food outlook No.4, December 2005 
global information and early warning system on food and agriculture(GIEWS)

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Other relevant agricultural commodities

Ocean freight rates


Special features

Statistical appendix


Ocean freight rates

(Contributed by the International Grains Council)

Dry bulk freight rates continued to rise during September and the first half of October. This was due to China’s increased demand for minerals and grains, as well as a substantial volume of grain and soyabeans shipments out of South America. Rising crude oil prices led to an increase in shipments of steaming coal, as an alternative energy source. Loading conditions in the US Gulf gradually improved after the severe disruptions brought by Hurricane Katrina in the Mississippi Gulf. The impact of Hurricane Rita, which mainly affected the Texas Gulf was less severe. From mid - October, rates in both the Atlantic and the Pacific started to decline due to a surplus of tonnage in early positions and a temporary decrease in bunker fuel prices following the correction in the crude oil market. Towards the end of October there were again signs of recovery, with more enquiries for forward dates, especially for modern ships. Since early September, the Baltic Dry Index (BDI) increased by 402 points (15.3 percent), to close at 3 033 on 11 November.

food outlook


In the Pacific, Panamax period rates, after climbing to US$23 000 daily in late September, fell back to between US$15 000 and US$17 000 by the beginning of November due to an oversupply of tonnage and weaker Chinese demand for iron ore as steel production fell. There were also concerns about falling grain demand because of the avian flu outbreaks in Asia. However, there were expectations that China’s demand for minerals and grains would revive the market in the final weeks of the year. In the Atlantic, the volume of new business rose as loading facilities in the US Gulf ports affected by Hurricane Katrina were gradually restored. Over the period, the rate on the major grain route from the US Gulf to Japan increased by US$6.00, to US$45.00 per tonne, while period rates on this route were reported at US$26 000 - US$27 000 per day, up from US$22 000 registered at the end of August.

During September and the first half of October, Capesize rates increased on good demand for minerals. In the Atlantic, the major iron ore rate from Brazil to China was quoted US$9.00 higher than at the end of August, at US$32.00 per tonne. By mid-October, timecharter rates in the Pacific rose from US$18 000 at the end of August, to US$35 000 - US$40 000 daily. But the market subsequently softened due to an oversupply of tonnage.

Handysize rates initially strengthened on solid demand for South American grain, with the grain rate from Brazil to the EU (Antwerp-Hamburg) quoted US$10.00 higher, at US$37.00 per tonne. Voyage rates in the Pacific at one stage reached US$22 000 daily, up from US$16 000 at the end of August. However, in the second half of October, Handysize rates in the Atlantic generally weakened due to the lack of grain enquiries out of the US Gulf. In contrast, rates remained firm in Europe, especially out of the Black Sea. In the United States, the barge rates on the Mississippi returned closer to normal levels, at about 400 percent over tariff, compared with 800 back in September, when barge traffic was severely disrupted by Hurricane Katrina.

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