- Red sea diversions is set to lead to more diversions of grain cargoes around the Cape of Good Hope.
- Rerouting appears to be affecting a large programme of French wheat exports to China.
An attack on a dry bulk carrier this week in the Red Sea region is set to lead to more diversions of grain cargoes around the Cape of Good Hope but most are still willing to risk using the Suez Canal for now, reports Nasdaq.
Houthi forces in Yemen struck an U.S.-owned and operated dry bulk ship with an anti-ship ballistic missile, U.S Central Command said on Monday, although there were no reports of injuries or significant damage.
Missile attacks on the Red sea
Dry bulk carriers are often used to transport grains although in this case the vessel was carrying a cargo of steel products.
“This week’s attack is certainly viewed as an escalation by bulk carriers and owners. There is a great deal more concern, and I’m fairly sure it will divert much greater volumes, including grains, to other routes,” the head of the bulk shipping department at a German trade house said.
He was speaking before reports emerged of an empty Malta-flagged, Greek-owned bulk carrier also being hit by a missile on Tuesday while northbound in the Red Sea. There were no injuries.
Ishan Bhanu, Lead Agricultural Commodities Analyst at Kpler, said about seven million tons of grains moves through the Suez Canal in an average month but now about 20% of the cargoes were being diverted around the Cape of Good Hope.
“This number was closer to 10% ten days ago, but we have seen more diversion decisions being made in the last few days. Soybeans from the U.S., wheat from Europe and rapeseed from Australia are mainly affected,” he said.
Taking the longer route
A senior grain trader at a German trade house dealing with Asia said they were still shipping through the Red Sea but were watching the situation closely.
“There has been no impact for us yet. But I say yet.”
Rerouting appeared to be affecting a large programme of French wheat exports to China that started in December.
Among 12 wheat cargoes to have left France for China since last month, five had travelled through the Suez Canal and Red Sea while seven were taking the longer route around Africa, including two that had turned back in the Mediterranean, LSEG shipping data showed.
France is the European Union’s largest wheat exporter and China has become a major destination in recent seasons, particularly as France has lost market share in Algeria.
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Source: Nasdaq
