The Baltic Dry Index (BDI), a major indicator of shipping rates, has moved higher for 12 straight sessions, hitting 973 points on Monday. That compares with the four-year low of 393 points in mid-May.

The BDI is compiled by the London-based Baltic Exchange and provides an assessment of the price of moving major raw materials by sea. The overall BDI includes sub-sectors for the different classes of ocean vessels including capesize, panamax and supramax.

The panamax index tracks the 60,000- to 70,000 tonne-capacity vessels that often carry grain or coal. It was pegged Monday at 884 points, roughly double its lows of a month ago.

While rising freight rates may be a sign increased optimism in the global financial markets, they can also put pressure on Canadian grain exports. Canada is at a freight disadvantage compared to its competitors into some markets, and higher rates make that disadvantage more pronounced.

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The Baltic Dry Index (BDI), compiled by the London-based Baltic Exchange, provides an assessment of the price of moving major raw materials by sea. The BDI has fallen for 13 consecutive sessions, hitting 453 points on Tuesday.

That marks the lowest level in four years, and is only slightly above the record low of 290 points hit in February 2016. The index was at five-year highs around 2,500 points as recently as September 2019.

The overall BDI includes sub-sectors for the different classes of ocean vessels — including capesize, panamax and supramax.

The capesize index accounts for the largest vessels that typically carry iron ore or coal. They are too big to travel through the Panama or Suez Canals, and must go around the Cape of Good Hope or Cape Horn. That index fell into negative territory for the first time ever at the end of January, and settled Tuesday at minus 133.

Coronavirus fears have cut especially into iron ore demand, with steel facilities and construction sites in China temporarily shuttering operations, according to reports. Recent flooding in Minas Gerais, Brazil has also limited exports from the key iron-producing region.

The panamax index tracks the 60,000- to 70,000 tonne-capacity vessels that often carry grain or coal. It has also fallen over the past few months, hitting 526 points on Tuesday.

A slowdown in the demand for shipping is generally seen as a sign of a softening global economy. However, lower freight rates can also lend some support to Canadian grain exports. Canada is often at a freight disadvantage compared to its competitors into some markets, and lower rates help reduce that disadvantage.

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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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The overall Baltic Dry Index (BDI), which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertilizer, rose for the sixth consecutive session by two points or 0.64 per cent, to 315 points.

The index touched an all-time low of 290 points on Feb. 10, marking the lowest level since records began in 1985.

The dry bulk market is expected to remain under pressure as a gloomy outlook for global demand persists.

The capesize index slipped 13 points, or 5.91 per cent, to 207 points.

Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, dropped US$130 to $2,642.

The panamax index slipped three points, or 0.84 per cent, to 355 points. Average daily earnings for panamaxes fell $30, to $2,844.

Among smaller vessels, the supramax index rose 16 points, to 286, while the handysize index was up five points at 198.

— Reporting for Reuters by Nithin Prasad in Bangalore.

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