LAST WEEK, FREIGHT FUTURES PRICES groped for a bottom, following a tumultuous three-week slide.

The spot market indicator sagged by another 10 points during the week, with weakness in the Pacific slightly outweighing some of the strength in the Atlantic. For Biffex futures traders, however, it was a quiet week, mirroring the reduced activity in the physical charter market.The interpretation of last week's action, or lack thereof, really depends on one's overall perception of the freight market.

For bulls, who believe the charter rates will turn upward, it was simply encountering a holiday lull (i.e., it will pick up after the Easter holidays).

For bears, who are not convinced Soviet chartering or South American activity can cut into the large overhang of surplus tonnage in the Atlantic, the market was continuing to languish in the summer doldrums. The pessimists believe there will be no traditional spring rally, and the summer slump has already begun (although most traders don't know it yet).

The real action last week was in the oil futures market, which showed some dramatic price activity amid uncertainty about OPEC intentions. Because of the interaction of dry rates and tanker rates, oil prices do not go unnoticed by freight futures traders. A big drop in oil prices would lead to massive stockpiling of oil; the result would be a rally of major proportions in the tanker freight rates.

In previous articles, I had mentioned that shippers of oil products, and tanker brokers and owners, had been asking about the possibility of a futures contract on tanker freight. I can now report that a small group, spearheaded by Ms. Cynthia (Kase) Pedota, vice president in the Commodity Risk Management group at Chemical Bank, has had several meetings and has developed some specifications for a contract on tanker freight. Ms. Pedota, who recently joined Chemical Bank, has worked in the oil business as a products trader and has seen first-hand the volatility of tanker rates.

Barry D. Parker is the freight futures strategist at EDF Man International Futures. His column appears each Monday. The statements in this column are not to be construed as recommendations of specific contracts or purchases.


BFI Spot Price: 1456 April 1445 May 1450 July 1295

Oct. 1400 Jan. 1410