Operators of smaller dry bulk carriers are set to be the biggest winners as the rise in grain shipments is expected to keep handysizes to supramaxes busy, with a large overflow to the panamax sector. A strong demand for wheat in Asia has led to record activity in the global wheat trade, driven by strong demand from China, Vietnam and India.

In a global grain report published this month, the United States Department of Agriculture (USDA) said that wheat imports have more than doubled over the past decade in Southeast Asia alone, to over 25 million tonnes. “Milling-quality wheat demand has grown as diets have shifted towards more wheat products. Furthermore, feed and residual use has more than doubled due to rapidly rising demand from the livestock, poultry and aquaculture sectors,” it said.

The report says that demand in Thailand and Indonesia has recently dropped slightly due to low feedstock requirement. However, this has been more than compensated for by Vietnam, where the USDA predicts wheat imports will surge 67.4% year-on-year to five million tonnes for the 2016-2017 marketing year, which runs from July to June. India has also been importing record amounts of wheat. It has bought more than five million tonnes since mid-2016, its biggest annual purchase in a decade. However, grain traders say India is cutting back on imports ahead of the April harvest, so purchases in the preceding months will depend on the size of the crop.

On the wheat production side, shipbroker Banchero Costa (Bancosta) said in a recent report that Brazil, traditionally a wheat importer, has exported several shipments recently. A large crop and a government subsidy make Brazil’s exports more competitive. Bancosta reported that Brazil exported 338,000 tonnes of wheat in December and January and is expected to ship 244,000 tonnes more during February, with China, South Korea and Vietnam being the main destinations. But Brazil’s wheat exports remain a miniscule amount of the entire global grain trade, which the USDA calculated at 172.1 million tonnes for the 2015-2016 marketing year. The USDA expects total wheat exports will grow to 178.3 million tonnes in 2016-2017.

The USDA forecasts that the rice trade will rise in 2017 due to larger imports by Asian and Middle Eastern countries, along with Brazil. Global trade in 2016 stood at 40.8 million tonnes and the trade this year is projected to climb 3% to the third-largest level on record. This is said to reverse the recent two-year contraction that occurred as countries sought to increase domestic production and self-sufficiency, sometimes through restrictive-trade measures. Although the global rice trade is predicted to grow, several shifts in trading patterns are underway. Growth in Thai and Vietnamese exports has slowed due to increased competition from India, which exported 10.43 million tonnes in 2016, making it the world leader. Thailand shipped 9.88 million tonnes of rice and Vietnam 4.95 million tonnes. In fourth place was Pakistan at 4.3 million tonnes and the US fifth with rice exports of 3.5 million tonnes.

The Thai Rice Exporters Association said shipments should drop slightly to 9.5 million tonnes for this year, while Vietnam is expected to register a slightly larger decline. Thailand and Vietnam claim that their exports have been affected by India, which has muscled its way into the African markets that have traditionally been major buyers of rice produced by the two Southeast Asian nations.

Over in the Americas, rice producers in the US are getting increasingly concerned that president Trump’s war of words with Mexico could result in the largest foreign buyer of US rice going elsewhere for its supply. Trump has been threatening that Mexico will pay for the construction of a wall along the US-Mexico border and his administration has floated the idea of a 20% to 35% tariff on Mexican imports to foot the bill. In retaliation, Armando Rios Piter, a Mexican senator who leads a foreign-relations committee in the government, said he intends to introduce legislation to shift the country’s grain import supplies elsewhere. Mexico takes one-quarter of the US export crop. Mexico also bought about 23% of the 51.2 million tonnes of corn exported by the US in 2015-2016. If these threats become a reality, Mexico will probably have to source its rice from Asia and its corn from Argentina and Brazil. “That would be very good for the tonne-mile ratios,” said Thailand’s Precious Shipping managing director Khalid Hashim.