Evening Report: Feb. 16, 2022

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Russia/Ukraine update... U.S. and NATO officials report more Russian military forces along the Russia/Ukraine border, despite Russia saying its troops are moving away from the border after completing drills in the area. Ukraine says it has not seen any drawdown of any Russian forces along the border area. Meanwhile, NATO defense ministers are meeting in Brussels to discuss the current Russian/Ukraine situation and ways to deter an invasion. Russia’s ambassador to the European Union, Vladimir Chizhov, told the German daily newspaper Welt, there would not be an invasion in the coming month. NATO has ruled out sending troops to Ukraine to fight. Russia is accusing NATO of moving closer to Russia’s borders. EU leaders are scheduled to discuss the situation before the EU-Africa summit on Thursday. Russia’s Finance Minister Anton Siluanov said sanctions against Russian banks would be “unpleasant,” but the state would ensure all bank deposits and transactions were secured. Russia said it would reroute energy exports if it was hit with trade sanctions.

 

Fed minutes: Interest rate hikes should be determined meeting-by-meeting... Interest rate decisions to tighten U.S. monetary policy should be made based on a meeting-by-meeting data analysis, according to minutes from the Jan. 25-26 Federal Open Market Committee (FOMC) meeting. Committee members agreed interest rate hikes would likely have to be increased at a “faster pace” than the 2015 increases.

“Participants emphasized that the appropriate path of policy would depend on economic and financial developments and their implications for the outlook and the risks around the outlook,” the minutes released on Wednesday said.

Investors expect the committee to start raising interest rates by 50 basis points at its March 15-16 meeting, with more increases throughout the year.

 

Canadian inflation hits a 30-year high... Canada’s annual inflation rate for January was 5.1%, the highest since 5.5% in September 1991, according to Statistics Canada. Food prices jumped 5.7%. In a pre-report Reuters poll, analysts expected an annual inflation increase of 4.8%.

Bank of Canada Deputy Governor Tim Lane noted the central bank is ready to adapt its policies to control inflation in a speech after the data was released. He stated the central bank expects inflation to be around 5% for the first half of the year.

The Bank of Canada is expected to raise interest rates at its next meeting on March 2. Traders expect up to seven interest rate hikes in the next year for Canada.



Argentina crop stress near peak... With a forecast for one more week of hot and dry weather conditions and then a shift to more rain, Argentina’s crop stress might be near the peak, according to World Weather Inc.

World Weather predicts central and eastern parts of Argentina are expected to be dry biased for one more week before there will be the opportunity for “some” change. Rain will continue to increase in the second half of next week with most of the nation getting some precip at one time or another. That should bring temporary relief to the crops.

World Weather forecasts better conditions from the end of February through the first half of March compared to recent weeks. More regular rainfall and milder temps will be mixed with hot and dry conditions. Based on its weather models, the country should finish its growing season with more favorable weather.



Attaché cuts Brazil soybean production adjusts exports... USDA’s attaché in Brazil lowered its estimate for the country’s soybean production to 134.5 MMT from its previous estimate of 136 MMT. In USDA’s February World Agricultural Supply and Demand Estimates (WASDE), Brazil’s soybean production was estimated at 134 MMT. The attaché reduced Brazil’s soybean planting area to 39.8 million hectares, down 600,000 hectares from its previous report.

The attaché cut Brazil’s soybean export forecast for 2021-22 to 86.8 MMT, a 1.2-MMT decrease from its previous estimate. In the Feb. 12 WASDE Report, USDA projected 2021-22 Brazilian soybean exports at 90.50 MMT. For 2020-21, the attaché raised Brazil’s soybean exports to 88.9 MMT.

 

Fire stops Indiana soybean processing plant... Louis Dreyfus suspended operations due to a Tuesday night fire at its soybean processing and biodiesel plant in Claypool, Indiana. The fire was in the bag house. The facility is the largest fully integrated soybean processing and biodiesel plant in the United States.

 

Last U.S./Canada border opens... Protesters left the blockade at Emerson, Manitoba. This fully opens the U.S./Canada border crossing. It is the first time all the U.S./Canadian border crossings are open in two weeks. About 360 vehicles are still protesting Canada’s Covid restrictions in the nation’s capital of Ottawa.


 

French non-EU wheat exports cut... French soft wheat exports outside the EU were trimmed by 100,000 metric tons (MT) to 8.9 million metric tons (MMT) by FranceAgriMer, part of France’s department of agriculture. It is the fourth straight monthly reduction of French non-EU wheat exports. French wheat exports within the EU were increased by the same amount. The shift comes due to trading issues between France and Algeria.


 

Biofuels industry defends RFS at hearing... In front of the Senate Committee on the Environment and Public Works, the biofuels industry stressed the importance of the Renewable Fuel Standard (RFS) to a clean energy policy.

“Let me be clear: there is no path to net-zero emissions by 2050 without biofuels,” said Emily Skor, CEO of U.S. biofuel industry trade group Growth Energy. The hearing reviewed the RFS as the Biden administration considers reforms and pushes for electric vehicles. EPA, which oversees the law, might announce changes as soon as May.

“Like many of our colleagues on this committee, I still support the goals of the Renewable Fuel Standard,” said Tom Carp (D-Del.), chair of the committee, said in his prepared opening statement. He said the law needs to be improved but warned the push to electric cars will still take a while. “In closing, as one of the strongest supporters of electric vehicles in the Senate, I know it’s important to remember that we aren’t yet in a post-liquid fuel world,” he said.

Taxpayers for Common Sense called the RFS a failed policy and a boondoggle for the corn industry in a letter to the committee.

 

Republicans warn USDA on coming oversight of climate efforts... Republican leaders of the House and Senate Agriculture Committees are already signaling they will pursue oversight efforts relative to USDA climate actions such as the announcement last week of $1 billion for pilot projects on climate-smart commodity actions. House Agriculture Ranking Member GT Thompson (R-Pa.) has been vocal in recent hearings the panel’s subcommittees have held relative to gathering information for the next farm bill, focusing his attention on USDA climate actions. He has taken exception to USDA using authorities under the Commodity Credit Corporation (CCC) to fund the effort and in a Tuesday subcommittee session on civil rights issues at USDA with Inspector General Phyllis Fong, asked if her office was going to audit the USDA authority to use the CCC for the program. Fong indicated there are no current plans to do so, but admitted there have been concerns raised about the climate effort. Senate Ag Committee Ranking Member John Boozman (R-Ark.) told Politico he wants to see the new pilot efforts before he decides on how effective they will be. He said, “We’re going to hold their feet to the fire.”

Should the November elections result in Republicans taking control of the House as widely expected, Thompson has made clear the panel will be putting a major focus on USDA’s climate efforts as he and other Republicans consider the USDA effort an overstep in what they see as something that should be left up to Congress. Similarly, Boozman appears ready to undertake oversight on USDA’s actions.

These efforts will be unfolding along with work on a new farm bill and may also contribute to what more observers believe are increasing odds for one- or two-year extension of the 2018 Farm Bill.

 

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