Evening Report: Feb. 22, 2022

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Biden unveils Russia sanctions, Ukraine invasion likely to progress... On Tuesday, President Joe Biden said the U.S. will impose the first tranche of sanctions on Russia and is shifting American forces already based in Europe. The U.S. is imposing sanctions on two of the country’s most prominent financial institutions, some of the Russian oligarchs and cutting off Russian sovereign debt abroad, which means it can no longer raise money from the West and trade in U.S. or European markets. Earlier in the day, the U.K. unveiled new sanctions on five Russian banks. British Prime Minister Boris Johnson called this the “first tranche” of punitive economic measures against Russian President Vladimir Putin. Biden is also shifting American forces in Europe to help bolster Estonia, Latvia and Lithuania and warned more sanctions are possible if Putin continues his invasion.

“Russia will pay an even steeper price if it continues its aggression, including additional sanctions,” Biden said in an address from the White House.

The actions follow an escalation of tensions triggered by President Vladimir Putin’s recognition of two self-proclaimed republics in eastern Ukraine. Russia’s upper house on Tuesday permitted Putin to deploy troops to the separatist-held regions. Russia has also pulled its diplomats and other embassy personnel from Ukraine.

Biden called Putin’s actions an “invasion,” which was a key term being closely monitored. He stated his hopes for diplomacy to avoid any further escalations. However, it does not seem like Putin was interested in diplomacy. Ukraine’s foreign minister advised Ukrainian President Volodymyr Zelenskiy to break off diplomatic relations with Russia.

France’s Foreign Affairs Minister Jean-Yves Le Drian called off a planned meeting on Friday in Paris with Russian counterpart Sergei Lavrov, which had been arranged before Putin announced his recognition of separatists in eastern Ukraine.

Pork stocks build less than normal, beef inventories rise contra-seasonally... USDA’s Cold Storage Report showed a smaller-than-normal build in frozen pork stocks during January, while beef stocks rose versus a normal small decline during the month.

Beef stocks totaled 526.4 million lbs., up 19.3 million lbs. (3.8%) versus December, whereas the five-year average was a 2-million-lb. decline during the month. Beef stocks were 7.1 million lbs. (1.4%) above January 2021 inventories but 14.9 million lbs. (2.9%) under the five-year average.

Frozen pork inventories at 428.5 million lbs. rose 32.0 million lbs. (8.1%) from December, far less than the five-year average gain of 56.7 million lbs. during January. Pork stocks were 29.0 million lbs. (6.3%) under year-ago and 121.7 million lbs. (22.1%) less than the five-year average.

Total poultry stocks at 1.01 billion lbs. increased 98.8 million lbs. (10.8%) from December but were 111.5 million lbs. (9.9%) less than last year. Chicken breast stocks at 163.5 million lbs. declined 75.8 million lbs. (31.7%) versus last year’s January record.

More avian influenza cases reported... The fourth case of highly pathogenic avian influenza on a commercial turkey farm in Indiana is pending. The 15,400 head flock has been depopulated, according to the Indiana Board of Animal Health. It is the same county, Greene, as the third suspected base in the state.  A total of 118,873 turkeys have been depopulated with flu being in four locations in two counties.

Several cases of bird flu have been discovered in wild birds in Delaware. Maine confirmed a case in a backyard flock in Knox County. A backyard flock in Suffolk County, a coastal area that includes the eastern end of Long Island, New York, also tested positive. 

The Philippines reported four bird flu outbreaks in duck and quail farms in two provinces.

EPA commits to increasing biofuel use... EPA is committed to increasing the use of biofuels, an agency official said on Tuesday, but the industry is still anxiously awaiting the Biden administration to finalize specific blending goals. The Biden administration is open to using every tool to fight climate change in the transportation sector, which includes biofuels, said EPA's Sarah Dunham, director of the Office of Transportation and Air Quality, at the National Ethanol Conference in New Orleans.

EPA has proposed denying all pending small refinery exemptions (SREs), but it will not take final action on that proposal until fully considering stakeholder comments, Dunham said.

The Biden administration also must make decisions to reset statutes that mandate U.S. renewable fuel blending, as Congress only set yearly volume requirements through 2022. "We must look both backwards and forwards as we consider what volumes may be appropriate," Dunham said.

Perspective: There wasn’t much new “news” in what Dunham said today. As EPA has previously indicated, a decision on final RFS levels and SREs won’t come until comments are reviewed.

Indiana soy processing plant back up after fire... The Louis Dreyfus Co. soybean processing and biodiesel plant in Claypool, Indiana, that caught fire on Feb. 15 is operating and taking deliveries, according to the company. The plant is the largest fully integrated soybean processing and biodiesel plant in the U.S. and can crush 175,000 bushels of soybeans per day.
 

ADM makes record soybean shipment from northern Brazil... Last week, ADM-owned bulk carrier MV Harvest Frost, which is 237 meters (777.56 ft) long and 40 meters wide, carried a record 84,892 metric tons of soybeans from a port in the Amazon basin to Rotterdam in the Netherlands, company officials told Reuters. ADM's South America Logistics Director, Vitor Vinuesa, said in a statement that this shows there is another option to soybeans through the Ponta da Montanha Grain Terminal in northern Brazil. The shipment broke the record by 2,271 MT set in 2020.

China allows Myanmar corn imports... China has approved corn imports from Myanmar as of Feb. 18, according to its General Administration of Customs. Myanmar typically exports 2 MMT of corn, according to the USDA. China has been purchasing a large part of its corn from the U.S. and Ukraine.

Argentina's farmers take export taxes to court... Major Argentine farm group, Argentine Rural Society (SRA), filed a case arguing that Argentine grain export taxes have been illegally charged since Jan. 1, 2022. Argentina’s government currently taxes soybeans at 33%, soymeal and soyoil at 31% and wheat and corn at 12%.

The group claims since the 2022 budget bill, which would allow the fees to be extended, was not signed into law by that time, export taxes should not be collected after the first of the year. The government contends the 2021 budget is still in force and all collection instruments are also extended. SRA's request would still need to go through several legal steps before the export taxes could be ruled illegal.

Biden administration will suspend or delay new federal oil and gas leasing...  The move comes following a court ruling against the process by which it calculates the social cost of climate change, the administration announced over the weekend. On Feb. 11, Judge James Cain of the Western District of Louisiana, a Trump appointee, blocked the administration’s method of calculating the social costs associated with greenhouse gases, the primary driver of climate change. The Biden administration had returned to Obama-era calculation methods, with plans to develop its own in the future.

In his ruling, Cain blocked federal agencies from considering findings from the White House Interagency Working Group, which had been tasked with devising new metrics based on the Obama-era calculations. It also bars the administration from considering the global impacts of greenhouse gas emissions, one of the significant distinctions that made the Obama estimates far higher than the Trump administration’s. In a legal filing Saturday evening, the Justice Department asked the court to stay the injunction, citing the likelihood that its appeal of the decision will succeed.

“The Interior Department has assessed program components that incorporate the interim guidance on social cost of carbon analysis from the Interagency Working Group, and delays are expected in permitting and leasing for the oil and gas programs,” Interior spokesperson Melissa Schwartz said in a statement Saturday night.

France bans growth antibiotic meat imports... Starting April 22, meat imports from animals treated with growth antibiotics will be prohibited, according to the French farm ministry. The move is expected to affect the poultry market mainly. According to industry sources, France imported about 45% of the chicken it consumed last year, including EU and non-EU origins. The EU imports most of its poultry from Brazil, Thailand and Ukraine.

Typical monsoon season predicted for India... India’s monsoon is likely to be normal this year, according to a private weather forecaster, Skymet Weather Services. It would be the fourth straight normal monsoon that delivers about 90% of the annual rainfall for the country and irrigates more than half of the country’s farmland.

The nation got 99% of the 50-year average rainfall of 880.6 millimeters in 2021, according to the India Meteorological Department (IMD), the official forecaster. Monsoon is considered normal when cumulative rains are between 96% and 104% of the long-term average. The IMD usually releases its forecast in April.

India commodity trader plans to increase ethanol output... A top Indian commodities trader plans to increase ethanol production by 60,000 liters per day after purchasing 100,000 liters per day capacity ethanol plant.  K.N. Group has also announced plans to build a 100,000 liters per day ethanol plant in western India.
 

In an interview with Reuters, Vijay Shrishrimal, managing director of Mumbai-based K.N. Group, told Reuters that the company is planning to add ethanol production from sugarcane juice. Currently, the company can only make ethanol from molasses.

India, the world’s third-largest oil importer, has set the goal of having a 20% ethanol blend in its gas supply by 2025.