Ocean Freight Rates Hit the Lowest Since the Past 12 Weeks
Although still higher than the beginning of the year, ocean freight rates for shipping bulk grain hit the lowest level since the past 12 weeks. For the week ending October 31, the rate for shipping a metric ton (mt) of grain from the U.S. Gulf to Japan was $49.50. This was 5 percent more than the beginning of the year, but 2 percent less than the previous week.
The rate from PNW to Japan was $27 per mt, 8 percent more than the beginning of the year, but 4 percent less than the previous week. The last time ocean freight rates were at this level was during the week ending August 8, 2019.
It is uncertain how long the ocean freight rates will remain at this level given the impending International Maritime Organization’s regulation on sulfur emission effective January 1, 2020. The regulation could impact the supply of bulk vessels in the near term.
Weekly Grain Inspections Down
For the week ending October 31, total inspections of grain (corn, wheat, and soybeans) for export from all major U.S. export regions reached 2.14 million metric tons (mmt). Inspections were down 20 percent from the previous week, down 28 percent from last year, and 36 percent below the 3-year average. Total exports of grain for the week were down primarily because of lower exports to Latin America and Europe.
From the past week, inspections of wheat and corn fell 47 percent and 30 percent, respectively, and soybean inspections decreased 9 percent. Mississippi Gulf grain inspections decreased 28 percent from the previous week while inspections in the Pacific Northwest (PNW) dropped 8 percent.
Diesel Prices Remain Firm Under Pressure From Market Fundamentals
For the week ending November 4, diesel fuel prices decreased slightly from the previous week, falling 0.2 cents to $3.062 per gallon. In the previous week (ending October 28), prices had increased 1.4 cents per gallon in response to increasing crude oil prices, which had gained 5 percent from October 21 to 25.
Additionally, according to the Department of Energy’s Energy Information Administration, the distillate fuel market is confronting both stocks that have fallen each week since early September as well as distillate demand that has steadily increased during the same timeframe. These dynamics put upward pressure on diesel fuel prices.
Snapshots by Sector
For the week ending October 24, unshipped balances of wheat, corn, and soybeans totaled 23.3 mmt. This represents a 26-percent decrease in outstanding sales, compared to the same time last year. Net corn export sales reached .549 mmt, up 12 percent from the past week. Net soybean export sales were .944 mmt, up 99 percent from the previous week. Net weekly wheat export sales reached .494 mmt, up 99 percent from the from the previous week.
U.S. Class I railroads originated 21,135 grain carloads during the week ending October 26. This is a 2-percent increase from the previous week, 9 percent less than last year, and 11 percent lower than the 3-year average.
Average November shuttle secondary railcar bids/offers (per car) were $213 above tariff for the week ending October 31. This is $259 more than last week and $413 more than this week last year. There were no non-shuttle bids/offers this week.
For the week ending November 2, barge grain movements totaled 662,450 tons. This is a 0.2-percent decrease from the previous week and 23 percent less than the same period last year.
For the week ending November 2, 416 grain barges moved down river. This is 2 more barges than the previous week. There were 621 grain barges unloaded in New Orleans, 3 percent more than the previous week.
For the week ending October 31, 22 oceangoing grain vessels were loaded in the Gulf—42 percent fewer than the same period last year. Forty vessels are expected to be loaded within the next 10 days (starting November 1). This is 27 percent fewer than the same period last year.