Brazil-China freight surges 6% as ore fixtures tighten dry bulk

The cost of shipping soybeans and corn from South America to Asia is expected to rise sharply for July and August shipments after a surge in iron ore exports forced freight rates higher on the busy South America to Asia route.

The cost of panamax-sized vessels booked from Brazil and Argentina to Asia rose 6%, according to market sources, after several vessels were booked by iron-ore exporters.

Freight rates out of Brazil on a spot basis were heard at $37/mt on Wednesday, up 5.7% from nearly $35/mt yesterday.

“It was largely that there were fewer July cargoes (available) and Vale also booked a few more,” one Singapore-based shipbroker at a major international brokerage said, explaining the higher rates.

“August has also been lifted,” the same broker added.

According to line-up data, the size of Brazil’s metal exports are about three times that of soybean exports, which is the largest export in the agriculture arena.

Brazil-based Vale is the world’s largest producer of iron ore and nickel.

The jump in freight costs was confirmed by a China-based soybean broker who said “freight costs for August and forward are indeed now at $37”, adding that shipment costs between August and September are now around $36-$36.5/mt.

This means the overall cost of buying soybeans for China could be up 1% while expenses for Korean and Vietnam corn importers are also about 1% higher on the back of higher freight.

China – the world’s largest soybean importer – has become the single biggest buyer of Brazilian soybeans, taking 79% of Brazil’s total of 9.06 million mt exports in the month of June 2019, according to official export data.

In the corn market, South Korea and Vietnam are key corn importers but are able to vary their origins according to those that are the most competitive.