Ocean freight index hits five-and-a-half year highs


MarketsFarm — The Baltic Dry Index (BDI) has steadily increased over the past few months, hitting its highest levels in five-and-a-half years.

The BDI settled Tuesday at 2,011 points, the highest level for the ocean freight rate indicator since January 2014. The BDI has been on a steady uptrend since hitting a two-and-a-half year low of 595 points in February.

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.

Solid demand for capesize vessels moving iron ore from Brazil has been a main driver for the index, according to industry reports. The smaller panamax class, which is often used to ship grain, is being pulled up with the larger capsize vessels as iron ore shippers facing a tight spot market are reportedly booking more panamax ships.

The panamax index on Tuesday hit 2,052 points, its highest point since December 2013.

Higher freight rates can hinder Canadian grain exports by heightening the freight disadvantage the country often faces internationally due to its distance from major demand centres, such as Asia and Europe, compared to its competitors.

— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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