ECB Hikes Rates 50bp to Fresh 14-Year High Despite Mounting Banking Stress

Five years into trade war, China continues its slow decoupling from U.S. exports
 

USDA daily export sale: 641,000 metric tons corn to China during 2022-2023 marketing year.

First new-crop sorghum sales to China reported. U.S. Export Sales data for the week ended March 9 included sales of old-crop corn, sorghum, soybeans and cotton, with the first sales of new-crop sorghum reported. For 2022-23, activity for the week included net sales of 73,157 tonnes of corn, 115,301 tonnes of sorghum, 208,097 tonnes of soybeans, and 35,832 running bales of upland cotton. Sales of 63,000 tonnes of sorghum were reported for 2023-24. For 2023, net sales of 1,630 tonnes of beef and 4,993 tonnes of pork were reported.

The European Central Bank raised interest rates by a half percentage point, pressing ahead with its fight against inflation despite concerns that this could exacerbate strains in the financial system. More in Market section.

Credit Suisse is rallying more than 20% pre-open after it was granted a $54 billion credit line from the Swiss National Bank. The bank said it would make use of the liquidity backstop by and buy back $3.2 billion worth of debt. RBC Capital Markets told clients that the measures “should provide some comfort,” while JPMorgan Chase wrote that the steps “will be sufficient to buy the institution the time required to execute on its restructuring plan.” Still, Morningstar cautioned that, fundamentally, Credit Suisse “has a profitability problem, not an asset quality problem.” Some analysts said the $54 billion lifeline might not be enough. Meanwhile, the Treasury Department is working with the Federal Reserve and European regulators to review the exposure of U.S. banks to Credit Suisse.

Silicon Valley Bank, as well as lending to early-stage tech companies, provided finance for renewable-energy projects of around $1.2 billion last year. Shares of wind and solar developers fell after SVB's collapse, but industry advisers say there should be more than enough interest from other banks to fill the gap for large projects. Access to lending could get more challenging in spaces where SVB carved out a niche, such as small-scale community solar projects.

Regulators at the U.S. Federal Deposit Insurance Corp have asked banks interested in acquiring failed lenders Silicon Valley Bank and Signature Bank to submit bids by March 17.

The Fed’s failure to spot the risks at Silicon Valley Bank has sparked a debate in Washington focused on two areas, reports the New York Times (link). Did a push to relax some regulations for small and midsize banks in 2018 go too far? And do the existing rules suffice for a changing world?

Major difference between 2008 and now, according to the Sevens Report: "In 2008, the assets held at banks (mortgages on homes) were hopelessly underwater. The home values were much less than the mortgages owned, which created massive losses and solvency issues. Today, the assets held at banks (Treasuries and agency backed mortgages) are worth what banks paid for them (par value) as long as they don’t have to be sold in dis-tress. This makes this a liquidity issue (which central banks can solve) not a solvency issue (which only governments can solve). That’s an important and positive difference.”

ITC report says importers, not Chinese exporters, paid the tab for duties. So why is the Biden administration keeping the Trump-administration-tariffs on? Meanwhile, a report just released says five years into the trade war, China continues its slow decoupling from U.S. exports. More in Trade Policy section. 

The farm bill listening session in Texas had familiar comments about what is needed. More in Policy section. But as usual, no one, including farm-state lawmakers, is putting a price tag on the additional funding needed — beyond the around $1.5 trillion price tag over ten years from the Congressional Budget Office.

European Commission President Ursula von der Leyen told the parliamentary plenary that the European Union would allow for “tax breaks and flexible use of EU funds” to produce at least 40% of the clean technology necessary by 2030. The U.S. and European Union, she said, would produce “striking symmetry” in their efforts, noting, “Both of them are simultaneously a climate strategy and a strategy for investment and growth.”

Equities today: The Dow is down around 300 points. In Asia, Japan -0.8%. Hong Kong -1.7%. China -1.1%. India +0.1%. In Europe, at midday, London +1%. Paris +1.2%. Frankfurt +0.8%.

     U.S. equities yesterday: The Dow and S&P 500 finished lower but were off their lows while the Nasdaq edged into positive territory on a late push higher. The Dow ended down 280.83 points, 0.83%, at 31,874.57. The Nasdaq rose 5.90 points, 0.05%, at 11,434.05. The S&P 50 lost 27.36 points 0.70%, at 3,891.93.

Agriculture markets yesterday:

• Corn: May corn futures rose 5 3/4 cents to $6.26 1/2 and nearer the session high.  
• Soy complex: May soybeans fell 4 1/2 cents to $14.89 1/4, a mid-range close. May meal futures fell $2.80 to $478.40, while May soyoil rose 16 points to 56.34 cents.
• Wheat: May SRW wheat rose 6 1/2 cents to $7.02 3/4 and nearer the session high. May HRW wheat gained 2 cents at $8.19 3/4 and near mid-range. May spring wheat futures rose 2 1/2 cents to $8.52 1/2.
• Cotton: May cotton fell 226 points to 79.11 cents, after trading as high as 81.73 cents.
• Cattle: April live cattle fell $1.50 to $161.55 Wednesday, while most-active April feeder futures dove $2.50 to $193.25.
• Hogs: April lean hog futures fell $1.65 to settle at $83.75, with deferred contracts seeing greater losses.
   

Ag markets today: Corn futures pivoted around unchanged in quiet overnight trade while soybeans were supported by corrective buying and wheat pulled back from gains earlier this week. As of 7:30 a.m. ET, corn futures were trading narrowly mixed, soybeans were mostly 5 to 6 cents higher and wheat futures were 2 to 5 cents lower. Front-month crude oil futures were modestly lower after earlier trading higher and the U.S. dollar index was down around 150 points.  

Technical viewpoints from Jim Wyckoff:

On tap today:

    •  Figures on new residential construction and building permits. Housing starts fell 4.5% in January from the prior month, while building permits inched up 0.1% in the same period. UPDATE: Building permits in the U.S. surged 13.8% to a seasonally adjusted annual rate of 1.524 million in February 2023, the highest for five months and well above market expectations of 1.34 million, a preliminary estimate showed. It also followed a meager 0.1% advance in January after hitting a 31-month low of 1.337 million in December due to stubbornly high inflation and rising borrowing costs. In February, single-family authorizations increased 7.6% to a rate of 777 thousand, up from January's near three-year low of 722 thousand, while the volatile multi-segment jumped 21.1% to 747 thousand.

     • The Labor Department reports the number of worker filings for unemployment benefits in the week ended March 11. Initial jobless claims rose in the prior week, but remained historically low. UPDATE: The number of Americans filing for unemployment benefits fell by 20,000 from the previous week to 192,000 on the week ending March 11, well below expectations of 205,000. The result pointed to further evidence of a stubbornly tight labor market in the U.S., in line with the hot payroll figures for February and erasing signals of higher unemployment after the prior week’s two-month high. The tight job market forces employers to raise wages to attract and keep staff, magnifying inflationary pressure in the American economy. The four-week moving average, which removes week-to-week volatility, fell by 750 to 196,500. On a non-seasonally adjusted basis, claims fell by 21,396 to 217,444, with significant decreases noted in New York (-15,305) and California (-2,312).
     • European Central Bank announces its latest interest-rate decision. The ECB raised interest rates by a half-percentage point last month, its fifth large increase in a row, and signaled another half-point rate increase is possible in March. See item below.

ECB hikes rates by 50 bp to fresh 14-year high. The European Central Bank (ECB) raised interest rates by 50 bps on Thursday, further pushing borrowing costs to the highest level since late 2008, to help temper the region’s stubbornly high inflation. Policymakers also said the euro area banking sector was resilient, with strong capital and liquidity positions, and that they were monitoring current market tensions closely, while they stood ready to respond as necessary to preserve price stability and maintain financial stability in the region. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were all increased to 3.50%, 3.75% and 3.00%, respectively.

     Perspective: Christine Lagarde, the bank’s president, had all but committed to a half-percentage-point increase, traders and economists were increasingly betting that it would raise rates by only a quarter of a point to avoid further hammering the value of banks’ bond holdings. They were wrong. Are they wrong about the upcoming Fed decision March 22?

Jeremy Hunt presented his first U.K. budget. Some highlights: The peak in inflation has passed and the U.K. won’t enter a recession this year. GDP is expected to shrink 0.2% in 2023, less than previously forecast, and grow 1.8% next year. The energy price guarantee will stay for another three months.

Canadian Pacific’s $31 billion merger with Kansas City Southern approved; to go into effect April 14. The Surface Transportation Board (STB) approved with conditions a merger between Canadian Pacific Railway Ltd. and Kansas City Southern, a $31 billion deal that would create the first freight rail network linking Canada, the U.S. and Mexico. The Canadian Pacific Kansas City, or CPKC, is the industry’s biggest in two decades. The railroads were the sixth- and seventh-largest freight haulers, respectively, according to STB data for last year. After the combination, it will still be the smallest of the so-called Class 1 railroads. The merger will enhance competition by creating a stronger competitor for Union Pacific Corp., BNSF Railway and Canadian National Railway, the STB said. “Shipping of grain, automotive parts and vehicles, and intermodal goods will improve with new single-line options, and shippers will have opportunities to expand their market reach,” the STB said. “Imposed conditions will ensure shippers’ options are not reduced.” Link to STB release.

     Market impact: It could shift freight flows once fully integrated. TD Cowen analyst Jason Seidl wrote in a report it could draw traffic away from U.S. West Coast ports to gateways in Canada and Mexico. Regulators also expect the larger network to draw tens of thousands of shipments away from trucks, an environmental selling point for the combination.

     STB conditions imposed include ones meant to retain shippers’ competitive options. CPKC would have to keep gateways, or connection points between the merged railroad and other railroads, open on reasonable terms, said the regulator. Upon customers’ request, CPKC will also have to justify rate increases related to the gateway obligation.

     Size and network coverage: CP is the second-largest railroad company in Canada and operates a network of approximately 13,000 miles of track across Canada and the northern United States. KCS is the smallest of the Class I railroads in the U.S., with a network of around 6,500 miles of track in the central and southern United States, including connections to Mexico — KCS’s network connects the Midwest on lines through Southern states and to Mexico.: The combined CPKC network would include about 20,000 miles of track in total.

     Both CP and KCS are investing in new technologies to improve efficiency and safety, such as the use of autonomous inspection systems and precision-scheduled railroading. However, CP has been more aggressive in implementing precision-scheduled railroading across its network, which has resulted in significant improvements in efficiency and cost savings.

     Keith Creel, chief executive officer of CP, has said that the additional track opens the railroad to new customers and offers the prospect of luring more truck traffic to trains.

     STB said this “end-to-end” transaction means there are little to no track redundancies or overlapping routes between the railroads, as they connect solely in Kansas City. It also cited other benefits, including:

• reducing travel time for traffic moving over the single line service;
• increased incentives for investment;
• eliminate the need for the two now-separate CP and KCS systems to interchange traffic moving from one system to the other;
• enhance efficiency, which in turn will enable the new CPKC system to better compete for traffic with the other larger Class I carriers.

     "The Transaction will make possible improved single-line service for many shippers and will result in merger synergies that are likely to allow CPKC to be a vigorous competitor to other Class Is by providing improved service at lower cost," said the STB.

Market perspectives:

     • Outside markets: The U.S. dollar index is weaker with only the euro firmer against the greenback. The yield on the 10-year U.S. Treasury note has weakened to trade around 3.44%, with a mixed tone in global government bond yields. Crude oil is higher but is off highs seen earlier, with U.S. crude around $67.80 per barrel and Brent around $73.90 per barrel. Gold and silver are slightly higher ahead of US market action, with gold around $1,932 per troy ounce and silver around $22.14 per troy ounce.

     • The Fed is still expected to raise rates by a quarter of a point next week. Analysts also predict that rate cuts could come in the back half of the year, if economic data show that inflation is stabilizing. Bonds have rallied in recent weeks on hopes that interest rates won’t go much higher and amid worries about a recession.

     • Oil prices plummeting nearly 6% Wednesday in their biggest one-day drop in more than eight months. International benchmark Brent rrude also dropped to its lowest point since December 2021, coming amid fears about the banking system as additional big banks experience a decline in market value. Prices have steadied today.

     • Europe is set to import a record amount of U.S. crude this month, relying increasingly on larger tankers as sanctions on Russian oil upend global trade routes.

     • U.S. crude oil exports reached a record peak of 3.6 million barrels per day in 2022, as a combination of releases from the Strategic Petroleum Reserve and an increase in domestic production aimed at boosting U.S. supply to countries replacing Russian crude led to a 22% increase in exports compared with 2021, according to the U.S. Energy Information Administration.

     • Analyst and trader Richard Crow on CFTC report: The Commitments of Traders report for Feb. 28 showed near-record contracts selling grains and oilseed. The corn and soy oil position may be near flat in aggregate.

     • Ag trade: Japan purchased 73,518 MT of milling wheat in its weekly tender, including 21,540 MT U.S., 24,430 MT Canadian and 27,548 MT Australian. Egypt tendered to buy an unspecified amount of wheat from optional origins.

     • NWS weather outlook: There is a Slight Risk of excessive rainfall over parts of the Southern Plains/Lower Mississippi Valley... ...Heavy snow over parts of the Upper Mississippi Valley and Upper Great Lakes; Pockets of rain/freezing rain over parts of the Middle Missouri Valley/Upper Mississippi Valley... ...There is an Enhanced Risk of severe thunderstorms over parts of the Southern Plains on Thursday and a Slight Risk over the Central Gulf Coast.

Items in Pro Farmer's First Thing Today include:

     • Relatively quiet grain market overnight
     • Brazil port says there are no shipping delays
     • Argentina’s soy processing industry faces ‘crisis’ due to drought
     • Macro concerns derail cattle futures, cash trade
     • Wholesale pork market weaken

— Black Sea grain initiative must not lapse: Blinken Secretary of State Antony Blinken said the Black Sea Grain Initiative that has allowed Ukrainian grains to be shipped abroad must not be allowed to lapse beyond its current termination date of March 18. Speaking in Africa, Blinken said the U.S. and African countries back the extension of the Black Sea Grain Initiative, “which has brought Ukrainian grain to countries across Africa as well as lowering prices around the world.” He noted the 4 million tonnes of wheat that have gone to developing countries via the initiative were the “equivalent of 8 billion loaves of bread. Millions rely on the Black Sea Grain Initiative. It cannot be allowed to lapse.”

— China hopes Black Sea grain deal implemented in balanced, comprehensive manner. Chinese Foreign Ministry spokesman Wang Wenbin said China was ready to strengthen cooperation with all parties as part of the Black Sea grain deal to ensure global food security. China hopes the deal will be extended and the agreement will continue to be effectively and comprehensively implemented.

— Russian attacks against civilians in Ukraine amount to war crimes, U.N.-backed investigation finds. Russian attacks against civilians in Ukraine, including systematic torture and killing in occupied regions, amount to war crimes and possibly crimes against humanity, according to a report from a U.N.-backed inquiry released Thursday. The sweeping human rights report, released a year to the day after a Russian airstrike on a theater in Mariupol killed hundreds sheltering inside, marked a highly unusual condemnation of a member of the U.N. Security Council.

— Pentagon releases video footage of a Russian jet spraying a substance on an unarmed U.S. drone before it crashed in the Black Sea. The video shows two high-speed passes by a Russian Su-27 fighter jet, which sprayed a substance that the Pentagon says is jet fuel on the American Reaper drone, which eventually tumbled into the Black Sea. The footage released by the Pentagon does not show the collision the U.S. says occurred. Russia has denied any wrongdoing and initially blamed the crash on faulty maneuvering by the American drone operators. Russia said it will try to retrieve the wreckage of the downed drone and has reportedly sent its forces to the site of the crash. The U.S. said earlier it was taking measures to ensure the drone won't fall into the wrong hands but admitted it may never be recovered.

— Situation for Russian forces trying to capture the Ukrainian city of Bakhmut is "difficult,” because there are no signs Kyiv is ready to order a withdrawal of its troops, the Russian-installed leader of Ukraine's Donetsk region said.

— Putin urges business leaders to build new Russian economy. President Vladimir Putin on Thursday called on Russia's billionaires and business elite to invest in new technology, production facilities and enterprises to help Russia overcome what he said were Western attempts to destroy its economy.

— Poland says it will send Ukraine fighter jets, the first NATO country to provide long-sought warplanes. Poland is set to send the first Soviet-made MiG-29s in the coming days, Polish President, Andrzej Duda said at a news conference Thursday. Western governments had thus far declined to send fighter jets out of concern over escalating tensions between NATO and Russia.

— The G7 opposed lowering the Russian crude-oil price cap from $60 a barrel. The Group of Seven (G7) advanced democracies’ position thwarted hopes in some European capitals of tightening the Western sanctions this month and could spark fresh tensions within the EU over the price-cap program. Officials at the U.S. Treasury, which designed the price-cap system, have said that the current system is largely working as intended. U.S. officials have been sensitive to not making moves that could endanger Russian oil supply — and therefore push up global prices.

— Ukraine invites DeSantis. After Florida Governor Ron DeSantis, an expected 2024 presidential candidate, appeared to downplay Russia’s war in Ukraine by referring to it as a “territorial dispute” that did not constitute a “vital national interest” for the United States, Ukraine invited him for a visit. “We are sure that as a former military officer deployed to a combat zone, Governor Ron DeSantis knows the difference between a ‘dispute’ and war,” said Oleg Nikolenko, spokesperson for the Ukrainian foreign ministry. “We invite him to visit Ukraine to get a deeper understanding of Russia’s full-scale invasion and the threats it poses to U.S. interests.”

 

— EPA official warns on WOTUS repeal effort. Efforts to use the Congressional Review Act (CRA) to repeal the Biden administration’s Waters of the U.S. (WOTUS) rule could end up having unintended consequences as it could remove certain protections that were in the rule, Radhika Fox, EPA assistant administrator for water, told the Senate Environment and Public Works Committee.

     If the repeal effort is successful, Fox warned that would put the pre-2015 definition of WOTUS back into effect without some of the updates the Biden administration included in its latest definition.

     Fox said it would remove the “significant nexus standard” and would remove exemptions for artificial ponds for previously converted cropland.

     The CRA effort also would bar EPA from pursuing future regs that are substantially similar to the one that would be removed by the action.

     Upshot: The House last week approved (227-198) has already passed its WOTUS rule resolution and it’s up for a Senate vote. The White House has pledged a veto of the measure should it reach President Joe Biden’s desk. So, the final say on this matter will rest with the Supreme Court, whose decision is awaited.

     Comments: The CRA language disapproving a regulation is prescribed and brief. It essentially says Congress disapproves the regulation. Of course, the Biden administration will want to find arguments to keep Members from voting for the resolution but, really, all the administration is saying is the regulation would no longer be in place. The administration fears it could pass and the president would need to veto another bipartisan bill.

— Farm bill listening sessions (link to video): Same things keep being repeated. Things such as:

• Congress needs to modernize the crop insurance program.
• Lawmakers must update Title I to reflect higher input costs and volatile commodity markets.
• “Keep the importance of access to SNAP and the adequacy of those benefits top of mind throughout farm bill discussions.” Celia Cole, chief executive of Feeding Texas, a network of 21 food banks, said SNAP should be expanded to include low-income college students. Cole also said “Work requirements are not an effective tool to improving employment outcomes.” Conservative lawmakers are expected to seek stricter work requirements for SNAP beneficiaries this year.
• Dale Murden, president of Texas Citrus Mutual, said payment limits should be addressed along with the rules that deny subsidies to people with high incomes. If three-fourths of their income is from agriculture, there should be no barrier to eligibility, he said.
• “A permanent disaster program would be beneficial,” said Murden, because crop insurance is not available for all crops. "We need disaster assistance, better crop insurance and we all need stability with our own water resources," Murden said.
• Brett Erickson, who represented the Texas International Produce Association, the Texas Vegetable Association, and the International Fresh Produce Association, asked the lawmakers for more specialty crop insurance options.
• Jerry Moody, a poultry producer from Omaha, Texas, urged the committee to consider creating flock insurance to protect revenue for poultry growers. He said a common misconception about the poultry industry is that growers don't have any risk, a notion that he said "cannot be further from the truth… There's so many things that are out of our control, whether it be disease [or] no antibiotics anymore," Moody said.

     House Ag Chairman G.T. Thompson (R-Pa.) said he wants to enact a new farm bill before the 2018 farm policy law expires for some provisions this fall.

— The SEC proposed new cybersecurity rules for financial firms, including requiring brokers and asset managers to notify customers of data breaches within 30 days.

— China to boost corn, soybean subsidies, buy more beans for state reserves. Reuters reports China has issued several “supporting policies” aimed at stabilizing soybean production in 2023, citing the Ministry of Agriculture and Rural Affairs. The report said China would boost the subsidy for corn and soybean producers and will also increase its purchases of soybeans for state reserves. There was no indication of the size of the subsidies to be provided nor on the level of soybeans the country would purchase for state reserves. China has previously signaled they want to boost their domestic production of soybeans in particular in a bid to rely less on imports to turn the crops into feed for the livestock sector.

— China wine tariff pushes Australia’s grape growers into crisis. Two years later, they’re suffering from a glut of red wine and plummeting grape prices with no overseas market big enough to fill the gap. Link for more via the New York Times.

— Chinese suppliers race to Vietnam as Covid let-up opens escape route from Sino/U.S. trade war. After China ended its zero-Covid-19 policy in December, Chinese firms spent the first 50 days of 2023 investing in 45 new projects in Vietnam, the most from a single country, Vietnamese government data showed. Link for more via Reuters.

— Five years into the trade war, China continues its slow decoupling from U.S. exports. U.S. exports to China, which cratered during President Donald Trump’s trade war of 2018–19, are continuing to suffer. China is now shifting some purchases of foreign goods away from the United States. Link for details.

— U.S. importers bore almost the entire burden of tariffs that former President Donald Trump placed on more than $300 billion in Chinese goods during his presidency, raising costs for American companies, said a report (link) by the independent U.S. International Trade Commission (ITC), a bipartisan entity that analyzes trade issues. It found an almost one-to-one increase in the price of U.S. imports following the Section 301 tariffs, it said in a report on Wednesday. The study came in response to a directive from Congress as part of a law passed last year.

     Some of the report’s findings:

• Prices for imports from China across some of the most affected industries — including imports of computer equipment, semiconductors, furniture and audio and video equipment — increased as much as 25% in 2021.
• In the same year, prices of U.S.-produced goods in some industries rose 3% to 4%.
• Imports of the affected products from China declined to about $265 billion in 2021 from $311 billion in 2017, the year before the duties were imposed.
• Across all affected sectors, the duties lowered Chinese imports by 13% during 2018 to 2021, raised U.S. output by 0.4% and increased prices of U.S. products by 0.2%.

     Bottom line: The conclusions back assertions from many that the cost of the tariffs hurt American firms, and contradict Trump’s claim that China paid the ultimate cost of the duties.

     The ITC’s commissioners weren’t all on the same page about the report, with Jason E. Kearns saying it painted an incomplete picture.

     So why are the tariffs still on? President Joe Biden’s administration has kept the tariffs on imports of Chinese goods in place for more than two years and is currently undertaking a review of the duties to evaluate their effectiveness and decide if they should continue.

     “It’s hardly news that tariffs are a tax paid by American families and companies, or that tariffs produce some winners and many losers across the US economy,” said John Murphy, senior vice president for international policy at the US Chamber of Commerce. “What’s most frustrating is that the administration has provided almost no opening for tariff relief — even in instances where tariffs are clearly forcing U.S. manufacturing offshore. It’s long past time to revisit these policies,” he said.

    USTR comments. “The administration is determining next steps on the section 301 tariffs and will take these relevant, but incomplete, findings into account,” said Adam Hodge, a spokesman for the USTR. “Our ongoing review will examine the effectiveness of the section 301 tariffs in addressing China’s unfair, harmful and anti-competitive acts, policies, and practices, as well as the impact on the US economy, including consumers.”

— Japan’s trade deficit narrowed sharply in February from the previous month’s record shortfall, as the impact from the lunar new year in China reversed, slowing imports and encouraging exports. Separately, Japan will lift export curbs of key semiconductor materials to South Korea, signaling an end of a bitter feud.

— Electric vehicles on the rise. In December 2022, the latest month for which figures are available, fully electric vehicles accounted for 7% of North America car production, according to data compiled by Bloomberg Intelligence. That’s an increase from 4.7% in December 2021, and up from 4% for the first half of 2022. Tesla led the pack by stamping out 52,300 vehicles in December, followed by Ford with an estimated 9,300 electric cars, trucks and vans.

— The Financial Times considers the climate targets enshrined in the 2015 Paris Agreement and asks: Is 1.5C still a realistic goal? Link for details.

— Kroger to deploy driverless trucks in Dallas. The grocer plans to begin using vehicles from autonomous-vehicle supplier Gatik to transport products between an e-commerce warehouse and several stores during the second quarter of 2023.

     Meanwhile, drone-delivery startup Zipline is planning a new service that will enable restaurants, grocers, pharmacies and other retailers to deliver directly to customers’ yards.

— Spilled milk. Minnesota law to help dairy producers may now be hurting farmers. A proposal before the Minnesota state legislature could lead to the repeal of a 56-year-old law that set a floor for grocery store milk prices in hopes of leading to more sales for the state's dairy farmers. The current law was enacted to help farmers but has led to dairy being at a disadvantage since stores can now price non-dairy milks lower, said Sen. Jordan Rasmusson, who argues that allowing stores to position dairy milk as a loss leader would help farmers and grocers make more profits in the long run. Link to details via Star-Tribune.

— Bird flu warning. Bird flu has been tearing through animals in the U.S. for over a year. While it has rarely infected humans, America must ensure it’s ready in case that changes, Caitlin Rivers writes in Foreign Affairs (link).

— U.S. maternal deaths hit the highest rate in nearly 60 years. The number of women who died during pregnancy or shortly after rose 40% to 1,205 in 2021, compared with 861 in 2020 and 754 in 2019, the National Center for Health Statistics said Thursday. The increase pushed the maternal-mortality rate to 33 deaths per 100,000 live births, the highest since 1965, compared with 24 in 2020 and 20 in 2019. Covid-19 and disruptions during the pandemic added to pressure from factors including cardiovascular problems and healthcare disparities that have worsened maternal health in recent years, doctors and health officials said.

— Norfolk Southern CEO to testify to Senate panel next week. Norfolk Southern CEO Alan Shaw will testify before the Senate Transportation Committee next week for a hearing on rail safety following the railroad’s recent crash in Ohio, Chair Maria Cantwell (D-Wash.) said.

— House lawmakers are forming the Congressional Colorado River Caucus, a bipartisan coalition aimed at working together to mitigate the impacts of worsening drought conditions across the seven-state basin. The coalition includes members from Arizona, California, Colorado, Nevada, New Mexico and Utah, but does not include Wyoming, which is part of a similar Senate caucus led by Sen. John Hickenlooper (D-Colo.). Link for details.
 

— Paris stinks, now Florida shores? A massive blob of seaweed spanning more than 5,000 miles is headed for the shores of Florida, threatening to dampen tourist season with an incredibly sticky smell. The seaweed will be prevalent on beaches in Florida around July, researchers say, after it completes its trajectory through the Caribbean and up into the Gulf of Mexico.

     As for Paris, demonstrators in France took to the streets again — and mountains of garbage went uncollected — to protest raising the retirement age to 64, a bill that now heads to the National Assembly for an uncertain vote.

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