World Shipping Rates Slumping

[errolanderson]

The Baltic Dry index reflects ocean freight rates for iron ore, coal and grain.

Ocean freight rates hit an all-time low last March, but then recovered into early summer. But recent China fallout is again pressuring these rates. About a 10% decline since early August.


http://www.telegraph.co.uk/finance/economics/11808488/World-shipping-slump-deepens-as-China-retreats.html

[farmaholic]

Will I see a higher farmgate price because of a reduction in the ocean freight? Or is it just another economic indicator? I think the latter. Less demand for food, hmmm. I guess I will go to bed hungry tonight, probably doesn't enter most peoples mind as an option they want to exercise!!

[TOM4CWB]

Farmaholic,

I read this actually lowers oat prices in N America... as Scandinavian Oats get cheaper and knock out CDN oats in US market! Interesting how trade flows change when recession hits!

[farmaholic]

Didn't that happen in the past? Negative arbitrage!

[farmaholic]

Hard to believe they would rather float it across an ocean and do a bunch of inland transfers than pay a decent continental price. Cheaper at any cost!!??

[TOM4CWB]

Farmaholic,

Positive Arbitrage for Quaker!

[hobbyfrmr]

This has happened with oats at least twice that I can remember. Canadian oats get too expensive or else supply interruptions like rail strikes or drought. The US looks to Scandanavian supplies. Yes, the big end users look for lower prices when they calculate all their costs.

[bucket]

That's why I think a prairie dry index for rail rates in north America would be an idea worth looking at.

Rail rates should drop instead of getting a rubber stamped increase from the government.

Oil is down so fuel surcharges should disappear. Won't happen.

So instead the freight moves to trucks and ruins a highway system that costs more to maintain than the railways.

[Rareearth]

Index is down for dry bulk yes.

The bulk oil tanker capacity is short and those rates will go through the roof.

[bucket]

Oil inventories are or will be building.

The capacity for oil might be short because tankers are floating storing oil waiting for higher prices.

[wmoebis]

What will happen to grain trans when that oil moves? Again!

[MBgrower]

And why is a box of cereal $7.00, and oats are 2.85/bu? Glad i didnt grow any this year
lots of fields are nearly flat on the ground and sprouting new tillers. Ughh!

[farmaholic]

Mbgrower, because you well know the monetary value of the Producer's contibution to the finished consumer product is dick all. Probably ALOT more value tied up in all the freight involved.

[ado089]

There's probably more value making the box the cereal goes in.