Market Perspectives August 16, 2013

Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: World ocean freight markets were a little more interesting this week as we saw some freight spread relationships change. The Capesize market started and showed some divergence in relationship to the Panamax market, and the Pacific Panamax market strengthened while the Gulf-Atlantic continued to soften. The Capesize market has enjoyed good iron ore demand from the Chinese as well as some logistical delays. However, this is the market with the biggest oversupply of vessels relative to worldwide demand, so it is difficult to treat this as a trend just yet. The balance of surplus Panamax vessels in the Pacific has temporarily shifted, but the pressure still remains in the U.S. Gulf-Atlantic market. It would seem logical to increase Panamax grain rates in the Pacific this week, but there has been no visible uptick in the physical rates verses the Baltic Index. In fact, there have possibly been some more aggressive (lower) fixtures than the rates below indicate. Let’s see what next week brings.