Mixed prospects for grain and soya trade

Headwinds facing commodity imports into countries around the world are intensifying amid restraints on economic activity. Growth prospects for global seaborne dry bulk trade have deteriorated accordingly, and a flat or possibly weaker period into 2023 now looks predictable.

 

A recent analysis by the OECD organization observes that “the global economy has lost momentum” amid inflation “reaching levels not seen since the 1980s”. Central banks have been forced into a rapid tightening of monetary policy, contributing to a pattern where “GDP growth has stalled in many economies and economic indicators point to an extended slowdown”. Accompanying weakness in China’s economy has also adversely affected international dry bulk commodity movements.

 

Limited growth in the grain and soya sector during the twelve months ahead may be seen, based on the latest US Department of Agriculture estimates. Forecasts for the 2022/23 trade year now starting suggest that world trade in wheat, corn and other coarse grains, plus soyabeans and meal could increase slowly by about 5mt (million tonnes) or under 1%, reaching 666mt, after no growth in the preceding period.

 

A downturn in the soyabeans and meal segment could be reversed. As shown in table 1 world trade in 2021/22, which has just ended, fell by an estimated 11mt or 5% to 218mt, mainly reflecting China’s 10mt reduction in imports. Over the next twelve months Chinese buyers’ demand is expected to recover while other importers could see growth, raising the world total by 6% to 230mt.

 

Several weakening performances among importing countries have been affecting seaborne coal trade recently, possibly preventing a global increase during 2022 as a whole or limiting it to a minimal percentage. Contrasting with a strong upwards trend in Europe’s import requirements amid the tight regional energy market, purchases by China have diminished.

 

During the first eight months of 2022, coal imports into China (including some overland movements) were down by 15% to 168mt based on official figures. One influence was subdued energy demand while the economy remained sluggish. Coal production from domestic mines in the same period reportedly rose by 11%, reaching 2.93 billion tonnes, improving supplies. An increased contribution from renewable power generation was another influence.

 

Fading optimism about iron ore trade growth in 2022 as a whole reflects prevailing steel output trends in the main raw materials importing countries and short term prospects for these. In a number of countries demand for the

products of industries using steel has been restrained by deteriorating economic activity.

 

In the January–August period of this year, crude steel production within the European Union fell by 7% compared with the same months a year ago, to 95.3mt, based on World Steel Association data. Japan’s production was down by 5% at 60.7mt, while South Korea’s volume decreased by 3% to 46.0mt. In China, where signs of steel demand weakness have been prominent, mills produced 693.2mt, a 6% reduction.

 

One of the minor bulk commodity trades likely to add substantial volumes this year is bauxite/alumina. The 2021 total is estimated at about 170mt, and some forecasts point to world seaborne movements rising by about 5% in 2022. Chinese imports, a major component of this segment, are expected to increase.

 

Panamax ships (in the 65–99,999 deadweight tonnes size group used in statistics), including Kamsarmax vessels, comprise about a quarter of the world bulk carrier fleet. This segment grew by over 3% in 2021 to 236.6m dwt at year- end (2925 ships) according to Clarksons Research data, as shown in table 2. A similar percentage increase is estimated for this year, assuming slightly reduced newbuilding deliveries and continued low scrapping levels.