May 17, 2007

Higher freight charges to affect China's grain imports

China's grain cost is expected to increase by US$ 8 to 9/tonne in a month as freight charges for ships carrying grain from the US or South America to China have risen nearly 12 percent since Apr 26.

Freight charges for grain from America to China have risen from US$69.9 per tonne on April 26 to US$77.9 by May 15, increasing 11.5 percent. Grain freight charges from Argentina to China also rose from US$75.3 on April 26 to US$84.7, a 12.5-percent rise.

In January, freight charges for grain delivery to China from the US was just US$49 per tonne whereas that from Argentina was just US$56 per tonne.

As China is the world's largest soy importer, freight charges would have a greater influence on the prices of soy imports. Soy prices are influenced by three factors: CBOT futures, FOB prices of soy loaded from the Gulf of Mexico and freight charges.

Higher volumes of global trade this year meant that international freight charges have been growing fast, with some nearing or exceeding historical highs reached in 2004.