Baltic Dry Index Approaches Crisis Lows

The Baltic Dry Index tracks the cost of transporting bulk materials like coal, iron ore, and wheat by giant cargo ships.  The massive decline seen in the second half of 2008 occurred as commodity prices collapsed and financial panic made financing very difficult to obtain.  As the global economy recovered from the meltdown, the BDI rose along a choppy trendline until last summer, when a new down leg began.  Does this forecast lower demand for shipping services because of a weakening economy and currency / sovereign debt issues ahead?  Bloomberg Businessweek predicts a decline in shipping rates of 34% because the new supply of capesize ships coming into service will overpower the small increase (7%) in shipping volume.

Neithercorp Press has a more bearish assessment of the BDI decline, one in which the global economy is not as healthy as the media claims, and that increases in the price of commodities like iron ore and wheat are a direct result of money printing, not increased industrial demand.  We agree with this "ship headed for the rocks" scenario.