Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Double whammy for food buyers as freight costs spike amid high grain prices

Economic IndicatorsJul 09, 2021 12:15AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: FILE PHOTO: Corn is piled in the back of a vehicle in a field on the outskirts of Jiayuguan, Gansu province, China September 28, 2020. REUTERS/Carlos Garcia Rawlins/File Photo

By Naveen Thukral and Gavin Maguire

SINGAPORE (Reuters) - Rising costs to ship crops globally are adding to concerns about food inflation that are already at decade-highs and hitting cost-sensitive consumers in import-dependent markets.

The cost of bulk carriers that move grains and oilseeds from production hubs in the Americas and Black Sea to key consumers have roughly doubled from last year due to rising fuel costs, tighter vessel supply and longer port turnaround times amid COVID-19 curbs, according to grain and shipping sources.

"Freight cost has become a real challenge as it comes when we see huge increases in grain prices," said Phin Ziebell, agribusiness economist at National Australia Bank (OTC:NABZY) in Melbourne.

"For years, buyers enjoyed low grain and freight prices. I see no immediate end to high freight costs."

Crop shipping costs surge on key routes as higher fuel costs, slower turnaround times bite

The cost of moving grains from Australia to Southeast Asia has risen to $30 a tonne from $15 last year, and to $55 from $25 from the U.S. Pacific Northwest to Asia, shipping sources said.

Ships carrying wheat from the Black Sea to Asia now cost around $65 a tonne, from around $35 last year.

"It is the cost of bunker fuel and the cost of bulk ships lifting the prices of carrying grains," said one trader at a leading brokerage in Singapore. "We also have COVID-19 quarantine requirements slowing cargo movement."


With world food prices having risen at their fastest pace in over a decade in May, the spike in crop freight costs poses a fresh challenge to food importers and policymakers attempting to keep inflation levels in check just as several key economies reopen following coronavirus lockdowns.

Global food price index hits 10-year highs after steep climbs in key crop prices

And the price of key crops like corn and soybeans are set to remain elevated and volatile through the rest of the northern hemisphere growing season as crops develop.

FAO Food Price Indexes climb to multi-year highs, especially edible oils & cereals

Chicago corn futures are up roughly 90% from a year ago on strong global demand and stressed crops in the United States, while soybeans are up more than 50% after drought clipped output in top grower Brazil. Wheat is up around 30% from a year ago following growing problems last season.


The double whammy of higher crop and freight prices is pinching buyers in Asia, the top crop consuming region and home to China that accounts for more than half of the world's soybean purchases. Japan is one of the world's biggest corn buyers.

Key food & crop shipping rates surge as COVID restrictions contort supply lines

For a typical wheat buyer in Indonesia, the world's second-largest wheat importer, the cost of a 50,000-tonne cargo of food-grade wheat from the Black Sea has jumped by $4 million from a year ago to around $15 million, with the freight cost alone rising by $1.5 million.

Crop price volatility is another challenge.

Benchmark corn futures lurched more than 10% higher in the last week of June before slumping 10% the following week as weather forecasts shifted market sentiment.

Crop price volatility is making buyers unsure about how to take a market position

"We have seen a drop in consumption with these high prices," said a procurement manager at a flour milling company with operations across Southeast Asia. "It is difficult to take a position in a market like this. Millers are reducing purchases."

Double whammy for food buyers as freight costs spike amid high grain prices

Related Articles

U.S. goods trade deficit widens; inventories increase
U.S. goods trade deficit widens; inventories increase By Reuters - Sep 28, 2021

WASHINGTON (Reuters) -The U.S. trade deficit in goods increased in August amid a rise in imports as businesses replenished depleted inventories, suggesting trade could again be a...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email