The bulk carrier market is poised to benefit from a boost in grains exports from South America. Brazil and Argentina are expected to supply “ample” volumes into the market from July to September, with increases of 12 MMT for wheat, corn and soyabeans versus the same period last year, according to Danish grains consultancy BullPositions. For corn, the market can assume a slow increase in exports in May and June based on gradual availability from Argentina before the potentially abundant Brazilian Safrinha crop from July will boost loadings, it said. Although overall grain volumes are expected to fall by 3.5%-4% this year given the Ukraine conflict, tonne-miles will increase as trade patterns are redrawn, which will be supportive of freight rates going forward, according to Eagle Bulk, a US-based owner and operator of smaller-sized bulk carriers. The company noted several shipments from Brazil making their way to North Africa. Supramaxes and panamaxes, typically involved in grain movements, have maintained strength, closing on Tuesday at $30,210 per day and at $29,491, respectively, according to Baltic Exchange data. That represents respective gains of 15% and 21% from February 23, the day before Russia’s invasion of Ukraine.

According to the USDA, both Brazil and Argentina have provided “ample exportable supplies” of wheat as major importers scramble to find alternative sources amid the disruption to exports from the conflict in Ukraine. Brazil, which is traditionally a net importer of wheat, has taken advantage of strong global demand, tightening supplies, and elevated international prices to expand its exports, the USDA said in a report last month. Exports in the 2021/22 season were revised up by 800,000 tonnes in April to 2.5 MMT it said. That is almost triple the level of last year, with all months since December reaching record levels. Compared with previous years, Brazil has expanded its exports significantly to Saudi Arabia, Indonesia, Morocco, Pakistan, and Turkey, according to the USDA.

Argentina’s wheat exports were adjusted up by 500,000 tonnes to a record 15 MMT, it said. That is 56% higher than last year. Apart from Brazil, destinations include Indonesia, Algeria, Morocco, Chile, Kenya, and Nigeria. Meanwhile, the new crop of US wheat “holds some, yet limited, additional export potential” while Canadian wheat and barley will have “no material influence on export flows before the very end of August” due to later harvest cycles, BullPositions said.

Wheat, barley, and corn exports from the Black Sea are estimated to decline by 17 MMT, as war-torn Ukraine struggles to export volumes of new crop wheat and barley, which traditionally flow in July and August, while Russia may face subdued demand for its invasion of its neighbor, though some countries may find it irresistible to buy discounted Russian wheat to avoid food shortages. Luke Hutson, an analyst at New AG International, said that Ukraine was facing difficulties in farming given damage to infrastructure, curfews, and the lack of available workers. In addition, access to fertilizers was a challenge. An estimated 70% of the usual spring area, equating to some 14m ha, will be planted this year, he noted, citing the Ukrainian Agribusiness Club. The latest date to sow is May 20. However, one of the biggest obstacles is getting grain to export facilities, with little to no volume shipped from the three main agricultural ports in the Black Sea, Odessa, Mykolayiv and Mariupol. As a result, large stockpiles have been accumulated in the region of 15-20 MMT, he said. In a typical year, Ukraine would export about 6-7 MMT of grain and oilseeds per month, which means that even in normal circumstances, the current volume in storage would take several months to clear, Mr Hutson said, adding that talks are taking place to find alternative export routes using Baltic Sea ports. One option is the Lithuanian port of Klaipeda, which has lost volumes from Belarussian potash prior to the Russian invasion, due to sanctions on Belarus by the US in December. However, moving grain via rail from Ukraine to Poland to Lithuania would involve two changes due to different gauges — wide in Ukraine, narrower in Poland, and wide again in Lithuania, he said.

According to BullPositions, loading data for March showed a 500K-1 MMT increase in grain exports from Romania and Bulgaria, as compared to February. “This increase is most likely Ukrainian supply seeking alternative export ports and will continue in the coming months,” the Danish consultancy said.  However, based on inland logistical hurdles and port capacity, the total monthly exports from these two countries is unlikely to reach above 3-4 MMT, it said.