On the 19th week the depleting of grain export quota has let to the collapse of freight market in Azov sea region. Frate rates have reached the level of USD 15-16 for 3000 mts wheat shipment from Azov to Marmara sea ports.
Despite the numerous appeals of grain traders to the Ministry of Agriculture complaining that most of the quota was exhausted due to the use of incomplete customs declaration of goods, and requests for the possibility of exporting already purchased and shipped goods, no measures were taken to meet the traders needs.
Currently, the only chance for traders to export their cargoes is the Ministry of Agriculture monitoring of quota appearance due to the refusal by some traders of previously submitted export declarations and its provision to other companies. So, last Thursday, April 30, 2020, more than 60 thousand tons became available for export, which were exhausted in a few hours.
Most Russian grain companies were forced to stop trading activity early this season and are waiting for the start of a new grain season to resume their work.
Such a sharp decrease in the amount of grain cargo in the Azov region, as well as a minimum level of coal cargoes for export, has led to a large accumulation of the spot fleet and a significant reduction in freight rates (by three dollars compared to the level of the previous week).
The Caspian freight market has been also greatly affected by end of quota what has led to the drop in freight rates this week to USD 27 PMT for shipment 3,000 mtons of corn from Astrakhan to NIP.
The inability to export grain cargo may favorably affect inner river transportation in Russia, as traders will seek to sell previously purchased goods on the domestic market.
There is also low activity on the deep sea market, which is why freight rates continue to decline. The level for shipment of a 30 000 tons
deadweight cargo from Novorossiysk to the ports of the Mediterranean Sea has already reached the level of USD 13-14 PMT. As in the Azov and Caspian markets, the deep sea market has a large number of open tonnage.
Many companies decided to temporarily suspend their export activities because of the uncertainty due to coronavirus and quarantine in many countries, so as not to risk and avoid possible large financial losses. The end of quarantine in European countries on May 12 and the resumption of work of most companies can positively affect the freight market.