Mar 30, 2021

Suez Canal Unblocked

Will take a few weeks for ship traffic to get back to normal

Suez Canal Unblocked

  • 140 ships are expected to go through the canal today following the release of a grounded container ship.
  • The ship became jammed diagonally across a southern section of the canal in high winds early last Tuesday, halting shipping traffic.
  • The massive ship has been straightened in the canal and further tugging operations were able to start when the tide rose.
  • About 15% of world shipping traffic transits the Suez Canal in any given year.
  • At least 369 vessels were waiting to use the canal, including dozens of container ships, bulk carriers, and oil tankers
  • Some shippers rerouted their cargoes around Africa, adding about two weeks of extra sailing and extra fuel costs.
  • Ocean freight rates are sitting at record highs and would have likely surged even higher if the canal had remained closed.

FBN’s Take On What It Means: It’s expected it will take a few weeks for ship traffic to get back to normal. A lengthy closure would have snarled logistics and caused a significant cost increase for exporters in the EU or Black Sea that would be sending grain supplies to Asia. US exports may get a small bump from the closure, but it will not last long now that blockage is removed.

FBN
FBN

Black Sea Export Prices Lower

  • IKAR reported Russian 12.5% protein wheat was down $16 per tonne to $257 per tonne FOB last week.
  • Sovecon pegged Black Sea wheat export prices down $21 per tonne at $253 tonne FOB.
  • Ukrainian wheat for export was down $20 tonne last week to $254-$260 per tonne FOB according to APK-Inform.
  • Corn export prices were reported at $248-$255 per tonne FOB, down $7 per tonne for the week.
  • According to reports, China may have purchased more than 3 million tonnes of Black Sea corn for Oct-Dec shipment last week.
  • Weather for the new wheat crop remains favorable with good rainfall expected this week in key growing areas.
  • If favorable weather continues, Ukraine’s grain crop could grow to 75 million tonnes this year from 65 million tonnes last season.

FBN’s Take On What It Means: Spring grain planting is just getting underway in Ukraine, a few weeks later than usual due to cool temperatures. Soil moisture profiles appear to be supportive to a good start to the growing season as the region looks for production to bounce back from last season’s less than ideal conditions. Exporters have been aggressively pricing old crop supplies which has weighed on the markets.

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Kevin McNew

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Magazine

Marketwatch: Jan, 18

US Corn Price Idx: ZCPAUS.CM

open: 5.7667
high: 5.8486
low: 5.7266
close: 5.8288

US Soybean Price Idx: ZSPAUS.CM

open: 13.366
high: 13.376
low: 13.2328
close: 13.2696

US Hard Red Winter Wheat Price Idx: KEPAUS.CM

open: 7.3061
high: 7.3384
low: 7.2334
close: 7.2454

US Soft Red Winter Wheat Price Idx: ZWPAUS.CM

open: 7.0114
high: 7.0566
low: 6.9566
close: 7.0014