Several major global developments are currently affecting regional demand and availability of dry bulk commodities (including wheat, iron ore, and thermal coal). Chief among these developments is that Japan, which imports approximately 3 million tons of wheat from the United States each year, has suspended imports of US wheat. The imports have been suspended as Japan has found genetically engineered wheat in a recent shipment from the United States. South Korea, which imports approximately 2.5 million tons of wheat from the United States each year, has also suspended imports of US wheat due to the recent findings in Japan. There is a chance that European buyers could suspend US wheat imports as well. Tests are now being conducted by United States Department of Agriculture (USDA) and other international agencies.

Another major development impacting Asian dry bulk commodity imports has seen China continue to import a growing amount of iron ore from smaller “minor” exporters, including South Africa, in order to compensate for a decline in Indian iron ore exports. Indian iron ore exports have remained extremely low due to several Indian mining and export bans. Recently released data shows that China imported 4.1 million tons of iron ore from South Africa in April, 1.6 million tons (64%) more than was imported in March and 1.2 million tons (41%) more than was imported in April 2012. April marked the third largest amount of iron ore that China has ever imported from South Africa (the record is 4.2 million tons imported in June 2009).

Elsewhere in China, Chinese hydropower production typically rises during May through August of ever year due to a seasonal increase in rainfall and this is poised to occur again this year. Most recently, China produced 50.2 billion kilowatt hours of hydropower in April. This was 2.4 billion kilowatt hours (5%) more than was produced in March and 6.4 billion kilowatt hours (15%) more than was produced in April 2012. Hydropower production in China is on the rise and will likely peak in August. China’s annual surge in hydropower production limits thermal-coal derived electricity production and demand for coal. China’s typhoon season begins in July and lasts through September. The severity of this year’s typhoon season will determine just how much hydropower is produced in China. If a large amount of typhoons make landfall, Chinese hydropower production will surge and demand for thermal coal will come under moderate pressure.