Evening Report: Feb. 7, 2022

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February crop reports will focus on U.S. demand, global crops... USDA will update its 2021-22 U.S. demand forecasts in the Feb. 9 Supply & Demand Report. There won’t be any U.S. crop updates this month. A bigger focus will be updates to USDA’s South American crop forecasts, though they will remain above most if not all private crop forecasters. The following report expectations are based on a survey of analysts by Reuters (Bloomberg for cotton).

European leaders build relations with Russia, U.S... French President Emmanuel Macron worked to build trust and avoid war with his meeting on Monday with Russian President Vladimir Putin. Macron said his goal was de-escalation with Putin. Before the meeting, Russian officials said not to expect a breakthrough in one session. Putin said the two leaders shared concerns about what was happening.

Meanwhile, German Chancellor Olaf Scholz said his country was working with the U.S. on possible Russian sanctions if the country invaded Ukraine. Germany will also send 350 troops to Lithuania. Scholz noted efforts to resolve the dispute diplomatically were also starting to resonate. One possible format could be the Normandy format talks with France, Ukraine and Russia.

Macron will travel to Ukraine on Tuesday. Scholz will travel to Ukraine and Russia Feb. 14-15.

According to Secretary-General Jens Stoltenberg, NATO is considering a longer-term military posture in eastern Europe to strengthen its defense. Defense ministers will discuss the strategy at its next meeting Feb. 16-17.

An influential Russian-backed separatist commander in eastern Ukraine asked Russia to send 30,000 troops to the area and another separatist leader said full-scale war could break out there at any time.
 

Ukraine grain exports increase, remain well ahead of last year... Ukraine has exported 39.2 MMT of grain so far in its marketing year, up 32.8% from a year ago, according to the country’s ag ministry. The total included 17.2 MMT of wheat, 16.1 MMT of corn and 5.5 MMT of barley.

For the year, the ag ministry predicts exports of 25.3 MMT of wheat, 33.8 MMT of corn and 5.5 MMT of barley. Last year, Ukraine exported 16.6 MMT of wheat, 23.1 MMT of corn, and 4.2 MMT of barley.

Tyson profits rise on higher meat prices... On Monday, Tyson Foods Inc. reported higher-than-expected profits and sales based on higher beef, pork and chicken sales. The company reported a first-quarter profit of $407 million on higher company-wide sales of $12.93 billion.

Beef segment profits increased $428 million, pork was up $48 million and chicken rose $13 million. Prepared foods profits were down $80 million.

The beef segment sales rose $1.02 billion to $5 billion as sales volume was down 6.2%, but prices were up 31.7%. Pork sales increased $187 million, with volume up 0.2% and prices up 12.8%. The company’s chicken revenue increased $1.06 billion with volume up 3.6% and prices up 19.9%.

Fuel seized to break up Canadian trucker’s vaccine protest... Canadian police took thousands of liters of fuel and removed an oil tanker to break up the 11-day protest of vaccine mandates in Ottawa. Police are expected to turn up the heat on the protest within the next 72 hours. Ottawa Police Chief Peter Sloly said over the weekend, they counted 1,000 trucks and 5,000 protesters, down from 3,000 trucks and 10,000 to 15,000 protesters the previous weekend. On Monday, a judge granted an injunction to prevent the truckers from honking their horns for 11 days.

China, Argentina agree on a five-year plan... Meeting on the sidelines of the Beijing 2022 Winter Olympics, Chinese president Xi Jinping and Argentine President Alberto Fernandez agreed to a multi-year project that includes agricultural cooperation, diversifying trade and investment. The two leaders signed a memorandum of understanding related to China’s signature Belt and Road initiative. Xi said the countries should work together on trade, agriculture, infrastructure, investment and financing. Argentina’s government noted “strengthening cooperation” between the central banks.

U.S., Japan to announce steel import deal... The U.S. and Japan are expected to announce a trade deal that would allow Japanese steelmakers relief from U.S. import tariffs to ship a limited amount of steel to the U.S., Reuters reported. Unlike the EU deal announced last year, past steel product exclusions from tariffs will not be added to Japan’s quota. In addition, Japan will not participate in U.S./EU talks to discourage steel production with high carbon emissions.

Colombia cuts fertilizer tariffs and increases farmer credit... Columbia will cut its fertilizer import tariffs and increase the amount of credit for farmers to control inflation, according to Columbia Finance Minister Jose Manuel Restrepo. Columbia’s inflation was 1.67% in January, with the annualized inflation up 6.94%. The country’s inflation goal is 3%. Columbia’s central bank raised its benchmark interest rate by 100 basis points to 4% in January.

The minister noted the answer to higher prices was to increase supplies. Some cities have had supply shortages due to anti-government protests and road blockades.