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Glogos Freight Report Week 30

Region: Russian River, Azov / Black Sea, Caspian

Trade: Coaster shipments

Freight market showed tendency to decreasing on week 30 in Azov region. First of all, market participants connect it with decline of the grain cargo supply in Azov. The harvested yield was almost carried out, but nowadays the grain delivers to river elevators at a slow pace. This was due to rainy weather all last week in the Central Black Earth region. The roads were washed away, and now it’s necessary to take more time for the drying of roads and full recovery traffic of road vehicles with grain. Moreover sharp deficit of cargo will continue in the nearest future despite of the high grain season. According to the Ministry of Agriculture, the final wheat crop in 2018 may reach a three-year low. Thus, the freight reached USD 28 pmt of wheat basis Rostov – Marmara. This is USD 1 less than the level of week 29.

After a long period of stagnation in the Caspian Sea, freight rates began to decline and amounted USD 29 pmt of wheat basis Astrakhan – Iran. Charterers in the region are forced to adapt to new realities due to low grain density of the new harvest. There were already many cases of under loaded vessels by reason of the barley has low weight. Also, thin yield of corn has been involved the shortage of cargo in the region. All this promises a further reduction of rates in the Caspian.

Major Ship Owners, who traditionally work in the Caspian basin, have redeployed their fleet for jobs ex Volga ports to the Azov-Black Sea routes. This is about 20%-30% of the total tonnage, regularly situated in the Caspian waters. Market participants suggest that the frail balance between cargo supply and the amount of fleet that can carry out these shipments restrains the market from sheer fall. Thus, local Ship Owners predict the freight market in the region will collapse as soon as the number of vessels in the region rebound to the previous level.

Besides, the growth of grain prices in the domestic market made an impact on quantity of available cargo. During week 30 the price rose almost for all grains (wheat, barley and corn) through severe weather conditions and deteriorating forecasts for the harvest. Local producers, who have high quality goods, assume that the unfolding situation will play into their hands. As soon as the grain price will be higher, agrarians will be able to sell the goods at a more favorable cost. According to Traders information, prices have jumped rather sharply, and now they require extra time for exploring their possibilities and adjusting new terms with buyers.