Evening Report: March 2, 2022

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Russia/Ukraine update... Ukrainians said on Wednesday they were battling in Kherson, as Russia claims it has taken control of the city. Russia’s week-old invasion has yet to achieve its aim of overthrowing Ukraine’s government. Russia continues to bombard Kharkiv and the port of Mariupol. U.S. officials said there had been no significant change on the ground in Ukraine since Tuesday. The Russian convoy going to Kyiv has stalled and was “behind schedule.” The Kyiv Independent reported that Ukrainian armed forces recovered planning documents that said the invasion decision was made on Jan. 22. The attack was expected to take 15 days, from Feb. 20 to March 3. They also recovered a working map, combat tasks, call table, control signal table, hidden control table and staff listings.

On Wednesday, 141 of 193 United Nations General Assembly members voted to reprimand Russia for invading Ukraine and demanded that Moscow stop fighting and withdraw its military forces. This action aims to isolate Russia at the world body diplomatically. Thirty-five members, including China, abstained. Russia, Belarus, Eritrea, North Korea and Syria voted against the resolution.

Russian sources say another round of peace talks will take place. Ukraine officials have not commented on the reports. President Volodymyr Zelenskiy said Russia must stop bombing if it wanted to negotiate. Israeli Prime Minister Naftali Bennett, who has proposed Israeli mediation between Russia and Ukraine, spoke with the leaders of both countries on Wednesday.
 



U.S. open to Russian oil sanctions, just not yet... The White House on Wednesday said it was “very open” to the possibility of targeting Russian oil and gas with sanctions. However, National Economic Council Deputy Director Bharat Ramamurti later said the administration does not want to target the Russian energy sector at this time. The Biden administration said in the past that any Russian oil and gas sanctions would likely hurt U.S. consumers more than Russian President Vladimir Putin.

However, many oil buyers are refusing to purchase Russian oil. On Wednesday, Russia’s Surgutneftegaz could not sell 880,000 metric tons of Urals oil from Russian ports following cancellations of other proposed sales. Some importers have denied Russian ships access to their ports.

Meanwhile, the U.S. Justice Department launched a task force known as “KleptoCapture” aimed at straining the finances of Russia’s oligarchs.
The U.S. is preparing a sanctions package targeting more Russian oligarchs and their companies and assets.

 

 

OPEC+ keeps output plan... At its brief meeting on Wednesday, OPEC+ decided to keep its plan to increase oil supplies by just 400,000 barrels per day, its long-term strategy. The decision from the leading oil-producing countries comes as world oil prices are rising.

For months, many of the countries in OPEC+ have failed to increase their oil production as much as they targeted.

 


Chinese buyers ordered to purchase commodities... Top Chinese government officials have ordered state-owned buyers to find oil and gas, iron ore, barley and corn supplies they need due to the Russia/Ukraine conflict, Bloomberg reported. China is heading into peak demand season for many commodities.

According to sources, there was no mention of prices or other guidance to ensure supplies. Officials are worried about even higher commodity costs on the Chinese economy.

The Chinese economy has already felt pressure from the pandemic, supply chain pressures and geopolitics including a diplomatic spat with Australia. Chinese officials are expected to reveal plans to support the Chinese economy during the National People’s Congress begins this weekend.

 

 

Firm trims Brazil soybean crop again... Due to lower yields in southern Brazil, commodity brokerage firm StoneX cut its soybean production to 121.2 MMT, down 5.3 MMT or 4.2% from its February estimate. It forecasts production in Rio Grande do Sul at 8.9 MMT, just 40% of its production last year.  StoneX noted that higher production in Goiás, Mato Grosso, São Paulo, northeastern and northern states could not offset the drop in southern production.

 

India asks Indonesia to raise palm oil shipments...  Indian government officials asked Indonesia to lower its biodiesel blending rules and increase its palm oil shipments. It is an effort by Indian officials to replace sunflower oil shipments from Russia and Ukraine. Those two countries supplied about 13% of India’s edible oil imports last year. India is exploring other edible oil supplies around the world. India’s new-crop rapeseed oil could be available next month, improving edible oil supplies in the country, according to industry sources. 

 


Powell still supports a 25-basis-point increase at the March meeting... Fed Chair Jerome Powell told the U.S. House of Representatives Financial Services Committee, he was “inclined to propose and support a 25-basis-point rate hike” at its March 15-16 meeting. He is “prepared to move more aggressively” if inflation remained high.

Traders expect the Fed to hike interest rates by 25 basis points. Previously, market indicators predicted a 50-basis point increase.

Powell expects inflation to decline this year. He noted it was too early to tell how Russia’s invasion of Ukraine will have on the U.S. economy. 

 

 

Bank of Canada raises interest rates...  The Bank of Canada raised its overnight interest rate by 25-basis points to 0.5%. It is the second central bank increase among the top seven economies globally since the pandemic’s start. The Bank of England has raised interest rates twice.

The Bank of Canada said annual inflation, at a 30-year-plus high of 5.1%, “remains well above” its preferred target of 2%. The bank expects inflation to increase in the near term with the Russian/Ukraine conflict adding to the price pressures.

 

 

Corn and soybean crop insurance prices higher, volatility remains steady...  The 2022 spring crop insurance price for corn is $5.90, $1.32 higher than last year. The 2021 corn crop insurance harvest price was $5.37. This year’s corn volatility factor was 0.23, the same as last year.

The 2022 spring crop insurance price for soybeans is $14.33, $2.46 above last year. The 2021 soybean crop insurance harvest price was $12.30. The 2022 soybean volatility factor remained steady with last year at 0.19.

 

 

Avian flu spreads to two more states, including Iowa... One non-commercial, backyard non-poultry flock in Iowa and one in Connecticut tested positive for highly pathogenic avian influenza (HPAI), according to USDA’s Animal and Plant Health Inspection Service (APHIS). APHIS will report the finding to OIE. However, APHIS noted OIE trade guidelines call on member countries not to impose bans on the international trade of poultry commodities in response to such notifications in non-poultry.

 

 

New fertilizer plant planned for Indiana... Bionutrients, a joint venture of MPS Egg Farms and Hello Nature, will construct a $50 million fertilizer plant in northern Indiana that will turn chicken manure into fertilizer, according to company sources. The plant is expected to be operational in the summer of 2023. MPS Egg Farms operates six egg farms in Indiana, Illinois and Texas. Hello Nature, based in Italy, already operates two organic fertilizer and biostimulant plants in Indiana that opened in 2018.

 

 

 

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