World Grain - January 2022 - 36

by the IGC to rise by 5 million tonnes to a new record,
with much of the increase reflecting drought-reduced
harvests in Near East Asia, with particularly large increases
in imports envisaged to Iran, Turkey and Iraq.
" On the export side, larger supplies and potentially
softer competition from Russia should boost July/
June exports from Ukraine, the EU and Argentina, "
Karavaytsev said.
Rising costs don't dampen trade
Karavaytsev said inflated freight costs likely had contributed
to slower-than-anticipated import demand
in recent months, but fourth-quarter pricing declines
could see demand bounce back.
" Specifically for maize, recent deliveries to parts of
North Africa and Asia have fallen short of expectations, "
he added. " Nonetheless, the sharp reversal in
freight costs across the grains and oilseeds carrying
sectors - Panamax, Supramax and Handysize - has
been welcomed by importers. The influence of the congestion
factor is seemingly subsiding as vessel backlogs
at Chinese ports have fallen amid slowing iron
ore demand. "
Karavaytsev broke down some of the main grains
trade increases and decreases in 2021 and looked forward
to 2022. He noted that while total grains trade, not
including soybeans, in 2021-22 was forecast to decline
by 6 million tonnes year-on-year to 421 million tonnes,
that volume, if verified, would still be the second highest
on record and 10% above the five-year average.
" The year-on-year drop is largely linked to projections
for lower maize trade, " he told World Grain.
The forecast calls for a 6% year-on-year drop, the
first retreat in 13 years, on expectations for reduced deliveries
to China. As a result, Brazil's shipments from
July to June are forecast to drop by more than one-third
to a five-year low amid tight local supplies and strong
demand, including for maize-based ethanol.
The wheat trade in 2021-22 (July/June) is forecast
4 Jan 1985=1000
Baltic dry index
Capesize sub-index
Panamax sub-index
Supramax sub-indes
Baltic Handysize index**
36
2430
3064
2475
2260
1582
m/m change*
-48.9%
-57.9%
-41.6
-37.5%
-22.2%
y/y change
+118.5%
+111.3%
+97.7%
+154.5%
+169%
Soybean shipments to surge
Darren Cooper, senior economist at the IGC, expects the
world trade in soyabeans in 2021-22 (October/September)
to grow by 5% year-on-year, with gains linked to expectations
for bigger deliveries to Asia, principally China,
where an assumed strengthening of feed sector demand
could underpin larger imports.
" Moreover, a recent improvement in processing margins
has coincided with an uptick in world market purchases,
both from the US and Brazil, " he told World
Grain. " Deliveries to a range of relatively smaller markets
in the EU, Africa and the Americas are also anticipated
to rise. "
Cooper expects that, despite a bigger local crop, thin
carry-in stocks from the prior season will ensure that
US export availabilities are fairly tight, especially given
prospects for record domestic consumption linked to
rising consumption of soybean oil for the production of
renewable diesel.
" Consequently, shipments in 2021-22 are predicted
to fall by around 9% year-on-year, " he added.
" Nevertheless, despite a recent upswing in exports,
weekly data show that total US commitments - which
is the aggregate of exports and outstanding sales (yet
to be shipped) - were still around one-third behind
year-on-year around mid-November. Consequently,
South American origins are expected to account for a
larger share of world trade in 2021-22. On an October/
September international trade year basis, Brazilian
shipments are seen expanding by 11% year-on-year as
a record crop and assumed competitive pricing means
that the country's exporters should be well-positioned
to respond to global demand, particularly from January
onwards when new crop supplies become available. "
What's next for freight?
So, what's next for freight markets? While healthy
demand for grains and soybeans will be a significant
factor in 2022, much will depend on demand for other
commodities and, of course, global levels of port
congestion.
According to analysis by MSI, key to the collapse
in freight earnings in the fourth quarter of 2021 was a
significant easing of Chinese port congestion.
" This has helped free up more tonnage across segJanuary
2022 / World Grain / World-Grain.com
©masterskuz55 - stock.adobe.com, Source: Baltic Exchange *Change vs GMR 523, **23 May 2006=1000
http://www.World-Grain.com
World Grain - January 2022

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