Ocean Freight Comments
Transportation and Export Report: Jay O’Neil, O’Neil Commodity Consulting: It was yet another mixed week in dry-bulk vessel markets. The paper market/Baltic Indices were able to rally slightly at week’s end with the hope of getting some follow-through support early next week. Some published market reports have stated that the paper market led the way this week and believe that the physical market needs to “catch up” next week. I am always amazed at the biased slant that market forecasters constantly provide in assuming that the physical market must follow the paper market when it moves upward without considering that the paper market could go back down to realign with the physical world. I still view much of this market talk as wishful thinking.
A relatively new grain route has been opening up for maize from Northern Brazil to East Coast Mexico. It appears that the freight spread is about a $5.00/MT premium from Brazil, but the physical corn value FOB Brazil is close to $9-$10.00/MT cheaper than FOB U.S. Gulf. This will be an interesting dynamic to watch.
