Talking ‘Bout A Revolution of Trade flows in the Grain Market

Joyeaux Quatorze Juillet! As it is France’s Fête Nationale, we at VesselsValue wanted to celebrate all things French.

Commentary from Vivek Srivastava, Senior Trade Analyst at VesselsValue.

Our near neighbours on the continent are one of the world’s leading exporters of cereal grains and other agricultural products. The same used to be true of both Russia and Ukraine before the conflict broke out in late-February. Financial and economic sanctions on the former and war in the latter have left a vacuum in the global grain market. So, we thought we would examine the latest VV Trade data and see to what extent France is able to fill the void

Figure 1: France Dry Bulk Exports, Excluding Capesize

Agricultural cargoes are predominantly shipped from France on Dry Bulk Carriers, of Panamax size and smaller (note: these also include occasional steel related cargoes from ArcelorMittal in Fos, but not agricultural cargoes shipped in containers, so net/net it is a good proxy). As shown in Figure 1 above, the four months since the war broke out have not been great for French export volumes, trending below the five year average and towards the bottom of the five year range. But there is marked seasonality, as with all large agricultural exporters, and the longer term response will not become apparent until late summer/autumn. Looking at the destinations of France’s grain shipments is somewhat more instructive.

Figure 2: France Dry Bulk Exports (Excluding Capesize), by Destination

As shown in Figure 2, French exports have so far this year been bid away from their traditional short haul markets, towards newer longer haul markets. Compared to January to June averages over the last five years, Europe bound volumes are 28% lower and Africa bound cargoes are 9% lower. But shipments to the Middle East are 15% higher and those to Asia Pacific (from a relatively small base) are 110% higher. So, to paraphrase a Dutch beer brand, it seems France is replenishing the markets other grain exporters cannot reach.

Source: VesselsValue