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Dry bulk FFA market: One more cup of coffee before I go…

Dry bulk FFA market: One more cup of coffee before I go…
A piece of technical analysis published this week by Reuters makes for uncomfortable reading, though as so often, not always for the reasons imagined. A bullish dollar index and a bearish Thomson Reuters CRB index together suggest that most commodities look bearish in the first quarter of 2016, with the exception of coffee.

Crude oil may have limited downside, as its long-term downtrend could be ending but gold and copper could have a long way to plunge. Citigroup predicts the iron ore price from this year through to 2018 could be as low as $35 a tonne, but the Cup of Joe that gets you through this miserable market is going up in price.

Since freight is a commodity too, it was little surprise to see the bloodbath in the capesize market continue this week with new lows hit in both basins. The 4TC index fell to an all-time low of $2,143 on Tuesday though Wednesday saw a touch of resistance in the East.

Early rumours on Thursday that Western Australia - China was bid at a mere $3.00 did little to stem the flow of sellers who were perhaps more focused on talk of Tuburao - Qingdao fixing sub-$3.50. The afternoon session saw some short covering which kept rates slightly more buoyant although any reason for a genuine move up is it yet to present itself.

Panamaxes just can’t shift the pain, with further index drops fuelling more declines on prompt contracts, which lost an average $200 on Wednesday. The bearish trend continued with levels sold off sharply. Jan and Feb printed $3,000 and $3,100 lows respectively while further out Cal16 was chased down to $4,275. Towards Thursday’s close we saw some support return nudging us off the day’s lows but with offers thinning out.

Unsurprising too to see the supramax market described as "dull and boring" with the hours drifting by from open to close with very limited activity, the index declining as expected but no great changes resulting.

The prompt months stayed under pressure but the negativity was felt down the curve and the continued decline in the index did little but lead to even quieter trading conditions as the week limped to a close.

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