There may be some minor buying and selling exercise popping out of the Romanian and Bulgarian ports within the Black Sea area, however the grains volumes are considerably decrease as compared with the Ukrainian and Russian grains exports that we had been used to seeing,” a dealer mentioned.
A second dealer mentioned: “There aren’t any shipments on Panamaxes or Supramaxes as of but, however there’s a particular circulation on smaller sizes, Handysize and beneath.”.
Market sources mentioned some grains parcels are being transported from Ukraine by rail to ports in Romania and Bulgaria and from shipped by way of the Black Sea on sub-Supramax vessels to their closing locations.
“The market is discovering a solution to slowly rebalance itself,” a charterer supply mentioned.
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In the meantime, many worldwide house owners of bigger vessels are nonetheless unwilling to load cargoes from Russia, market sources mentioned.
Whereas some house owners keep away from sending their vessels to Russia altogether, some are requesting premiums of round $2,000/d to enter Russian ports, market sources mentioned.
Grains cargo out of Ukraine halted when Russia invaded the nation. Odessa and different cities had been attacked on Feb. 24 and cargoes loading in Ukraine began to be cancelled.
Within the days main as much as the invasion, commerce exercise out of the Black Sea had ramped up as exporters hurried to get volumes in a foreign country.
Based on S&P World Commodity Insights assessments, on Feb. 23 the Odessa to Qingdao 60,000 mt grains route traded at $48/mt, up greater than 13% since Feb. 14. The Odessa-to-Alexandria 60,000 mt grains route stood at $20.50/mt, up greater than 38% since Feb. 14.
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S&P World suspended quite a lot of Black Sea assessments Feb. 24, together with all dry bulk assessments to and from the Black Sea.
Black Sea ports are particularly crucial to grains shipments out of Ukraine and Russia; the 2 international locations account for round 26% of world wheat exports. Russia has exported 26 million mt of wheat thus far within the 2021-22 advertising and marketing 12 months (July-June), accounting for 80% of the US Division of Agriculture’s estimate for the 12 months, and Ukraine 18 million mt, accounting for 90% of the USDA’s estimate.
The USDA additionally expects Ukraine to produce 13% of world corn outflows for the 12 months. It has exported practically 18 million mt of corn to date in MY 2021-22, reaching 65% of the USDA’s full-year estimates.
Consumers search alternate options
Dry bulk charterers may change their consideration to different areas, together with the EU, Argentina and Australia, to interchange Black Sea cargoes, a 3rd dealer mentioned.
Nevertheless, immediate provides is perhaps restricted as a result of port capability points and home meals inflation, market sources mentioned.
Russia is the world’s largest wheat exporter whereas Ukraine is among the many prime 5.
The highest Black Sea wheat shopping for international locations — Egypt, Turkey, and Indonesia amongst others — are the worst hit by the commerce disruptions.
Demand for Black Sea wheat is more likely to shift to European nations like Germany, France, Romania and Bulgaria, within the close to time period, sources mentioned.
Moreover, India, sitting on large stockpiles of wheat, has emerged as a serious exporter, market sources mentioned.
India is more likely to profit from a disruption to Black Sea flows, as export costs of wheat from Australia and Canada are sharply increased and considerations about world provide shortages are exacerbating meals inflation worries, market sources mentioned.
Whereas Australian wheat costs have gained sharply over the previous few weeks because the battle started, Canada and the US are dealing with extreme provide shortages as a result of excessive dry circumstances.
“The tight provide and rise in grain costs from main exporting international locations have made Indian wheat aggressive,” a shipowner mentioned.
“India’s enhance in wheat exports will doubtlessly begin a brand new grains route within the dry bulk markets whereas the liquidity and buying and selling exercise of the route stays to be seen.”
India has been concentrating on new patrons, such because the Philippines, South Korea and Lebanon, whereas sustaining exports to conventional importers, together with Bangladesh, Sri Lanka and the United Arab Emirates.
Philippines, South Korea and Lebanon sometimes search wheat from Australia and Russia.
“As patrons look to interchange Russian and Ukrainian cargoes and search for various routes, this in flip will positively have an effect on ton-miles,” a second shipowner mentioned.
For corn, patrons are more likely to flip to the US, market sources mentioned. Main locations for Ukrainian corn — the fourth-largest origin, embrace China and the EU.
In the long term, corn patrons may additionally flip to South America when its corn harvest begins.
Extra spot exercise has already been reported out of the East Coast South America area.
The Santos to Qingdao 60,000 mt grains route reached a year-to-date excessive of $75/mt on March 28, up greater than 57% from its year-to-date low of $47.75/mt on Feb. 4, based on S&P World knowledge.
Furthermore, there was an uptick in exercise and charges for ECSA trans-Atlantic routes going to the Mediterranean/Continent, market sources mentioned.
“Bids are at $40,000/d, provides are within the excessive $40,000/d for LMEs and over $50,000 for Kamsarmaxes, APS foundation, Tubarao-Recalada vary,” a fourth dealer mentioned.
Grains freight charges have additionally been growing out of the US Gulf. Based on S&P World assessments, the New Orleans to Qingdao 66,000 mt grains route reached a year-to-date excessive of $75/mt on April 5, up virtually 30% from its year-to-date low of $57.75/mt on Feb. 1.
The New Orleans to Alexandria 60,000 mt grains route reached a year-to-date excessive of $36.50/mt on March 24, up virtually 70% from its year-to-date low of $21.50/mt on Feb. 3, S&P World knowledge confirmed.
Supply: Platts
