Brazil’s plentiful grain harvests and delays at the drought-stricken Panama Canal are putting lots of wind in the sails of the midsize bulker market, according to brokers.
The factors are boosting two grain routes in particular, London-based shipbroking house Braemar said on Thursday.
One voyage is the Baltic Exchange’s P2A-82 route, which sees panamaxes ballast from Europe to the US Gulf Coast before shipping grain through the Panama Canal to the Far East.
The average spot rate for that voyage has risen 58% since 25 July to $25,300 per day on Thursday, taking it to a 20-week high.
The other route impacted is the supramax S1C route that ships grain from the US Gulf Coast through the canal and across the Pacific basin to the Far East.
Its average spot rate has gained 59% over the same period to nearly $13,200 per day on Thursday to reach its highest point in 16 weeks, according to the exchange.
“August’s record month for Brazil’s corn exports coupled with August-high for soybeans featured busiest-ever month for Brazil-to-China grain shipments,” Braemar said in a report.
“Corn and soybean buyers now face severe port congestion in Brazil, low water levels along the lower Mississippi, plus Panama Canal restrictions.”
As of Wednesday, there were 102 vessels waiting to transit the panamax locks and 23 ships queuing to enter the canal’s bigger neopanamax lanes as a result of draught restrictions, according to Leth Agencies. Transit waiting times are from 13 days to 17 days.
“Brazil’s grain export expansion over the past 10 years owes to gains in port capacity as well as growing area,” Braemar said.
Grain exports from the Northern Arc terminals across the Amazon region have grown to 28.5m tonnes so far this year, up from 8m tonnes of exports in 2016, Braemar stated.
“A further increase is very likely in 2023, judging by data for the first eight months,” the broking house said.
The surge in grain volumes from these terminals is accompanied by corn exports from the eastern coast ports of Santos and Paranagua that totalled 57m tonnes during the 2022-2023 marketing year and already burden a strained supply chain and port infrastructure, Braemar said.
The US Department of Agriculture expects corn exports from these two ports to reach a record 59m tonnes for the current 2023-2024 marketing year, the brokerage noted.
