Volga Baikal AGRO NEWS Update on the Situation in the Azov Basin: Grain Freight faces difficult times !!!

Volga Baikal AGRO NEWS Update on the Situation in the Azov basin: Grain Freight faces difficult times !!!

In the 40th week, the conjuncture of the commodity market clearly demonstrated the volatility of demand, to which many domestic traders could not respond in a timely manner: in the Azov ports, wheat consignments were accumulated, which were bought at a high price, but against the background of a reduced demand from processing enterprises in Turkey, these volumes cannot be sold while maintaining the desired margin. The reasons for this are the specific view of the senders on pricing and problems in the logistics component. For example, the shortage of the Russian-flagged fleet still does not allow for a sufficient number of coastal voyages to the roadstead transshipment of the Caucasus. The recent tightening of weight control complicates the delivery of goods by road and increases the already high demand for the coastal fleet. The traditional weather situation for this time of year also hinders the implementation of the Exporters’ programs. The sweep winds caused a drop in the water level in the Sea of ​​Azov, which, in turn, influenced the decrease in the permissible draft in the river. So, in the ports of Azov and Rostov, the prevailing conditions lead to the downtime of motor ships in anticipation of a suitable water level and do not allow taking the cargo to its full capacity.

The decrease in the water level also prevents the passage through the navigable lock of the Kochetovsky hydroelectric complex, where a queue of motor ships has already formed. A consequence of the difficulties caused by weather conditions may be that the planned volumes of wheat will not be exported in a timely manner from remote river elevators, which will entail a shortage of goods in the ports of Azov: this is especially true for shipments from the upper Volga, where the harvesting of crops such as seeds, is still going on.

With the exception of a moderate increase in rates on long arms – from Chistopol and Kazan to Iran – the state of the freight market in the Caspian has been maintaining for several weeks. It should be noted that such stability is not typical for this region, where fluctuations of $ 3-5 per ton per week are usually the norm. The only event that can set the market in motion in the near future is the approaching completion of corn harvesting in the regions adjacent to the Volga basin: the formation of ship lots of the new crop should have a positive effect on the growth of freight rates.

Participants of the grain and freight markets are anxiously discussing the possible introduction of the second export quota in the history of new Russia. There is no official information on the volume and timing at the moment, but there is reason to fear a repetition of the scenario of the last season, when 70% of the quotas were selected in just a day and a half, and the decisive role was played by the volume declaration, not the export. This forced the players to resort to various schemes to circumvent the existing restrictions, primarily those related to transit and re-export, as well as to trading in quotas, which for Exporters was associated with additional difficulties and costs.

Source: GrainOnLine.ru