Rates softened to $40.10 per tonne from $40.90 per tonne for the Brazil-Northeast Asia route, while USG rates were flatter at $55.10 per tonne from $55.50 per tonne for the US Gulf-Northeast Asia route.

Many shipbrokers noted that demand for shipping was slowing, putting downward pressure on rates.

“In the South Atlantic, a scarcity of fresh enquiry prevailed, putting pressure on rates, while in the North there was an improvement in cargo availability,” Allied shipbrokers noted in a report on Monday.

Some of the softening is also likely to be a seasonal effect.

For example, in the South Atlantic, record Brazilian exports have begun to tail off.

ANEC projected that in November Brazil would export 5.1 million tonnes of soybeans and 8.3 million tonnes of corn.

While both are still record numbers for the month, they are still a decrease from the 5.5 million tonnes and 8.5 million tonnes that were exported in October.

However, there remains some potential for freight rates to move higher.

Impact of restrictions on the Panama Canal

One obvious factor is the renewed restrictions on the Panama Canal.

There has been no improvement on the Lake Gatun reservoir, which remains at a level of about 80.5 feet after a prolonged drought in Central America, where rainfall has been down 41%.

Vessel limits of 24 per day took effect from November 8, down a third from normal levels, and will be cut further to 18 by February.

The extended period of restrictions could act to support rates as vessels are forced to seek alternative routes.

“We don’t see many ships choosing Suez with regards to bulk carriers so far,” one source said, “but if the situation gets worse with fewer shipments through the canal we should see more charterers choosing Suez and [it] will affect positively rates.”

Another source suggested there was already increased tightness in the North Atlantic as a result.

Droughts have played havoc with logistics globally, with continued concern about low water levels in northern Brazil driving exports south along already crammed export routes.

Logistics in Brazil were not helped by a fire at the Parangua port which knocked one berth out for a week, but Berth 201 is now heard to have resumed operations from the 5th.

One bright spot for logistics has been a recovery in the level of the Mississippi, which should ease the problems barges face from low water levels.

Intermodal shipbrokers noted that US-China soybean trade was one factor that could help to support rates.

US soybean exports have remained strong, with inspections up 2% on the week to 2.09 million tonnes in the most recent release, with 74% headed to China.

Soybean buying in China also sharply picked up this week, with nine to 20 cargoes of US soybeans booked from Monday to Wednesday, with shipment expected between November and March.

In the Black Sea, rates at the Danube ports have seen a significant decrease of about $10 per short tonne to $31 per short tonne.

Increased government inspections have led to fewer cargoes being loaded.

As a result, there are more open vessels seeking cargoes, which has put pressure on the freight rates.

At the Russian ports, prices were relatively stable week-on-week.

Prices from Ukrainian ports had started to fall by Wednesday afternoon.

However, a reported Russian attack on a Ukrainian vessel at port in the Black Sea late on Wednesday has caused significant concern in the market and this has left the situation uncertain.

Freight rates for vessels transporting palm oil to India and China from Southeast Asia have firmed slightly this week although in limited tonnages.

The rate on 18,000-20,000 tonne vessels from Southeast Asia to West Coast India and Pakistan increased by $1-2 per tonne to $45 per tonne on Wednesday, November 3 from a week ago while rates for 10,000-12,000 tonne vessels to East Coast India were flat at $37 per tonne.

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Rates rose on the week to $39.80 per tonne from $38.50 per tonne for the Brazil-Northeast Asia route and $53 per tonne for the US Gulf-Northeast Asia route from $50.50 per tonne.

South America

The biggest factor supporting rates was still strong demand for shipping in South America due to strong exports from Brazil.

“The rise in Panamax rates can be attributed to a combination of factors, including a notable influx of grain cargoes from ECSA”, Intermodal shipbrokers noted in their weekly report, while Banchero Costa said that “the tonnage list for the first half of September was shortening remarkably.”

Corn exports from Brazil have continued to grow, with customs data showing that last week’s average exports per working day increased again to 373,204 per tonne, with 5.2 million per tonne exported in August so far.

With ANEC expecting 9.4 million tonnes of corn exports in August, corn shipments should continue to provide a supporting factor for rates.

Rates have also been boosted by ongoing problems at the Panama Canal.

Prolonged dry weather in Central America has cut water levels on the Canal, meaning fewer ships can transit.

Delays have lengthened, with waiting times now heard to exceed 20 days on the canal, and around 80 bulk carriers heard to be waiting to pass.

On the other hand, a weakening Chinese economy could weigh on freight rates in the months to come.

The economic picture has become increasingly gloomy, with the Central Bank unexpectedly slashing interest rates last week amid a weakening property market, falling confidence, and rising unemployment.

One broker told Fastmarkets Agriculture that pressure on rates was already evident for coal shipments from Indonesia to China, and effects would likely spread in coming months.

Seaborne iron ore prices, a key indicator, have so far not followed coal, but have fluctuated in recent months between bearish economic data and bullish expectations of government stimulus.

A sustained weakening of the economy, especially the property sector, would weigh on shipments of these key commodities and thus on rates.

Find out more about corn market trends by visiting our dedicated page for corn prices.

Black Sea region

In the Black Sea region freight rates were slightly up, with handy-size vessels on the Romania to Spain route indicated $1 per tonne higher at $18 per tonne, while indications for the same cargoes loaded into Egypt were assessed at $16 per tonne.

Meanwhile, indications for Russian cargoes into Egypt were $16-21 per tonne, corresponding to levels seen in recent Egypt state buyer tender.

In the coaster-size market, the levels in the Danube have stabilized, with freight indications for 5,000-6,000 tonne vessels to Egypt said to be at $57-58 per tonne, while same-sized cargoes were discussed at up to $65 per tonne into Spain.

Russian coaster market rates were seen higher week on week amid continued delays at the Kerch strait, adding another $1-3 per tonne per week to the current $50-52 per tonne trade ideas heard for the Marmara route.

South East Asia

Freight rates for vessels carrying palm oil to India and China from Southeast Asia were stable this week as export demand remained healthy on restocking from destination buyers.

Freight for 18,000-20,000 tonnes vessels from Southeast Asia to West Coast India stayed at $46 per tonne from a week earlier, while rates for 10,000-12,000 tonnes vessels to East Coast India were unchanged at $38 per tonne.

Freight rates to China were unchanged at $38-48 per tonne for 12,000-15,000 tonne vessels compared with a week earlier, as restocking kept sentiment firm and freight rates unchanged.

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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.

What is driving demand

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.

Global freight rates

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.

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The forecast remained above the 2022-23 marketing year when total grains production fell 39 million tonnes to 2.25 billion tonnes, with the rebound in current marketing year production driven by a projected larger corn crop.

The IGC raised their 2023-24 total grains consumption projection month-on-month by 4 million tonnes to 2.31 billion tonnes, driven by a large month-on-month increase in projected wheat consumption.

The report projects carryover stocks to fall further to 577 million tonnes from 580 million tonnes in the last report due to increased global consumption.

The grains trade projection for 2023-24 was raised unchanged from the previous update at 408 million tonnes, down 3 million tonnes year-on-year.

Corn production

The corn production forecast was cut by 6 million tonnes to 1.21 billion tonnes, marking a 58 million tonnes increase year-on-year, while the consumption estimate was also cut by 6 million tonnes to 1.2 billion tonnes.

View our corn prices.

Wheat production

The IGC raised the wheat production projection for 2023-24 by 3 million tonnes from the previous report to 786 million tonnes, a 17 million tonnes decrease from the previous year, while wheat consumption forecasts were increased by 8 million tonnes from the last forecast to 803 million tonnes.

The wheat trade projection was set at 197 million tonnes, up 3 million tonnes from the May report but down 6 million tonnes from last year.

In terms of oilseeds, the soybean production projection was cut by 1 million mt from the last update to 402 million tonnes.

Learn more about our wheat prices.

Soy production

The soybean consumption projection for 2023-24 was unchanged from the last report at 389 million tonnes, marking a 27 million tonnes increase from 2022-23.

Finally, the soybeans trade forecast was decreased by 1 million tonnes from the previous report to 172 million tonnes but still 4 million tonnes higher the last year’s figure.

For more information on the current grain market, take a look at our dedicated page for grain market news.

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The January Monitoring Agriculture Resources (MARS) report showed that from December 1 to 18, much of Northern Europe was colder than usual, with temperatures as low as 8 degrees below average in parts.

Then from December 19 to January 16 much of Europe was 2 to 6 degrees Celsius warmer than normal, which had an impact on crop hardening.

But while MARS warned of this vulnerability, it has not predicted further frost damage for January, despite forecasting below-average temperatures in western Europe.

So far frost damage has been minimal.

Warmer than usual conditions are predicted for most of Europe in February, except for parts of the European Plains, Iberia and Scandinavia.

Despite the colder weather and the warnings of MARS, most market participants have been unconcerned about crop damage.

For example, France has been at the center of the shifting weather patterns, as snow showers followed a balmy New Year, but sources did not see this as a cause for concern.

“There is nothing to worry about. This is no cold snap and no alarming temperatures,” one French source told Fastmarkets Agriculture.

“I don’t think so, it’s not cold enough for that. No impact,” were the views of another French broker.

Central Europe has seen a similar pattern as France, with Germany to see snow in the next few days. But market sources were similarly unworried.

“We need no snow cover and minus 20 degrees for a few days to damage anything,” a German broker said.

Indeed, they expected the lack of winter kill could mean higher yields and lower prices.

In contrast to Northern Europe, much of Russia has seen colder conditions since December 1.

The warmest areas in the Southwest were 0.5 to 2 degrees warmer, but most of Russia was colder than normal.

The result is that crop hardening has stayed consistent and there has also been minor frost damage to crops in the Volga area.

“It’s still early to make predictions on weather,” a London based source told Fastmarkets.

“There could be frost kill this week in Russia but it’s just speculation. Of course, I don’t expect the same crop as this year from Russia.”

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