Question-and-Answer Session
Operator
(Operator instructions) And your first question comes from the line of Doug Mavrinac with Jefferies & Company. Please proceed.
Doug Mavrinac – Jefferies & Company
Thank you. Good morning, Soph and Alan and my congratulations on once again another great quarter.
Sophocles Zoullas
Thank you, Doug.
Doug Mavrinac – Jefferies & Company
Just had a few questions for you guys. First off, we have seen a divergence between the strength in spot charter rates and time charter rates in recent weeks and in recent days. As an owner that transports a broad base of commodities and as an owner that primarily uses time charter contracts, how would you describe in your view the current underlying demand environment for dry bulk commodities in general, and how would also interpret the strength of the time charter market versus the weakening spot charter rate environment?
Sophocles Zoullas
Actually Doug, I think that is a very good question because I think it gives people on the call today insight into what ship owners are seeing in dry bulk and actually – really gets to the heart of the demand issue. What we have going on here is we have what I believe is a couple week expected seasonal summer slowdown coupled with the Olympics, which is sort of underscored by a slowdown in – call it the spot market rates for dry bulk carriers. What you have is a very interesting phenomenon, where long-term charter rates are significantly higher than spot charter rates. For example, supramaxes in the Pacific, around the Chinese Olympics market are trading at about $10,000 higher on long-term charters than they are on spot charters. So what I think it tells ship owners and I hope tells investors is that you have a couple of weeks of expected short-term – call it drifting down of rates, but you have very strong underlying long-term demand and ship owners generally expect a big snap back to strong demand post-Olympics.
Doug Mavrinac – Jefferies & Company
Okay. Fantastic. That is perfect. I thank you. My second question has to do specifically with the grain trade. Both of the upcoming North American harvests and also the South American grain trade with Argentine farmers strike behind us, how does the North American grain trade typically work in terms of the impact on rates? And secondly, is there going to be any follow-through effect on the demand for ships and therefore rates due to the Argentine farmer’s strike being behind us; did those first-half disruptions – will they have an impact on the demand for South American exports in the second half of this year?
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