Dry Bulk Market Under Pressure in Early 2023
According to Intermodal’s Research Analyst, Mr. Fotis Kanatas, “regarding wheat, production will be increased for the Marketing Year 2022/2023 as EU is expected to have higher yields and therefore exports, as the Black Sea Grain Initiative gradually gains traction. It is notable that Ukraine has shipped more than 2mt to the EU. Russia is expecting a production of 91.0mmt, 21% higher than last year while Ukraine is expecting a 21mmt production which will be 36% lower than last year, as a result of the war. During the last week, we have seen the flows increasing in the average cargo reaching all-time highs at 47,046 mt. This reflected in global wheat prices as well, with prices falling in all regions”.
“On the other side of the Atlantic, the La Nina phenomenon is showing signs of ending, which is good news for farmers and producers, which means that higher production is expected from that part of the world as well. Argentina, in particular, is expecting a higher corn yield at 52mmt which will be 5pct up from last year and Brazil forecasts 125mmt for 2022/23 which is 8% higher than last year. The same trend is expected for soybeans as well, as Argentina is expecting a 45.5mmt production up 4%. Brazil’s soybean production estimates should not go unnoticed since USDA’s projection for 153mmt, will be a record for the country”, Mr. Kanatas addied.
“Last but not least, China is expecting record production for corn and soybeans, with 277.2mmt (+2% from last year, 6% above the 5-year average and 20.3mmt (+24% from last year, 19% above the 5-year average) respectively. Both are results of favorable growing conditions and governmental incentives to farmers. It seems that the plan to make China self-sufficient in terms of soybean needs, is so far working. Last year, the country has decreased soy imports from both Brazil and the US, 6% to 54.4mmt and 10% to 29mmt respectively. It is worth keeping an eye on if the country will continue to import the quantities it used to do in the past from America or the trend will continue, forcing exporters to find new destinations for the commodity, and shaping the trade of these grains from now on”, Intermodal’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide