OREANDA-NEWS. June 20, 2016. Soybean exports typically start rising out of South America in the second quarter and peak in June and July as the new harvest comes down to ports.

This year's harvest has been delayed by bad weather, nevertheless, front-haul freight rates have risen in the last three months.

The front-haul route out of Brazil is one of the most lucrative routes at this time of year in the Atlantic, with US stocks depleted, and attracts a lot of ballasting vessels from the Atlantic and Pacific Basins.

If you look at freight rates to take a 60,000 mt soybean stem from Santos, Brazil, to Qingdao, China, freight rates have steadily risen on the route from \\$13.15/mt on March 1 and peaked at \\$18/mt on May 18, before closing at \\$16.75/mt on June 10, a 27% rise in value over the period.

This route saw higher prices because of the greater volume of cargo that has been marketed and the price spiked in mid-May because there was a positonal squeeze on tonnage, with few vessel able to make end-May loading dates.

However, the whole dry-bulk market remains very long on tonnage and even though exports are projected to be higher than last year, the outlook is still quite bearish, with excess tonnage expected to cap price increases.

According to US Department of Agriculture data, Brazilian exports of soybeans and soybean meal are projected to rise to 75.1 million mt in the current harvest, against 65 million mt last year, a rise of 15%.

Brazilian soybeans have been priced more competitively than the US, where exports are actually expected to fall by 7% to 57.7 million mt. However, Chinese import demand is projected to rise by 6% to 83 million mt in the current harvest.

So these exports will still continue to exert upward pressure on freight rates in the wider Atlantic basin.