Market analysts report that China’s move to reinstate soybean import licences for three US companies from 10 November marks another incremental step toward conditions resembling the pre-tariff era.
The decision follows last month’s high-level discussions between the two countries, during which Beijing resumed limited purchases of US soybean and wheat. Despite this diplomatic progress, the market continues to monitor whether large-scale soybean deals will materialize, even as state trader COFCO recently signed over $10 billion in agricultural agreements with Brazil, without confirming any additional US volumes.
An important trend emerging since the October US–China soybean arrangements is the absence of Panamax vessels transiting the Panama Canal with US soybean cargoes. Instead, Panamaxes loading US beans have chosen the Cape of Good Hope routing. This development comes despite dry bulk transits through the Panama Canal recovering from last year’s drought-driven lows.
AXSMarine data indicates 9 million tonnes of Panamax cargoes moved through the Canal so far in 2025 across 148 voyages. Excluding the 2024 drought impact, the Canal could still match 2023 levels, yet soybean transit activity stands notably lower, with only five such voyages this year compared with 143 in 2022 and 52 in 2023.
In freight markets, the P7 average rate for October registered a 6% year-on-year increase, supported by the sharp rebalancing of Atlantic tonnage in September ahead of the anticipated 14 October USTR fee deadline. As of 12 November, P7 assessments hover near $54 per tonne, with operators continuing to prefer the longer Cape of Good Hope route even at higher freight outlays.
A laden Panamax from the US Gulf to Qingdao takes around 40 days via Panama but 61 days via the Cape, extending the voyage by roughly 5,000 nautical miles, or 42%. With Singapore VLSFO prices around $469.50 per tonne — about 24% lower year-on-year — the additional steaming consumes approximately 600 tonnes of VLSFO and 40 tonnes of LSMGO in ECA waters.
Total added bunker cost is estimated near $300,000, while the extra voyage time translates to an opportunity cost of a similar magnitude when using P6_82 round-voyage benchmarks, lifting incremental expense to nearly $600,000.
Even so, the resulting cost structure remains generally comparable to — and in several cases slightly more favorable than — a Panama Canal transit. Current Canal Authority charges stand at about $490,000, exceeding $600,000 once port movements and reservation-based bid fees are included. Concerns tied to congestion and draft limitations further reduce effective cargo intake, motivating operators to consider the longer but operationally smoother route.
Early indications suggest that Panamaxes loading in Q4 and Q1 are likely to persist with the Cape routing, particularly as US LPG and LNG exports increase toward the Far East, reducing slot availability. Meanwhile, other dry bulk segments continue to rely on Panama transits due to the lack of viable alternatives, including US coal flows to Central and West Coast South America, wheat exports from the US Pacific Northwest to Atlantic recipients, and phosphate cargoes from Peru to the US Gulf.
On the competitive landscape, the US Gulf–to–Qingdao voyage via the Cape remains approximately 4,000 nautical miles longer than the Santos–to–Qingdao itinerary. This expands sailing duration by about 16 days and bolsters overall ton-mile demand. However, the potential benefit of US beans displacing South American supply appears limited.
Chinese private crushers display continued caution toward US cargoes, which face a 13% tariff compared with 3% for volumes originating in Brazil and Argentina. This differential reduces the attractiveness of US supply, especially as China’s January–October soybean imports have reached a record 90 million tonnes.
Port stockpiles now stand at roughly 10.3 million tonnes — up 41% year-on-year and more than triple April levels — paired with negative crush margins that weigh on immediate import incentives. State-aligned buyers, however, retain the capacity to absorb volumes under broader strategic objectives, including inventory accumulation.
Mid-size bulkers have experienced selective valuation support, benefitting from the broader rally across sectors between September and October. Six months ago, P5TC and S10TC 1Q26 forward contracts were trading at $10,044/day and $8,854/day respectively, whereas current assessments show these levels at $14,524/day (+44.6%) and $12,414/day (+40.2%). Despite these gains, asset prices remain approximately $1 million lower year-on-year. The Panamax orderbook — spanning 68,000 to 100,000 DWT — stands at roughly 35.5 million DWT, or 7.6% of the live fleet, with incoming deliveries exceeding scrapping activity.
The market now awaits the US Department of Agriculture’s 14 November WASDE report for refreshed fundamental projections following the US government reopening. For the moment, P7 indicators remain supported by longer Cape of Good Hope routing, even as US soybean flows to China show limited momentum.
Before the USTR paused the proposed port fees, sentiment in the Atlantic basin had been unsettled, leading to a pronounced outflow of Panamaxes. The Atlantic-to-Pacific ballaster ratio dropped to 0.5 in September — a multi-year seasonal low — in contrast to the 2024 average of 0.7. Following the suspension of the proposed fees after bilateral discussions, the ratio shifted again as vessels redirected westward on expectations of stronger US grain exports. November, however, saw this sentiment recalibrate as soybean export velocity slowed.
Further Atlantic tonnage outflow may eventually help narrow the rate gap between basins. Whether this translates into sustained support for freight markets will depend on underlying commodity flows, particularly South American seasonal patterns and Chinese demand indicators, alongside the actual execution of cargo programs rather than headline-driven expectations.
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Source: Breakwave Advisors LLC
