Grain shipments are also expected to get a boost of 6% during the 2013–2014 season compared to the previous season’s negative 3%, based on Clarksons’ projections. While grain shipments make up a smaller part of the overall dry bulk trade compared to coal and iron ore, Navios Maritime Holdings Inc. (NM) notes that it accounts for a larger portion when measured in vessel days, because it takes longer to load and discharge.

Grain trade revival

Based on the USDA’s (the United States Department of Agriculture’s) projections, total grain and oilseed shipments are expected to rise to 475 million metric tonnes during the 2013–2014 marketing year, rebounding from an estimated shipment of 417 million metric tonnes in 2012–2013.

Global shipments fell in 2012–2013, as record drought swept across farmlands, destroying crops and denting trade growth. Only few quantities of grains and oilseeds were available for export, and the worldwide inventory hit record lows for many countries.

But for the marketing year 2013–2014, the weather has been favorable. Farmers in the United States, which made up more than 24% of grain exports in 2011, saw record yields and huge harvests from corn and soybean crops. As crop prices have fallen, countries will look to replenish their inventories. Stockpiles of corn and wheat in the United States were recently revised lower on prospects of strong exports. While these are positive trends, global grain and oilseed shipments could face some headwinds in the medium term.

Headwinds

At the beginning of this year, Brazil’s agriculture minister, Antonio Andrade, said Brazil could see record soybean output this year based on favorable weather and significant fertilizer applications. Yet soybean and corn prices have risen lately on concerns that the driest rainy season in decades will persist in Brazil and hurt production output this year. If drought persists, grain shipments could be negatively affected.

Higher crop prices might entice farmers in the United States to use more fertilizers and plant more crops this year, which would be long-term positive. But last year was one of the best years for crop growth. It was really cool, with lots of rain and some late summer heat towards the end. Who knows what’s going to happen this year?