food outlook No.3, September 2005 
global information and early warning system on food and agriculture(GIEWS)

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Basic food commodities

Other relevant agricultural commodities

Ocean freight rates


Statistical Appendix


Ocean freight rates

(Contributed by the International Grains Council)

OCEAN FREIGHT MARKET (June 2005 – August 2005)

Dry bulk freight rates continued to decline in June and July, attributable to a marked reduction in China’s iron ore imports, having tightened import licensing procedures and experienced sharp falls in domestic prices for steel products, due to overcapacity. China’s exports of coal also declined after introducing stricter mine safety regulations. An increasing supply of newly-built ships and a clearing of congestion in ports accelerated the drop in rates. As a result, the Baltic Dry Index (BDI) decreased by a further 54 percent from a previous low in mid-May, touching 1 749 in early August, the lowest in two and a half years. However, later in August, increased Asian demand for new crop grains and oilseeds, as well as expectations of higher Chinese imports of minerals, as stockpiles of iron ore were drawn down, pushed the index higher, to 2 631 points (25 August).

The recent recovery in the Panamax sector was driven by an increased volume of orders in the Pacific, where timecharter rates, having recorded lows of US$10 000 per day, returned to the levels of late May (US$20,000 - US$21,000 daily). In the Atlantic, the rate on the major grain route from the US Gulf to Japan increased in August by US$4.00, to US$39.00 per tonne, although still below the figure of US$54.00 per tonne at the end of May. Period rates on this route were reported at US$22 000 - US$23 000 per day, up from US$13 000 daily reported in early August, thereafter registering a net gain compared with the end of May (US$17 000).

After dipping to recent lows, rates in the Capesize sector also began to recover in August. Short-term timecharters were lifted to around US$32 000 - US$35 000 per day, compared with about US$40 000 at the end of May. At the end of August, the major iron ore rate from Brazil to China was quoted at US$23.00 per tonne, compared with US$25.60 per tonne three months earlier.

Handysize rates were under pressure in June and July due to weaker demand, including for cargoes out of the Black Sea, usually the strongest in the sector. The grain rate from Brazil to the EU (Antwerp-Hamburg) dropped from US$47.50 per tonne at the end of May, to US$25.50 per tonne in early August, but increased slightly to US$27.00 per tonne by the end of the month. A summer drought in the United States’ Midwest limited grain barge traffic on the Mississippi, Missouri and Ohio rivers, while end-August floods in central parts of Europe disrupted barge navigation on the Rhine and other rivers.

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