Grain-Ship Rates Seen Falling 50% as Worst of Brazil Delays Pass

Rates for Panamax ships that collect crop cargoes from Latin America may fall by about 50 percent in the next four months as delays dwindle at Brazilian ports and vessel supply rises, a shipping hedge fund said.

Daily earnings for the ships hauling about 75,000 metric tons of cargo will slump to between $4,000 and $5,000 a day by August, Philippe Van Den Abeele, London-based managing director of Castalia Fund Management (U.K.) Ltd., an adviser to a hedge fund trading freight swaps, said by phone today. Costs slid 2.9 percent to $8,214 a day today, their sixth straight decline, according to the Baltic Exchange in London.

Delays for vessels loading corn and soybeans at Brazil’s two biggest ports for agricultural exports rose to a record this month, according to SA Commodities. Those waiting times are now starting to diminish, freeing up vessels to compete for cargoes at a time when the supply of Panamaxes is expanding faster than any other class of dry-bulk commodity carrier, according to Abeele. Rising shipments from Argentina won’t be enough to prevent a decline, he said.

“The Panamaxes have given up the ghost,” Abeele said. “The grain market provided support from mid-February until about a week ago. It seems that in the Panamax market that the queues are going down. They are going to have a tough time.”

Three out of four vessel classes tracked by the Baltic Exchange declined. Capesizes, the biggest type monitored by the bourse, advanced 2.9 percent to $4,883 a day. Costs for the vessels may rise later this year because of additional bookings to haul coal and iron ore, according to Abeele.

Rates for Supramax vessels that carry about 50,000 tons of cargo slid 0.8 percent to $9,288 a day. Handysizes, the smallest tracked by the Baltic Exchange, fell 0.1 percent to $8,022.

Forward freight agreements that traders use to bet on future shipping prices indicate Panamaxes will earn an average of $6,575 a day in the third quarter, according to data from Clarkson Securities Ltd., a unit of the world’s largest shipbroker.

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