Despite the global COVID-19 pandemic adversely affecting many sectors of shipping in recent months, grain exports out of East Coast South America (ECSA) are setting records in 2020. According to data from AXSMarine, this year’s grain season in the region started earlier than usual as many Panamax vessels were sent ballasting from Southeast Asia and the Far East towards the major Brazilian and Argentinian grain ports as early as last December.
What followed can only be described as record breaking. While January was not overly exiting for ECSA grain exports with a 7% year-over-year (YoY) decrease, the following months witnessed export quantities not seen in recent years. Most of it has been driven by Brazilian soybean exports, but it has to be noted that even Argentinian corn and wheat exports were not too phased by the local government’s increase of tariffs. It is against this backdrop that the Panamax fleet swooped in to reap the benefits of the increased demand.
Post January 2020, monthly grain quantities out of ECSA have been ramping up YoY, with a 4% increase in February, 22% in March, 31% in April, 22% in May, and 38% in June. Panamax bulkers were to be the first responding to the hike and gained a larger market share as a result. While the grain market share for this fleet segment averaged at 64% last year, between February and June of 2020 Panamax vessels were responsible for 70% of all grains exported from ECSA. This came at the expense of Handysize utilization dropping by 3%, Handymaxes’ share down 2% and Supramaxes shaving 1% off over the same time period.
It will be intriguing to see how this situation develops further, as Argentine grain exports have shown signs of resurgence in April and May, following a stale Q1 2020 attributed to the new government-imposed tariffs. The Ultramax fleet also seems keen to join in the action as it gained a 5% market share out of the Panamax pie in June alone.
Naturally, most of the demand for the ECSA grains this season came from China, which accounted for over 41% of all ECSA grain exports since the start of 2020. The Chinese started ramping up their imports as early as February 2020, with March and April recording a 54% and 58% YoY increases respectively. This is likely due to China restocking their pig herds in the aftermath of the African Swine Flu outbreak, which led to the loss of up to 60% of the local pig population between 2018 and 2019. It should be noted, however, that Chinese YoY grain import growth from the ECSA eased off to 17%, with the remainder of the demand coming from Vietnam, Indonesia, Malaysia, as well the EU-28 members.
