In this case, we obtained forex eur usd forecast today toronto from 2003 to 2016. In a series of normalized charts, we will show that for bull, bear, and overall market conditions, there are predictable intra-year trends in the value of the Baltic Dry Index.
The BDI measures the current price of moving raw materials by sea. It is posted five days a week, exclusive of holidays and from Xmas until the first work day of the New Year. The Index is compiled and posted by the Baltic Exchange of London and covers four different sizes of bulk cargo ships on 23 shipping routes throughout the world. The Baltic Exchange has a long history. England’s major sources of international commerce at the time. By 1823, it consisted of a merchant committee that regulated trade and operated a securities exchange from a local tavern. It admitted the London Shipping Exchange as a member in 1900 and organized as a private limited company with shareholders.
The Exchange consists of over 600 member firms and is the world’s only source of maritime market information for the trading and settlement of physical and derivative shipping contracts. The Baltic Dry Index was started in 1985 and surveys a panel of international shippers on a daily basis for assessments of rates. It is a weighted index that considers shipping routes and volumes for the four different categories of cargo ships. Supramax from 45,000 to 59,000 tonnes, and Handysize from 15,000 to 35,000 tonnes.
BDI is a direct measure of the supply of dry bulk carriers versus demand for shipping capacity. The supply part of the equation, consisting of about 9000 vessels worldwide, is tight and inflexible. Unlike oil tankers, it is costly to park and idle a cargo ship, and new ships take two years to build. Because of fluctuating world and regional demand, the Index can be wildly volatile on both the upside and downside.
The Index indirectly measures global supply and demand for metallic ores, coal, grains, steel, and industrial and agricultural minerals. Index is dominated by this commodity. Therefore, it is an important input in predicting short-term economic activity. There is no speculative component in the Baltic Dry Index because freighters are contracted only if there is cargo to move. That said, there is a freight derivatives market operated by the Baltic Exchange and administered by brokers that allows principals and traders to lock-in or hedge freight rates via futures contracts.
The Baltic Dry Index has exhibited extreme volatility over the past 14 years with rises and falls broadly corresponding to bull and bear markets for industrial commodities. BDI’s all-time high of 11,793 was reached on May 20, 2008 in the second of two parabolic spikes when commodity prices peaked. From early 2012 to Q3 2016, a deep bear market for commodities resulted in the Index trading well-below its previous low. Its all-time bottom of 290 occurred on February 11 of this year due to severely depressed demand for iron ore and coal and a glut of carriers. Since that time, BDI has moved sharply upward as the commodities sector enters an incipient bull market cycle. It reached 1257 on November 18 but is currently trading in the mid-900 range as cargo shipping reaches its usual year-end lull. Supply, demand, and prices of bulk dry commodities.
Crude oil prices and the resulting cost of bunker fuel. Seasonality in the transport of commodities. Port congestion and choke points including straights, channels, and canals. Health of the world’s economy and overall market sentiment.
Geopolitical events, labor issues, weather, and accidents in exporting and importing countries. There is a general fall in the BDI Index from the beginning of January to early February. It is prominent in the composite and the bear market years while in bull market conditions, the Index is flat during this period. The Index rallies robustly from early February to early March and then falls off from mid-March to mid-April regardless of market trend. In bear years, the Baltic Dry Index undergoes a steep decline from late May thru mid-June and then steadies during the early summer.
Beginning in late July it undergoes a steady downtick for the remainder of the year. For overall and bull market composites, the BDI is flat and oscillating during the summer months. Then it goes mostly higher from mid-September thru early December, except for a pause in late October to mid-November. In all cases, there is a significant drop-off in the Baltic Dry Index during the second and third weeks of December. The BDI is not posted from Christmas thru New Year’s.