• Facebook
  • Twitter
  • Vimeo
  • LinkedIn
  • SUBSCRIBE
  • MEMBER LOGIN
U.S. Wheat Associates
  • Our Story
    • About USW
    • Dependable People. Reliable Wheat.
    • Board of Directors
    • Staff Directory
    • Office Locations
  • Market Information
    • Market Information
    • Price Reports
    • Price Charting Tools
    • Supply and Demand
    • Commercial Sales
  • Crop Quality
    • Crop Quality
    • Harvest Reports
    • Hard Red Winter
    • Hard Red Spring
    • Hard White
    • Soft White
    • Soft Red Winter
    • Durum
  • Working With Buyers
    • Working With Buyers
    • Customer Conferences
    • Wheat Classes
    • Wheat Glossary
    • Wheat Grade Factors
    • How to Buy
    • Ask the Expert
    • Resources
  • Who We Represent
    • Who We Represent
    • Board Meetings
    • State Wheat Commissions
    • Partners
    • Trade Activities
  • Policy
    • Policy
    • Trade Negotiations
    • Trade Barriers
    • Innovation and Sustainability
    • Food Security and Assistance
    • Public–Private Partnership
  • News
    • Newsroom
    • Wheat Letter Blog
    • News Releases
    • Videos
  • Search
  • Menu Menu
You are here: Wheat Letter Blog 1
Market and Crop Analysis, South America

Ocean Freight Rates Follow Rising Bulk Commodity Demand

A spike in ocean freight rates is creating some heartburn for dry bulk commodity buyers who may be uncovered over the next few months as strong global demand for grain and coal stresses vessel supply. Fortunately, lower freight futures prices in the second half of 2021 could hold if commodity demand eases, as expected.

“We believe most of our wheat buying customers have booked freight already for April or May deliveries,” said USW Vice President of Overseas Operations Mike Spier. “We hope this spike in freight prices is short term because it obviously increases the landed cost of wheat from the United States and all other suppliers.”

“The ocean freight rates story is all about demand and supply for dry bulk vessels,” said a former U.S. grain trader. “There’s just too much dry bulk movement right now and not enough vessels to cover it.”

“There’s an absolute frenzy now to secure Panamax and smaller vessels to ship coal and grains,” said one U.S.-based freight trader. Usually, bigger ships are more expensive to run than smaller ships and the cost to operate a vessel increases with its size. But the current situation is anything but usual. Because medium-sized, Panamax vessels are more versatile in their loading and unloading capabilities, they are trading at a premium to even capesize vessels, which can ship more than 125,000 MT of dry bulk commodities in one voyage.

Between March 1 and March 2, Panamax quotes for nearby delivery jumped 17% to trade at $21,350 per day — a $6,700 premium to the capesize vessel operating cost. According to independent transportation consultant Jay O’Neil, PNW to Japan Panamax rates for nearby delivery increased 18% between early and late February to $32.00 per MT.

Ocean freight rates for shipping wheat and other grain in Panamax dry bulk vessels are spiking as global demand grows.

Ocean freight rates for shipping wheat and other grain in Panamax dry bulk vessels are spiking as global demand grows.

Chinese Demand Factor

China’s current outsized demand for global commodities is adding the most pressure on the whole dry bulk shipping system. In a unique situation, dozens of vessels loaded with coal are idle off Chinese shores because of the ongoing trade dispute with Australia. Heightened Chinese purchases of corn, soybeans, wheat and even grain sorghum from North and South America also reduces vessel supply around the world.

Looking ahead, “It all comes down to what China will do in Q2, Q3 and Q4,” said another grain exporter. The trade believes if China continues to buy North and South American agricultural commodities at a substantial pace, like in Q3 and Q4 of 2020, Panamax availability could remain tight through 2021 and the landed price of U.S. wheat could remain high.

Bright Spot

As of March 3, however, Panamax futures for Q4 delivery traded at $15,200 per day, substantially lower than the $21,350 per day Panamax futures quoted for nearby delivery. Perspective also comes from looking back to dramatically higher ocean freight rates more than ten years ago when wheat buyers were paying close to $100 per MT and, only one year ago, when rates were near all-time lows.

Suppose global Panamax demand and supply factors reach more equilibrium throughout the year if, for example, Chinese demand for imported coal and agricultural products does ease. In that case, customers could take advantage of the inverted Panamax futures curve to price more competitive freight options for future delivery.

Time will tell. Stay update to date on future U.S. wheat market analysis here.

By Claire Hutchins, USW Market Analyst

March 4, 2021/by actualize
Share this
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on LinkedIn
  • Share by Mail
https://www.uswheat.org/wp-content/uploads/2021/07/IMG_0269-scaled.jpg 1920 2560 actualize https://www.uswheat.org/wp-content/uploads/USW-Logo-Full-Color.png actualize2021-03-04 16:04:262022-03-29 16:37:51Ocean Freight Rates Follow Rising Bulk Commodity Demand

Wheatletter Sidebar

Quick Links

  • Newsroom
  • Wheat Letter Blog
  • News Releases
  • Videos

Wheat Letter Related Blogs

Foreign Agricultural Service, Soft White, Wheat Foods

Aspiring Chefs in Hong Kong Explore the ‘Science of Souffle’ With Assist From U.S. Wheat

U.S. wheat shared the spotlight with U.S. eggs, U.S. dairy and a Netflix celebrity at a…
MORE
March 24, 2023
https://www.uswheat.org/wp-content/uploads/1678778873191-scaled.jpg 1971 2560 Ralph Loos https://www.uswheat.org/wp-content/uploads/USW-Logo-Full-Color.png Ralph Loos2023-03-24 08:15:102023-03-24 08:15:10Aspiring Chefs in Hong Kong Explore the ‘Science of Souffle’ With Assist From U.S. Wheat
Photo of a combine unloading wheat into a semi-trailer.
Wheat Industry News

Wheat Industry News

News and Information from Around the U.S. Wheat Industry Speaking of Wheat “Overall, U.S.…
MORE
March 16, 2023
https://www.uswheat.org/wp-content/uploads/USW_2022_NE_Harvest-5-scaled.jpg 1707 2560 Steve Mercer https://www.uswheat.org/wp-content/uploads/USW-Logo-Full-Color.png Steve Mercer2023-03-16 09:38:472023-03-16 09:38:47Wheat Industry News

Stay up to date on wheat industry news!

SUBSCRIBE

Think Farm Export Programs Don’t Matter? Think Again.

GET THE REST OF THE STORY

Our Story

  • About USW
  • Dependable People. Reliable Wheat.
  • Board of Directors
  • Staff Directory
  • Office Locations

Market Information

  • Market Information
  • Price Reports
  • Price Charting Tools
  • Supply and Demand
  • Commercial Sales

Crop Quality

  • Crop Quality
  • Harvest Reports
  • Hard Red Winter
  • Hard Red Spring
  • Hard White
  • Soft White
  • Soft Red Winter
  • Durum

Working with Buyers

  • Working With Buyers
  • Customer Conferences
  • Wheat Classes
  • Wheat Glossary
  • Wheat Grade Factors
  • How to Buy
  • Ask the Expert
  • Resources

Who We Represent

  • Who We Represent
  • Board Meetings
  • State Wheat Commissions
  • Partners
  • Trade Activities

Policy

  • Policy
  • Trade Negotiations
  • Trade Barriers
  • Innovation and Sustainability
  • Food Security and Assistance
  • Public-Private Partnership

News

  • Newsroom
  • Wheat Letter Blog
  • News Releases
  • Videos

DTN Wheat Detail
DTN Corn Detail

2008-2013 U.S. Wheat Associates. All Rights Reserved
Privacy Policy | Non-Discrimination Statement

Scroll to top