ECSA freight watch: Market navigates holiday slowdown amid declining cargo volumes

The South Atlantic grain market trading slowed down noticeably amid public holidays across the world and shipping events that pulled participants away from their desks.

However, a closer examination reveals robust cargo fundamentals ahead of June. Anticipated substantial loadings are expected to invigorate trading activity and influence freight rates. Conversely, the performance of the Pacific region is likely to attract the attention of ballasting tonnage toward the South Atlantic.

Soybean shipments see meagre declines

For grain types, soybeans experienced a modest decline in cargo volumes in week 19, while exports of corn/maize and sorghum remained minimal, ultimately resulting in no shipments during the week ahead of harvest seasons for the crop, according to the US Department of Agriculture's Brazil crop calendar. Shipments were expected to pick for Sorghum in May and the second crop of corn/maize in June.

"Despite cargo volumes not being as substantial as in previous weeks or the last month, the market remains healthy, even with a slight softening of rates," a dry bulk analyst said.

Platts, part of S&P Global Commodity Insights, assessed the 60,000 mt Santos-Qingdao grain fronthaul at $35/mt on May 23, reflecting a 3% decline from the beginning of the trading week.

China's grain harvest to influence freight

"During the first quarter of 2025, grain shipments fell 7.2% year over year, amid low import demand from China," the Baltic and International Maritime Council said in its first quarter drybulk report.

"The outlook for grain shipments will largely depend on the strength of China's harvests in 2025," the report stated, commenting on the country's strategies to reduce dependence on grain imports.

Agribulk shipments to China overall were at their lowest in the last seven weeks at week 13 with six cargoes, eventually reaching a peak of 48 cargoes on week 17 according to S&P Global Commodities at Sea data.

The number of shipments to East China dropped to 21 in week 19 from 30 in week 18. In North China, shipments consistently jumped by five on Week 14, from only one shipment the week prior, CAS data showed.

"In 2024, the country's wheat and maize harvests reached record highs, trimming import demand. Soya bean shipments have remained stronger, with Chinese purchases of Brazilian cargoes ramping up since February," BIMCO said.

Meanwhile the number of agribulk shipments to the Japan-Korea-Taiwan region stayed consistently low, with zero cargoes going to the region three weeks out of the seven.

Laden-Ballast spread contracts

As South Atlantic fronthaul freight rates soften, despite healthy soybean exports, the ballast-laden spread has experienced a steep decline compared to previous weeks. Sources have noted a negative sentiment regarding tonnage concerns since week 18.

"According to our systems, there are 237 ballasters expected in the next 30 days, a significant increase from the 120-150 ships we observed in the past two weeks. While we saw activity pick up in the Pacific [on May 19], it has since flatlined, with bids for shorter trips, such as Indo-India and Australia round voyages, simply unserious," a shipbroker said.

"Most trading activity is now focused on the second half of June, with very few contenders left for the first half, which was trading at a $500/d premium. Most offers remain above $13,000/d, with a few in the mid-$12,000s/d range. The later 30 days are proving difficult for finding any requirements, and owners are not pursuing them either. Therefore, for the earlier part of the laycan, you could earn more, but rates are expected to decline slightly as we look further ahead," another shipbroker said.

Looking ahead, market participants will pay close attention to developments in the Pacific region. A recovery in this area is crucial to reduce tonnage from ballasting, while cargo volumes out of East Coast South America are projected to increase in the coming weeks.