Japan-bound grain ships reported unable to unload

At least nine vessels carrying grain bound for Japan are unable to discharge their cargoes due to problems at the country’s ports hit by last week’s earthquake and tsunami, trade sources said Wednesday.

Concerns about delays or cancellations to Japanese shipments sent benchmark corn and wheat futures contract prices lower in Chicago on Wednesday.

Japanese ports have sustained damage, disrupting supply chains and making imports difficult.

The sources said some of the vessels were at anchorage in Japanese waters or were slowing down their expected arrival time as they could not offload their cargoes which included grains from the U.S. and soybeans from South America.

“The ships are waiting for clarity as to what is going to happen,” one shipping source said. “That is creating an issue for grain houses.”

Corn and wheat futures prices have been volatile this week due to prospects of a temporary reduction in purchases by Japan, the world’s biggest importer of corn, third-largest of soybeans, and fourth-biggest wheat buyer.

A European trader at a global trading firm said one or two grain cargoes shipped by their company had been diverted to southern Japanese ports following the quake in the north.

But the company, which was shipping U.S. corn and wheat to Japan, had not experienced rerouting to other countries and had not seen cancellations of orders or use of force majeure clauses by Japanese buyers, he said.

“I think they are doing everything they can to get the grains in,” he said of Japan, adding his firm’s ships had not experienced any delivery delays.

Another source said their ships were looking to find alternative ports to dock.

“The cargoes have been put on slow steaming and will arrive later than planned. There is no plan to resell them yet,” the source said. Slow steaming is where ships reduce fuel consumption due to slower speeds employed.

Adding to complications, shipping sources said a number of ship owners were considering avoiding high-risk areas in Japan and could reroute their vessels due to fears over the potential spread of radiation.

Higher costs

Japan’s nuclear crisis appeared to be spinning out of control Wednesday after workers withdrew briefly from a stricken power plant because of surging radiation levels and after a helicopter failed to drop water on the most troubled reactor.

Shipping sources said dry bulk vessels, carrying commodities including grains and coal, as well as oil tankers, could move to avoid affected areas of Japan.

“Some owners are definitely considering routing differently to avoid any potential radiation cloud, and passing that on to charterers (those looking to hire ships),” a shipping source said.

Another said freight costs were expected to rise if cargoes were rerouted.

“This will add two to three days’ voyage time and rates will have to be adjusted,” the source said.

— Additional reporting for Reuters by Valerie Parent in Paris and Ikuko Kurahone in London.

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