The special focus this week is on the monthly quantity of soybeans and corn exported to China, comparing the current year’s shipments to the growth trends seen in the previous two years. Brazil continues to surpass the U.S. in terms of monthly shipments sent to China, maintaining a dominant position. However, both countries experienced a significant slowdown in the summer months, raising concerns about the overall health of China’s economy and its future demand for grains, reports AJOT.
Serious Challenge
Recent reports suggest that China’s economic slowdown could pose serious challenges for farmers in Brazil, the U.S., and other major exporters. The potential decrease in Chinese demand is particularly troubling given its status as a top importer of soybeans and other key agricultural products like barley, with Australia also feeling the effects. For Brazil, which relies heavily on grain exports, the economic shift in China comes amid internal challenges, including an ongoing drought that threatens crop production.
One of the major concerns for Brazilian grain exports, besides China’s softening demand, is the severe drought currently affecting parts of the country. While key agricultural regions producing corn, soybeans, sugar cane, and coffee have not been significantly impacted by the drought in the Amazon River Basin, there remains worry about the long-term effects on the country’s overall agricultural output. Additionally, wildfires in the Amazon have ravaged millions of acres, making this year one of the worst on record for the region. These fires are putting further pressure on Brazil’s farming industry, as smoke and fire damage can affect crop quality and productivity.
Mixed Performance
The dry bulk freight market has shown mixed performance for an additional week. Rates on the Cape Brazil to North China routes started to record a downward revision for the third week of September following the uncertainties on the strength of the Chinese economic growth, while the Panamax Continent to Far East route indicated an upward trend.
- Capesize vessel freight rates for shipments from Brazil to North China revised downwards to $26 per ton, representing a 5% weekly decline, though still 24% higher compared to the same period last year.
- Panamax vessel freight rates from the Continent to the Far East rose to $37 per ton, down 11% on the previous month.
- Supramax vessel freight rates on the Indo-ECI route hovered slightly below $11 per ton for the current week, 7% higher than those recorded during the same period last year.
- Handysize freight rates for the NOPAC Far East route held steady at around $34 per ton, up 9% from rates a year ago.
Supply Trend
In the third week of September, the number of blasters across various dry vessel size categories declined, falling below the annual average. This decrease suggests that the dry bulk freight market is grappling with the effects of China’s slowing economic growth, which is impacting both the volume of dry bulk shipments and the demand for tonne days and miles.
- Capesize SE Africa: The number fell below the annual average of 110 to a current level of 115. However, this remains below the peak of 140 vessels observed at the end of week 31.
- Panamax SE Africa: The current number remains below the annual average of 140 for the third week of September, having dropped by over 40 vessels compared to the peak level observed three weeks ago.
- Supramax SE Asia: The number of ballast ships confirmed the trend of the previous week for levels around 90 vessels, 10 fewer than three weeks ago.
- Handysize NOPAC: The number of ballasters defied the expected trend, reaching 67 vessels—11 below the annual average.
Port Congestion
In the third week of September, Chinese dry bulk port congestion held steady at levels comparable to the previous week, with notable increases in congestion among smaller vessel size segments.
- Capesize: Capesize ship congestion dropped below 120 vessels, marking a decrease of 7 from the previous week and nearly 30 fewer than the peak observed at the end of week 30.
- Panamax: The number of Panamax vessels reached approximately 220, a decrease of 20 compared to the end of the previous week.
- Supramax: Congestion levels remained elevated at above 300 vessels, consistent with the accelerated pace of the previous two weeks, with not yet significant signs of reduction for September.
- Handysize: Congestion levels rose 190 vessels in the third week of September, about 25 more than the end of week 36.
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Source: AJOT
