This week’s Chart Monitor from Allied QuantumSea Research highlights a significant paradox in the global grain market: Brazil is facing increasing constraints on its corn exports, even as the country approaches its second-largest corn harvest on record.
Capesize Market: Oversupply and Rate Pressure
Despite a demand boost from miners and an increase in shipments from Western Australia, oversupply remains a significant concern for Capesize vessels. While June saw approximately 31 million metric tons of South Atlantic cargo volumes bound for China (a 7 million metric ton increase from April), the growing number of ballasters, estimated at around 260 vessels, is actively exerting downward pressure on Brazil-China freight rates, which now stand at approximately $18.5/ton.
On the C5 route (West Australia to China), there have been signs of firmness, with rates exceeding $7/ton. This is supported by strong June cargo volumes, which surpassed 60 million metric tons, a notable increase from 49 million metric tons at the end of April.
Capesize Ballaster View: The availability of Capesize ballast vessels has increased in the Atlantic, with the South Atlantic experiencing a considerably higher oversupply burden compared to the North Atlantic. In the Pacific, ballast vessel numbers remain elevated, particularly in the Indian Ocean/South Africa region, where they now surpass 170, compared to 130 in the Far East/North Pacific.
Panamax Market: Regaining Ground in the Atlantic
The Panamax market has experienced a resurgence, driven primarily by a robust Atlantic basin. Strong demand from East Coast South America (ECSA) for late July and early August loadings has successfully drawn in tonnage, tightening availability in the North Atlantic. This has led to firmer rates for both transatlantic and front-haul voyages. This Atlantic strength has also positively influenced the previously quieter Indonesian market and lent support to a firmer tone in the Pacific.
ECSA-Far East spot rates have risen by 8% week-on-week to reach $36/tonne, marking a 13% increase month-on-month. This upward trend is supported by firm demand that is helping to rebalance the continued rise in ballaster counts.
Panamax Ballaster View: Oversupply persists in the Pacific market, particularly in the Indian Ocean/South Africa, where ballast levels remain high at 240 vessels, despite initial signs of a decline. Conversely, ballast figures in both the North and South Atlantic have decreased since mid-June, contributing to the firmer rate environment in those regions.
Supramax Market: Positive Momentum Continues
The positive momentum for Supramax vessels has continued across most regions, with the 11TC average steadily climbing.
Supramax spot rates ex-US Gulf (USG) to the Far East have risen to $39/tonne, marking an 8% weekly increase. An upward trend is also observed on the ECSA/Skaw-Pass and ECSA/Far East routes. This is likely supported by a downward correction in the number of ballasters heading to the USG/USEC, which has fallen to around 100. Monthly cargo volumes loaded at the end of June reached approximately 7.7 million metric tons, matching the highs recorded in March and April, representing the strongest levels seen so far this year.
Supramax Ballaster View: Oversupply continues to be a factor in the Pacific market, with over 200 vessels ballasting in the Far East/NOPAC, 180 in Australasia, and more than 100 in the Indian Ocean. Similarly, the Atlantic market also faces significant oversupply, with over 90 vessels ballasting in the North Atlantic.
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Source: Breakwave Advisors
