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Ocean Grain Transport Costs Jumped in 2017

Ocean freight rates for grain transport spiked in the second half of 2017 due to high bulk freight demand and a softening of vessel supply growth.

As of December 5 of last year, the price to ship one ton of grain from the U.S. Gulf to the EU was $30, according to the International Grain Council (IGC), up from $22 earlier in the year. At the same time, the price to ship one ton of grain from the U.S. Gulf to Japan was $43 - a 52-week high.

One thing of note in the dry bulk markets of last year were the high volumes of grain exports from the Black Sea region, with Russia and Ukraine exporting a combined 40.3 million tons of grain between July and November 2017, compared to 35.9 million tons the year before. And although freight rates for grain out of the Black Sea to Egypt have been climbing, experts do not believe that this will have a negative effect on exports, although it may affect the competitiveness of Black Sea grain in farther global markets.

Looking forward, it is the Black Sea that is expected to be a decider in global grain trade going into 2018, with Ukraine expected to ship between 41.5 million and 42 million tons, and Russia expected to see new record exports of between 43 million and 44 million tons for the 2017-2018 season.

Although volatility in shipping is expected to lessen, high grain volumes are expected to support higher freight rates for much of 2018.

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