Evening Report | March 20, 2023

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Russia considering measures if grain deal is suspended... Russia is considering in full the measures that can be taken in case the Black Sea grain deal is suspended. Deputy Foreign Minister Sergey Vershinin said they will be of a comprehensive nature, under such a scenario, without providing details.

Meanwhile, Russian President Vladimir Putin said, “We are insisting exactly on the package nature of this deal, primarily in interests of African and other developing countries. Out of the total volume of grain, grain crops exported from Ukraine, about 45% were sent exactly to European countries, and just 3% to Africa.” Putin also said Russia will be ready to supply grain free of charge to African countries in need in the amount equal to previous grain exports under the Black Sea Grain Initiative if Moscow decides not to extend the deal after the 60-day period expires.

Ukraine’s grain production expected to fall sharply, but oilseed output will rise... Ukraine’s 2023 grain harvest is likely to fall to 44.3 MMT from 53.1 MMT last year amid less planted acreage and lower yields, a forecast by the Ukrainian ag ministry showed. The crop is expected to include 16.6 MMT of wheat, 21.7 MMT of corn and 4.8 MMT of barley.

“The reduction in grain sowing acreage, coupled with the projected decline in average yields caused by rising prices of key inputs, will affect harvest volumes,” the ministry said. The area planted to grain is expected to total 10.2 million hectares, 1.4 million hectares less than last year, including 4.17 million hectares of wheat (down 834,000 from last year) and 3.6 million hectares of corn (down 451,000).

Oilseed production is expected to rise to 19.2 MMT, up 1 MMT from last year, due to expected increases in acreage and yield.

Xi, Putin meet in Russia... Russian President Vladimir Putin hosted his “dear friend” Xi Jinping at the Kremlin on Monday. It was the first trip abroad for Xi since he obtained a third term as China’s leader. Xi has been trying to portray Beijing as a potential peacemaker in Ukraine, even as he deepens economic ties with Russia. Putin told Xi he viewed China’s proposals for a resolution of the Ukraine conflict with respect. The meeting occurred just days after the International Criminal Court issued an arrest warrant on Friday accusing Putin of war crimes for deporting children from Ukraine. Beijing said the warrant reflected double standards.

U.S. Secretary of State Antony Blinken said, “That President Xi is traveling to Russia days after the International Criminal Court issued an arrest warrant for President Putin suggests that China feels no responsibility to hold the Kremlin accountable for the atrocities committed in Ukraine. Instead of even condemning them it would rather provide diplomatic cover for Russia to continue to commit those grave crimes.”

White House national security spokesman John Kirby said Xi should use his influence to press Putin to withdraw troops from Ukraine, and Washington was concerned that Beijing might instead call for a ceasefire that would let Russian troops stay.

EPA reportedly plans to let California phase out diesel-powered trucks... The Environmental Protection Agency plans to grant California a waiver to impose its own tailpipe pollution regulations — which are stricter than federal requirements — that will allow for the phaseout of diesel-powered truck sales in the state, the Washington Post reports, citing three people briefed on the plans. The waiver could affect six other states that have committed to following California's tougher standards, which include more stringent pollution limits for heavy-duty vehicles that would apply to vehicles starting with the 2024 model year.

USDA extends comment period on cattle/bison electronic eartag proposed rule... USDA’s Animal and Plant Health Inspection Service (APHIS) will extend the public comment period by 30 days, to April 19, on its proposed rule to require eartags to be both visual and electronic for interstate movement of cattle and bison. The comment period had been set to end today. APHIS has proposed the requirement would be put in place six months after a final rule is published in the Federal Register, but the agency has provided no timeline on when any final rule would be published at this stage.

Lagarde: Banking woes won’t halt ECB’s inflation fight... Financial market turbulence will not stand in the way of the European Central Bank’s fight against inflation as it has separate tools to fight both issues, ECB President Christine Lagarde said. In fact, she said it may help ECB on that front. This was a likely reference to both higher central bank rates and jitters in the banking sector tending to have the same effect by discouraging lending and cooling economic activity.

“Clearly financial stability tensions might have an impact on demand and might actually do part of the work that would otherwise be done by monetary policy and interest rate hikes,” Lagarde told European lawmakers.

For inflation, Lagarde said interest rates will remain ECB’s main tool while for the bank sector, the central bank can utilize its existing lending facilities or devise new ones. But she repeated a warning that banks should prepare for slower economic growth, higher funding costs and lower lending volumes. “Individual financial institutions should carefully preserve their current levels of resilience, to ensure that they could weather a potentially less favorable environment,” Lagarde said.

Vaccine makers prep bird flu shot for humans ‘just in case’... Some of the world’s leading makers of flu vaccines say they could make hundreds of millions of bird flu shots for humans within months if a new strain of avian influenza ever jumps to people. Executives at three vaccine manufacturers – GSK Plc, Moderna Inc and CSL Seqirus, owned by CSL Ltd - told Reuters they are already developing or about to test sample human vaccines that better match the circulating subtype, as a precautionary measure against a future pandemic. Others, like Sanofi, said they “stand ready” to begin production if needed, with existing H5N1 vaccine strains in stock.

In a pandemic, vaccine manufacturers would shift production of seasonal flu vaccines and instead make shots tailored to the new outbreak when needed. They already have the capacity to make hundreds of millions of doses.