COVID-19 Developments 4/3/20

Rice, respirator pirates, Singapore, and more.

No updates this weekend, back ‘atcha on Monday. Stay safe y’all. — JLS

Rice. Due to nation-wide labor shortages and logistics disruptions, Indian rice traders are not currently signing new export contracts. Myanmar’s Ministry of Commerce said it was temporarily suspending new rice export permits but that it was not banning rice exports -- it was merely putting a new system in place. Cambodia’s rice exports were up 35 percent year-on-year in the first quarter, but is banning rice exports beginning on April 5 “until further notice.” Despite speculation that Vietnam would lift its ban on new rice export contracts, the country has not yet done so. Pakistan is still exporting, and Thailand’s Commerce Ministry said Thailand would “continue exporting rice as usual.”

What it means: India (1), Vietnam (3), and Myanmar (6) were three of the top six biggest rice exporters in the world last year. While the assumption is that Indian rice exports will resume, almost 500,000 tonnes of Indian rice exports are currently stuck at ports or trapped in India’s supply chain and it will be at least weeks -- and likely longer -- till India’s situation stabilizes. This is all very good news for a country like Thailand, which has seen prices for its rise increase to the highest in seven years, but it is exactly the sort of thing the WTO, the FAO, and the WHO have been warning about. Keep an eye on whether this is truly a short-term disruption, or whether countries continue to place restrictions on exports. This may be a leading indicator for a significant and sustained rise in food prices across the board.

The United States of Piracy. Rundfunk Berlin-Brandenburg reports that according to Berlin’s state minister of the interior Andreas Geisel, the United States confiscated a shipment of 200,000 FFP2 respirators intended for Germany. Geisel said the masks were ordered by Berlin’s police and were made by a U.S. company with manufacturing in China and were confiscated in Bangkok, where they were set to be transported to Germany via air. He referred to the incident as “an act of modern piracy.” Germany’s Health Minister Jens Spahn said he had no knowledge of the incident and the United States has denied previous similar reports regarding Canadian and French orders of Chinese-made masks and respirators...but the report is circulating in a number of legitimate German papers.

What it means: Worldwide shortages in crucial personal protective equipment are leading to a surge in prices and a competitive global scavenger hunt for fresh supplies. Even as China’s factories are coming back online, production of this medical gear is outpacing global demand. This is not the second strange U.S.-Germany COVID-19 related spat; reports in mid-March about the US attempting to buy a Germany company called CureVac to produce a COVID-19 exclusively for the US made waves in Germany and was subsequently denied by the US and CureVac. I cannot confirm the accuracy of Geisel’s story at this point but it underscores what will be one of the COVID-19 pandemic’s long-term consequences: biotech will become (and arguably already is) a frontline geopolitical issue.

Singapore succumbs. Singapore reported 65 new COVID-19 cases, including three new clusters. As a result, Singapore officially moved from a mitigation strategy to a suppression strategy. Singapore’s success has been built on its extremely effective ability to track and manage current cases, but developments in the last week indicated that Singapore’s ability to continue to do so had broken down, as the MInister for National Development said current trends indicated “likely” hidden cases in the community. Singaporean Prime Minister Lee Hsien Loong addressed the nation earlier today and announced suppression measures most of the world has become all too familiar with, including closures of schools and non-essential businesses until May 4. Singapore’s Health Minister said the country was not yet at its highest level of alert despite the closures.

What it means: Singapore has had remarkable success at containing COVID-19’s spread. The fact that a breakout of this magnitude has occurred underscores the long-term risk posed by COVID-19 as long as the pandemic remains active and as long as a vaccine or effective drugs against the virus are lacking. Even once countries like the US, Italy, and Spain manage to bring their caseloads down, the threat of second waves of cases will remain high. Singapore is also modeling what the timing of an effective suppression strategy looks like, coming down hard and fast for a period of four weeks quickly and decisively before slowly peeling back restrictions. 

Poland-Russia squabbles. Poland announced it will forgo traveling to Smolensk in Russia on April 10 for an annual ceremony to commemorate the death of former Polish President Lech Kaczyński in a plane crash 10 years ago and to mark the 1940 Katyn Massacre, when over 20,000 Poles were executed by Soviet forces. The postponement is due to COVID-19. The announcement comes after the Polish government had implied earlier this week that Russia had failed to respond to Polish requests on the trip. Russia officially rejected the implication earlier today, as the Russian Foreign Ministry published a blistering statement earlier today, saying Russia was “baffled by the new provocative outburst” and criticizing Poland’s “outrageous ingratitude.”

What it means: Poland and Russia never miss an opportunity to point a finger at each other..

Honorable Mention

The U.S. Ambassador to China released a positive statement about joint efforts between the two countries to combat COVID-19.

The President of Brazil’s Petrobras said the company was considering cutting oil production due to high prices and a 60 percent drop in gasoline demand in the Brazilian market.

Russian President Vladimir Putin said Russia was “ready to interact” with the US and OPEC on “pooling efforts” to achieve “oil market rebalancing.” Whatever that means.

Uruguayan employees of Brazilian meatpackers like Marfig and Minerva want better salaries and more extensive measures put in place to protect workers from COVID-19 and plan to stop working until April 8.

Austrian Chancellor Sebastian Kurz told parliament that his government would review data and begin crafting a plan to roll back suppression measures and gradually restart the economy over the weekend.

4,500 tonnes of Russian grain are being held up at the port of Novorossiisk on the Black Sea due to delays in issuing permits for trucks to enter the port.

Morocco extended the suspension of custom duties on wheat, lentils, chickpeas, and beans until June 15.