- Pacific Weakness Drives Vessel Influx into Atlantic.
- Freight Rates Drop Despite Strong Cargo Volumes.
- Soybean Shipments Begin Seasonal Decline.
As June rolls in, the South Atlantic grain market is looking pretty solid, thanks in large part to strong agribulk shipments coming out of Brazil. However, the rise in freight rates is somewhat stifled by outside factors, especially the movement of vessels across different regions, reports S&P Global.
Pacific Weakness Pushes Tonnage into the Atlantic
A lacklustre performance in the Pacific has left vessel owners with fewer options, leading many to shift their ships over to the Atlantic basin. This surge in tonnage has ramped up competition and put downward pressure on freight rates, making it tough for any potential upturn to take hold. With the South American soybean harvest wrapping up by the end of June, the overall market sentiment is leaning towards the negative side.
Atlantic Freight Rates Decline in Week 21
In week 21, freight rates for Atlantic Panamax and Kamsarmax vessels took a dip midweek. The market stayed quiet after the US and UK holidays, and even with strong cargo volumes, rates struggled to hold steady due to an increasing number of vessels ballasting.
“Charterers maintained the upper hand throughout the week, as owners were forced to reduce offers to secure cover,” noted one shipbroker.
Soybean Shipments Begin to Decline
Soybean shipments have started to dip, with only 37 cargoes reported in week 21, a drop from the high of 45 in week 19, as noted by S&P Global Commodities at Sea (CAS). Meanwhile, soybean meal shipments have remained quite low, bouncing between one and three shipments each week since week 16. In week 19, the volume of soybean meal shipments fell to 30, down from 42 the week before.
Other grains like barley, sugar, corn/maize, and sorghum haven’t seen much action either, averaging one or fewer shipments per week over the past seven weeks. Interestingly, there was just one wheat shipment recorded in week 20.
Seasonal Weakness Expected to Persist
“We are currently in, or nearing, a seasonally weak phase for Panamaxes,” said a dry bulk analyst. With the US grain season concluded and South American volumes expected to slow post-June, demand is likely to remain muted.
S&P Global Commodity Insights is forecasting that Q2 2025 will be the high point for quarterly shipments, with Brazilian soybean exports to mainland China shining as a key highlight. On the flip side, sluggish wheat exports from the Black Sea are expected to put a damper on the overall market.
Shifting Trade Flows to China and JKT
Looking at trade patterns with China and JKT, shipments to mainland China have been on a downward trend since week 19, starting at 45 and dropping to 25 in East China and just six in North China by week 21. Meanwhile, JKT (Japan, Korea, Taiwan) initially experienced a boost, reaching four shipments in weeks 19 and 20, but then fell back to only one in week 21.
Commodity Insights pointed out that the weak demand from mainland China for other agricultural products like barley and sorghum, along with demographic changes such as a declining population, could hinder long-term growth prospects.
Charterers Hold Advantage Amid Tonnage Imbalance
A second shipbroker commented on the ongoing imbalance: “Charterers are in no rush to fix 30 days ahead and picked the cheapest units for the first half of June.” A disparity remains between prompt availability and future arrivals, which is contributing to continued rate suppression.
Outlook: Market Braces for Further Downside
With bearish fundamentals in place and the South American soybean season drawing to a close, market participants are proceeding cautiously. The continued inflow of ballasters and lack of Pacific demand support the expectation of further losses. Unless cargo volumes shift meaningfully to the Pacific to absorb excess tonnage, a freight rate rebound appears unlikely in the near term.
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Source: S&P Global
