(Contributed by the International Grains Council)
Intermittent chartering activity for Panamax vessels resulted in considerable fluctuation of freight rates during June. Falling export prices stimulated an upsurge in purchases by large importers, especially Egypt and Pakistan for wheat and Saudi Arabia for barley. China began offering substantial amounts of maize (corn), mostly to destinations in Far East Asia. Grain from this origin is usually exported in small vessels which are able to enter directly into regional ports where handling facilities are limited. July saw a general weakening in the dry bulk sector. Mineral fixtures, particularly for coal, were insufficient to absorb the substantial Panamax tonnage available in prompt positions.
Grain cargoes from the southern hemisphere will not match last seasons high volume, reducing requirements of Handysize carriers. A noteworthy development in Australia is that, with effect from 1 October, the Australian Wheat Board will increasingly sell on a c&f basis, assuming direct responsibility for freight fixtures. Iraq made several purchases under the second phase of the oil-for-food deal. Some grain was scheduled for delivery to Umm Qasr. However, a significant volume was to be shipped to the Jordanian port of Aqaba and then moved overland to Baghdad and other major towns. Freight rates recovered in August, as Japanese charterers took a number of vessels for forward deliveries of heavy grain. Handysize carriers were in demand for grain transactions to North Africa, where domestic harvests were below average. India also sought similar ships for fertilizer imports.
The general trend of freight rates is shown by the Baltic Freight Index (BFI). It rose from 1 325 on 1 July to 1 369 before dropping to 1 287 at the end of the month. It strengthened during August, to reach 1 344 on 2 September.