CNS Canada –– The Baltic Dry Index is finally starting to show some stability after setting fresh record lows on a near-daily basis for the past few months.
The BDI set a record of 290 points on Feb. 10, but has since posted gains for the past four sessions, settling at 301 on Tuesday. It was above 1,200 as recently as August 2015, and had never been below 500 points since records began in 1985 prior to its latest downturn.
The BDI is compiled daily by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea, including grain.
An overcapacity of ships, the slowdown in Chinese demand for building materials, weakness in crude oil and declining commodity prices have all been cited as contributing factors to the lower freight rates, according to freight analysts.
The lower freight rates even the playing field for Canadian grain and oilseed exporters into many markets. However, declining rates are already causing some shipping companies to dock their boats and others to go out of business completely.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.