Palm & Veg Report, August 2019

We would love to be able to tell you the spot markets have been really busy over the last month but that would be in the words of Donald Trump, “fake news” because they have been anything but! The month of July turned out to be an incredibly gloomy and lifeless month and even though there have been pockets of activity here and there the chemical, vegetable oil and CPP markets all remain very routine. The benchmark 40,000 freight rate for palm into Rotterdam is presently ten dollars higher today compared to a year ago which surprised us to be honest, however the rates for intermediate size vessels on the same run remain virtually unchanged.

Dorab Mistry indicated in a recent speech that in 2019, World Palm oil production will be increased by at least 3.5 m in 2019. Malaysia is expected to produce 20.3 m this year and Indonesia is expected to rise to 45 m. A staggering 45 m tonnes of vegetable oil will go for Bio Diesel in 2019, 17 m from palm oil alone and some argue that producers are still far too dependent on bio diesel to support prices.

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James Woolfson
Palm & Veg Report, July 2019

It is hard to measure the repercussions of the tensions that were building up in the Middle East last month and just how this might impact shipping markets moving forward. One thing for sure is that crude oil prices and insurance premiums have already risen noticeably higher over the last couple of weeks as a direct response to the spate of mysterious attacks in the Straits of Hormuz and sea trades in and out of this region remain volatile. Markets need to see an end to the geopolitical fog that has also been hanging heavily on global trade for most of this year before any feel good factor is restored because right now market activity is still rather limp and lifeless.

 

CPP markets in the East and in the West are fluctuating by the day, however, globally the  chemical, acid and Vegetable oil markets remain rather subdues indicating that the summer markets are now in full swing

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James Woolfson
Palm & Veg Report, June 2019

It has felt unnervingly quiet over the last two or three weeks but we do expect or should we say ‘hope’ that activity will resume now that we are nearing the end of the public holiday season as it has been incredibly hard to build any sort of momentum recently. The CPP markets out of the AG firmed up during the second half of last month but globally CPP markets remain rather subdued at the moment. The Pacific basket is currently averaging around US$/PD 14,000 compared to US$/PD 9,500 in the Atlantic, meaning there is little appetite to position ships from the Fareast to the West. Crude oil prices have slumped 8% over the last month, partly because US stockpile levels fell less than expected but also because of raised fears about a slowdown in the global economy.

When you accumulate the understanding to know why pizza is made round, is placed in a square box and is eaten in triangles you might be able to work out why suddenly hundreds of thousands of tonnes of used cooking oil (UCO) is being shipped around the world every month. Sceptics are starting to wonder if this is recovered oil or just regular vegetable oils packaged to look like UCO. When big subsidies are involved shady things can take place just like they did during the good old days of ‘splash and dash!’

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James Woolfson
Palm & Veg Report, May 2019

Freight markets have remained surprisingly calm over the last few weeks leaving us with very little gossip to report on this month for which we can only apologise. Unfortunately a possible fall out in the U.S-China trade talks could change everything in an instance so watch this space. The unprecedented and devastating typhoons which affected major regions of East Africa and India last month had a significant impact on shipping and lots of time and energy has been consumed trying to replace late vessels and reallocating cargo stems.

ENI may well be under renewed pressure from Greenpeace to phase out palm oil for biodiesel blending but the EU’s appetite for biodiesel continues to grow. Imports tripled in 2018 compared with 2017, after anti-dumping tariffs on fuel from Argentina and Indonesia were suspended. Reported figures indicate that in 2017 the EU imported 1.165M tonnes of which 387,000 originated from Indonesia compared to a whopping 3,329M tonnes in 2018 of which 785,000 mtons originated from Indonesia. Whether you agree with the food for fuel argument or not, this remains spectacularly good news for shipping!

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James Woolfson
Palm & Veg Report, April 2019

The prospects for a China-US trade resolution are in flux and the calamitous Brexit negotiations have left us all in a permanent state of confusion. The EU also risks opening up a trade war with Malaysia over its grossly unfair policies aimed at reducing the use of palm oil in bio fuel. Notwithstanding all the negative headlines, we are pleased to report that most of the shipping markets that we operate in have had a much more upbeat and positive first quarter. The CPP and chemical markets here in the West and out in the Far East have been extremely lively of late and this has put added pressure on most of the edible oil trade routes. The tropical oil markets have been rather over crowded with time charter and spot cargoes recently, so taking the right decision at the correct time has been very important.

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James Woolfson
Palm & Veg Report, March 2019

Edible oil markets are still plodding along at the sort of pace we would expect them to do at this time of the year and freight rates are broadly the same as they were a month ago. Most people share our view that the chemical, CPP and vegetable oil markets will not tumble to the depressing lows levels of activity that we experienced during the 2nd and 3rd quarter of last year, which was a period of slow torture for everyone, although it’s still difficult to say with any accuracy where we are heading. CPP markets, which continue to have a significant influence on edible oil freight rates are still yo-yoing along at the moment and sentiment is softening, especially out in Asia where average earning are back to the US$ 10,000 per day levels again.

The fall out from this years POC conference in Malaysia is still unclear, however our initial feeling is that most people from both the trading and shipping sides of the fence were a lot more upbeat this year compared to last. Palm oil imports to the EU, purely for edible usage may well have dropped off over the 5 years, because of food labelling concerns, but this shortfall has been replaced by the significant increase in the demand for bio fuel and the biofuel markets in Spain, Italy, Scandinavia and Russia should continue to grow exponentially this year.

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James Woolfson
Palm & Veg Report, February 2019

Every year brings a mixture of events that sway the shipping markets one way or another and this year is no different from any other. We started the year in a very high gear, sentiment was upbeat and transactions were plentiful. Unfortunately, as we have witnessed so many times in the past, the markets have now lost some of that upward momentum and freight rates are dipping slightly lower as a result. It would be fair to say that the mood is no longer quite as upbeat as it was a month ago, but it is still significantly improved from where we were six months ago. Freight markets in Asia are expectedly quiet this week as they welcome in the year of the porky pig, a year that is supposed to be good for making money and a good year to invest, but we will all have to wait until business resumes again in a couple of weeks time to see which way the markets trend next.

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James Woolfson
Palm & Veg Report, January 2019

The shipping and commodity markets suffered huge losses in 2018, a year packed full of high drama and low comedy, and all hopes are now pinned on 2019 being a better year. The IMO 2020 global sulphur cap is expected be a highly disruptive factor when introduced later this year, according to most analysts anyway, although to what extent this will actually affect the market is unclear. The ongoing trade dispute between China and the USA is undoubtedly still influencing global trade patterns and this will continue until a solution is found. In the short term the ship owning community which enjoyed a massive end of year boost in earnings, is still trying to remain optimistic that the freight markets will yield better results this year compared to last. Charterers on the other hand are trying to recover from a gruelling year for the commodity business and although competition remains fierce, increased consumer confidence is expected to eventually boost demand and thus commodity values moving forward.

Keep your tin hats on and just be thankful that we are not in retail!

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James Woolfson
Palm & Veg Report, December 2018

We are finally nearing the end of 2018, a year littered with words beginning with the letter ‘C’, contraction, consternation, confusion, and consolidation and one starting with a ‘B’ for Brexit! Few in our industry will argue that this has been a year which will be remembered as the year we just want to forget. The one positive is that markets are very active at the moment so it looks like we will close the year on a significantly busier note than when it started. All things being equal 2019 should be a better year although it’s hard to say for sure exactly where we are heading as all the basic economic indicators are still very confusing.

Only one month ago those talented and clever commodity analysts predicted crude oil prices might reach $ 100 dollars per barrel by the year end. As is so often the case, the trap door opened and oil prices have been in a rapid decent ever since, losing close to one third of their value over the last two months. How much this has influenced the CPP markets globally is hard to say but one thing for sure is the CPP markets are extremely lively at the moment, in fact they are booming, and all product tanker owners are taking every advantage of the huge spike in earnings, and frankly after a pitiful year who can blame them.

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James Woolfson
Palm & Veg Report, November 2018

The edible oil freight markets are more or less unchanged from a month ago at least from a volume traded and number of cargoes fixed perspective; however freights have started to nudge slightly higher in most of the main export areas including the Black Sea, South and Central America and out of Asia. These modest increases are mainly driven by higher bunker prices but also a tightness of open tonnage in the West as they pursue better returns in CPP which have most certainly improved from the dismal lows earlier this year. The market out of the US Gulf is especially firm at the moment and there appears to be some measured optimism of further rises over the winter months especially if we experience a colder than normal winter.

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James Woolfson
Palm & Veg Report, October 2018

It has been a bruising year for everyone involved in the shipping industry and some companies could well require life-support if things don’t improve soon, especially those owners who have had vessels sitting spot for long periods of time waiting for a workable cargo! Owners operating vessels within Europe, the Atlantic basin and out of South America have probably suffered the most as these markets have been particularly gruesome. The geopolitical tensions between the US and China don’t seem to be abating and both the commodity and freight markets are extremely difficult environments to operate in at the moment and rapidly escalating crude oil values is only adding to the gloom. The last time bunkers topped 500 US/dollars per tonne in Singapore was almost exactly 4 years ago to the day in 2014. Palm oil rates averaged mid US$ 80ies for 18,000 MTS and low US$ 60ies for 40,000 MTS from 2 Malacca Straits to Rotterdam then. The EPCA was also being hosted in Vienna not that that has anything what so ever to do with it

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James Woolfson
Palm & Veg Report, September 2018

The US-China muscle flexing trade war and continued political uncertainty is still disrupting the global trading environment and most shipping markets, with the exception of dry bulk, are still facing a major headwind. The currency markets also fell last month amid fears of contagion over Turkey which hasn’t helped. The good news is that someone far cleverer than us, from one of the larger ship broking firms starting with a ‘C’ remains confident that activity will increase and that higher freights will prevail, unfortunately what they failed to say is when! We share the more commonly held view that the CPP and Chemical markets are not going to change anytime soon but we do think the forth quarter of this year will yield increased activity for the edible markets as this is the time of the year when they tend to improve.

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James Woolfson