Palm & Veg Report, March 2019
Palm & Veg Report, February 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for edible usage may well have dropped off over the 5 years, because of food labelling concerns, but this shortfall has been replaced by the significant increase in the demand for bio fuel and the biofuel markets in Spain, Italy, Scandinavia and Russia should continue to grow exponentially this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.
Palm & Veg Report, January 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.
Palm & Veg Report, December 2018
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!
Palm & Veg Report, November 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.
Palm & Veg Report, October 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.
Palm & Veg Report, September 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
Palm & Veg Report, August 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.
Palm & Veg Report, July 2018
Clean petroleum markets spiked during the middle of last month East of Suez which added some much needed spice to an otherwise bland market. In direct contrast clean earnings West of Suez are worse than awful at the moment. Not surprisingly business in virtually every other sector of the shipping markets has been slow and uninspiring over the last month, leaving us all feeling a little bit like mice in a gas filled maze without an exit! There is little to indicate that shipping fortunes will turn around before the 4th quarter of this year at the earliest and some people appear to have already written off 2018 as another year to forget!
Crude oil prices dropped by more than 4 % in a day during the middle of last month as Saudi Arabia increased its exports to Asia and headlines suggested that the US could also add to the global supply and tap into strategic reserves to stabilize markets when sanctions on Iran come back in to force later this year. This news appears to have reversed the upward trend in bunker prices which will come as welcomed news to ship owners.
Palm & Veg Report, June 2018
It’s mid summer and guess what? Global freight markets like many of the top world cup football teams this year, except for England of course, have gone to hell in a handbag! The major difference this year compared with previous years is that fuel prices are continuing to rise and freight rates are struggling to keep up, which has created the worst possible combination if you are a ship owner/operator. Trading activity has also been fairly lacklustre in virtually all of the edible oil markets making it just as challenging for those trying to make a living on the other side of the fence.
Some longer term encouraging news for the trade is that rising demand and stagnating domestic production is expected to boost India’s vegetable oil imports to 25 million tonnes by 2030, from 15.5 million tonnes in 2017, the problem is most of us will be long gone before this takes off!
Palm & Veg Report, May 2018
Global edible oil markets are still failing to ignite at the moment especially in South America where the soya bean oil markets have been as quiet as a Tesla engine for months now and if it wasn’t for all the annoying GDPR messages clogging up our inbox we would probably be sitting here wondering what to read! The palm oil markets were a trifle busier compared to the month earlier although spot freight rates are still flat lining and markets have so far failed to react to the rapid up-tick in crude oil (bunker) prices which tipped 460 per tonne in Singapore on the 23rd of May. Chemicals and UCO/Biofuel exports from Asia to Europe have been steady but global chemical markets remain very anaemic and most people in this sector are already prepared for a challenging summer. Fresh rumours are circulating again that PFAD will be declassified as a waste product and how this will impact trade flows to Europe in the future will be very interesting to follow.
Palm & Veg Report, April 2018
It won’t come as a major surprise to hear that the edible oil freight markets are materially the same was they were last month and hindsight is the only exact science we can offer you at the moment on where these crazy markets are heading! The liquid oil markets are painfully slow in the Western Hemisphere and the tropical oil markets East of Suez have been very stop-start this month. The East and Western CPP markets are charting in a completely opposite direction to one another as the Atlantic basket, which had dipped to as low as 5,700 per day a month ago is now averaging US$ 11,175 per day and in the Far East, the Pacific basket is now averaging US$ 8,000 per day compared with US$ 12,000 a month ago.
Crude oil hit its highest price level in three and a half years on the 18th of April due to a supply squeeze and it has continued to edge higher ever since and some forecasters believe that crude values could possibly rise by another 15 % this year. Whilst we know from past experience that this doesn’t always influence spot freight rates in the short term, as it takes a basket of other factors to do that, however, we think it is only a matter of time before it does.
Freight markets are feeling rather twitchy at the moment especially out in Asia where activity, particularly tropical oils, has been somewhat muted. That said a couple of punchy time charter trip fixtures were concluded this week at increased levels over last done. If past years have any bearing on the future then we do expect the next quarter to be challenging as this is the time of the year when activity has a tendency to dip out in Asia. The escalating trade stand off intensifying between America and China has been hugely unsettling and this is now weighing heavily on all the major commodity markets around the world at the moment. Combine this with the overcapacity of tonnage, not only in the MR sector of the markets, but in the stainless steel sector also where another 156 NB’s are still on the order books between now and 2020, it’s no wonder some people think we are facing further headwinds.