The Baltic Dry Index (BDI) has dropped sharply over the past two months, as declining global demand for commodities — especially from China — weighed on the economic indicator.
The BDI, compiled daily by the London-based Baltic Exchange, provides an assessment of the price of moving major raw materials by sea, including grain.
The BDI settled Wednesday at 622 points, down from the 1,282 points posted at the start of 2019 and well below the high of the past year of 1,773 points seen in August.
The BDI hit a low of 595 points on Feb. 11, marking its lowest level since June 2016.
Declining freight rates can help Canadian grain exports by limiting 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.
However, “we’re not in normal times,” said Errol Anderson of ProMarket Communications in Alberta.
While Canada may gain some freight advantage from lower rates, he said the general weakness in the global economy represented by the low BDI was bearish overall. “It’s an indicator of a global slowdown,” he said.
— Phil Franz-Warkentin writes for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.Tagged Baltic Dry Index, BDI, commodities, freight rates, grain exports, raw materials, shipping