HAMBURG- More ships carrying grain were diverted from the Suez Canal to sailings around the Cape of Good Hope this week after attacks on vessels in the Red Sea, shipping analysts said.
“Another 16 vessels were confirmed diverted last week, taking the total grain cargoes diverted to some 3.9 million tons, up from 3.0 million tons last week,” said Ishan Bhanu, lead agricultural commodities analyst at data provider and analysts Kpler.
About 7 million metric tons of grain cargoes normally transit the Suez Canal into the Red Sea each month.
Continued attacks on shipping by Iran-aligned Houthi militia despite US led air strikes on the group’s positions in Yemen mean more bulk carriers transporting grain are avoiding the Red Sea.
The Houthis, who control much of Yemen, have launched drone and missile attacks on ships in solidarity with Palestinians in Gaza. The Houthis say they have been targeting vessels that had Israeli links or had been sailing to Israel.
“Many of the diverted ships are carrying US grain cargoes showing caution with this freight,” Bhanu said.
“One ship which sailed from the US Gulf for China actually transited the Suez Canal southbound but stopped south of Suez for 11 days before heading north again and transiting the canal northbound, then sailing past Gibraltar.”
However, substantial numbers of grain vessels are still sailing through the Red Sea, Bhanu said.
He estimated that some 2.4 million tons of grain will transit the Suez Canal in January compared with 6.6 million tons in December 2023 and 6.4 million tons in January 2023.
“Ships previously chartered are often sailing through the Red Sea but it is increasingly hard to book vessels for new cargoes,” said a German grain trader. “It is obvious that the air strikes are not going to quickly stop the attacks.”
Meanwhile, Euronext wheat futures fell on Friday to near contract lows, pressured by a sharp drop in Chicago and worries about stiff export competition amid ample global supplies.
March milling wheat on Paris-based Euronext was down 1.4 percent at 215.25 euros ($233.78) a metric ton, near a life-of-contract low of 214 euros struck last week.
A lull in demand this week, following a run of purchases by importers last week, has put the focus back on lagging European Union exports and cheaper competition from Black Sea supplies.
“All the gains we saw this week have evaporated today, with Chicago back under $6 a bushel,” a French trader said
“It’s gone very quiet and there’s nothing to give the market impetus.”
Easing prices in Russia and rising volumes in Ukraine’s wartime sea shipping channel were keeping attention on competition from the Black Sea zone.
“Russian export prices for both 11.5 percent and 12. percent protein wheat for February shipment are still holding below $240 a ton FOB,” one German trader said.
Traders said substantial numbers of grain ships previously booked to ship grains through the Red Sea were still sailing, but it is becoming more difficult to book grain ships to make the Red Sea transit.
