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USG Pmx/Kmx F/H market remains under pressure amid severe lack of soybeans


The situation has not changed much in the Panamax/Kamsarmax fronthaul sector. The offer of grain is extremely limited (players have not reported any requests for shipments of soybeans to China for almost a month). The fronthaul market is somewhat supported by shipments of US maize. The Panamax/Kamsarmax time-charter bss dely Continent via USG redel Spore-Japan is quoted at $19-20k daily. The rates for Panamax fleet bss dely USG redel FEast amount to about $16k daily + $600k bb. Transportation of 66,000 t of grain from the Gulf of Mexico to China (via the Cape of Good Hope) may cost $42-43/t. Carrying 55-60,000 t of US grain to northern China (via the Panama Canal) is estimated by brokers at $43.5-44/t.

Note that market participants are highly concerned regarding the prospects of soybean exports ex the US. China is going to levy 25 percent tariffs on imports of 106 US products including soybeans. As for now, Brazil is the main source of soybeans for China, while USG soybean exports towards China are minimal. But still, market participants state that the US has the upper hand against China. The thing is that China can't fully replace US volumes sourcing from other destinations. The latest forecast for Chinese soybean imports is pegging at 89 million t in 2017-18 MY up from 86 million t estimated in 2016-17 MY, while Brazil can supply at best 65-70 million t. It should be noted that even with this tension between China and the US, market participants report that China continues to buy beans from the US, as they are always ready and search for the opportunity to buy at favorable prices and we should admit that China picked the correct time for a trade war against the US as currently it is not the peak of the US grain season. Anyway, it’s still too early to say and make any forecasts as it’s a developing story.

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