Oil Prices Drop as Israel Avoids Striking Iran’s Oil Facilities

Note: Abbreviated format today as I am in Colorado Springs at a CIPA event.

— Equities today: Asian and European stock indexes were mixed to firmer overnight. U.S. stock indexes are pointed to higher openings. In Asia, Japan +1.8%. Hong Kong flat. China +0.7%. India +0.8%. In Europe, at midday, London -0.3%. Paris +0.1%. Frankfurt -0.2%.

U.S. equities Friday and for the week: The Dow registered another day of losses with the Nasdaq ending in positive territory and the S&P 500 little changed. For the week, the Dow was down 2.68%, the Nasdaq edged up 0.16%, and the S&P 500 was down 0.96%. On Friday, the Dow lost 259.96 points, 0.61%, at 42,114.40. The Nasdaq rose 103.12 points, 0.56%, at 18,518.61. The S&P 500 edged down 1.74 points, 0.03%, at 5,808.61.

— Ag markets today: Corn and soybeans faced light followthrough selling after last Friday’s losses during the overnight session, while wheat has turned mixed early this morning. As of 7:30 a.m. ET, corn futures were trading around a penny lower, soybeans were mostly 6 cents lower, winter wheat markets were steady to a penny higher and spring wheat was steady to a penny lower. Front-month crude oil futures were around $4.25 lower, and the U.S. dollar index was modestly weaker.

Wholesale beef rally may not be done yet. Wholesale beef firmed on Friday after losses earlier last week hinted the strong price rally may be running out of steam. Choice beef firmed $1.07 to $322.24 while Select rose 74 cents to $295.08. Due to the wholesale beef strength, packer cutting margins remain solidly in the black, despite cash cattle prices rising for seven consecutive weeks.

Cash hog fundamentals continue to strengthen. The CME lean hog index is up another 22 cents to $85.43 as of Oct. 24, the sixth consecutive daily gain. The pork cutout value firmed 79 cents on Friday to $98.94.

Weekend demand news: Tunisia tendered to buy 75,000 MT of optional origin durum wheat.

— Agriculture markets Friday and for the week:
• Corn: December corn futures fell 6 1/4 cents to $4.15 1/4, though still marked a 10 1/2 cent gain on the week.
• Soy complex: Novem December SRW wheat futures fell 12 1/2 cents to $5.69, nearer the session low and closed at a five-week low close. For the week, December SRW fell 3 3/4 cents.
• Cotton: December cotton fell 87 points to 70.66 cents and gave up 33 points on the week.
• Cattle: December live cattle futures fell 10 cents to $189.15, nearer the daily high and hit a 3.5-month high early on. For the week, December live cattle gained $1.825. November feeder cattle futures rose 5 cents to $248.575 and nearer the daily high. On the week, November feeders rose 97 1/2 cents.
• Hogs: Futures rebounded quickly from Thursday’s drop, with nearby December futures jumping $1.025 to $79.675. That represented a weekly rise of $1.85. December

— Oil prices drop as Israel avoids striking Iran’s oil facilities. Oil prices fell sharply after Israel’s weekend attacks on Iran avoided targeting key oil and nuclear infrastructure. Brent crude dropped 5.2% to $72.11 a barrel, while West Texas Intermediate fell 5.5% to $67.85. Iran’s measured response, signaling no immediate retaliation, helped ease fears of regional supply disruption. The U.S. had urged Israel to avoid key Iranian sites to prevent further escalation. Analysts suggest that market attention is shifting from geopolitical risks to concerns over potential oversupply in 2025, with OPEC nations expected to unwind production cuts by year-end.

— McDonald’s announced that Quarter Pounders will be returning to menus at hundreds of its restaurants after testing ruled out beef patties as the source of the recent E. coli outbreak. The E. coli outbreak has affected at least 75 people across 13 states, resulting in 22 hospitalizations and one death in Colorado. The Colorado Department of Agriculture conducted tests on beef patty samples from McDonald’s restaurants associated with the outbreak. All samples tested negative for E. coli contamination. Based on these results and a comparison with CDC data, McDonald’s has ruled out Quarter Pounder beef patties as the source of the outbreak. “The issue appears to be contained to a particular ingredient and geography, and we remain very confident that any contaminated product related to this outbreak has been removed from our supply chain and is out of all McDonald’s restaurants,” Cesar Pina, chief supply chain officer for McDonald’s North American operations, said in a letter Sunday.

The U.S. Food and Drug Administration (FDA) continues to believe that slivered onions from a single supplier are the probable source of contamination. Taylor Farms, a California-based produce company, was identified as the supplier of fresh onions used in the affected restaurants. The onions came from a Taylor Farms facility in Colorado Springs, Colorado.

The 900 restaurants that received slivered onions from the Colorado Springs facility will offer Quarter Pounders without slivered onions. These locations are in Colorado, Kansas, Wyoming, and parts of Idaho, Iowa, Missouri, Montana, Nebraska, Nevada, New Mexico, Oklahoma, and Utah. McDonald’s has decided to stop sourcing onions from Taylor Farms’ Colorado Springs facility “indefinitely.”

Several other fast-food chains, including Taco Bell, KFC, Pizza Hut, and Burger King, have also removed onions from some menus in certain areas as a precautionary measure.

The investigation into the outbreak is ongoing, with the FDA and CDC continuing to work with partners to trace its origin. McDonald’s has expressed commitment to addressing the situation and regaining customer trust.

— USDA confirms new avian influenza cases in poultry and cattle. USDA’s Animal and Plant Health Inspection Service (APHIS) confirmed highly pathogenic avian influenza (HPAI) in a commercial egg-laying flock of 146,000 birds in Clackamas County, Washington. Over the past 30 days, four commercial and five backyard flocks have been affected, totaling 3.63 million birds. Additionally, HPAI was reported in 134 dairy cattle herds in California and three herds in Idaho. Since the outbreak began, there have been 380 confirmed infections across 14 states.

— Iowa destroys 1.3 million chickens following Pure Prairie Poultry bankruptcy. The Iowa Department of Agriculture has euthanized approximately 1.3 million chickens that it had taken custody of following the bankruptcy of Pure Prairie Poultry. This drastic action came after the state failed to find buyers for the birds, largely due to creditors’ claims on the broilers. The situation unfolded when Pure Prairie Poultry, an Iowa-based poultry processor, filed for Chapter 11 bankruptcy in late September 2024. The company’s financial collapse left 1.3 million broiler chickens across 14 Iowa farms without proper care, as Pure Prairie could no longer afford to buy feed for the birds. In response, the Iowa Department of Agriculture sought and obtained an emergency court order to take control of the chickens.

Initially, state officials attempted to find alternative solutions for the birds. However, their efforts to locate buyers were unsuccessful, complicated by existing creditors’ claims on the chickens. Faced with no viable alternatives, the state requested and received permission from a district court judge to euthanize the birds.

The culling process was recently completed, affecting thirteen farmers, primarily located in northwest Iowa’s Sioux County, who had been contracted to raise the chickens for Pure Prairie Poultry.

The Pure Prairie Poultry ordeal is expected to cost the state of Iowa approximately $2 million. This financial burden comes on top of the $45.6 million that USDA had invested in Pure Prairie Farms Inc. through a Food Supply Chain Guaranteed Loan program in 2022, adding to the complexity and scale of the economic impact.

Questions remain about the long-term implications for Midwest poultry farmers and potential changes in oversight and support mechanisms for the industry to prevent similar occurrences in the future.

— USDA warns of illegally imported meat in multi-state health alert. USDA’s Food Safety and Inspection Service (FSIS) issued a health alert concerning meat and poultry products illegally imported and sold in several U.S. states without official inspection marks. The affected products, found in Arizona, California, Iowa, Kansas, Maryland, Minnesota, Nebraska, Oklahoma, and Texas, include items such as “BEST Beef Curry” and “Eain Chak Coconut Soup Paste.” While no illnesses have been reported, consumers are urged to discard or return the products. The investigation is ongoing as FSIS emphasizes the public risk posed by uninspected imports.

Of note: FSIS does not refer to the products as coming from Burma. However, they do note that you can view the labels in Burmese. Link

— Soy growers criticize EPA’s new herbicide restrictions. The American Soybean Association (ASA) expressed concern over new restrictions imposed by the EPA on glufosinate-P herbicide, citing pressure from environmental groups. The finalized registration, released on Oct. 18, unexpectedly tripled runoff points and added a 10-foot ground spray drift buffer. ASA director Alan Meadows warned that the move sets a troubling precedent, as it deviates from EPA’s Herbicide Strategy and introduces limitations not raised in the draft registration. Restrictions also unexpectedly impact areas associated with the Whorled Sunflower, raising concerns about future regulatory unpredictability for farmers. Link

— USDA raises 2024 and 2025 food price inflation forecasts. USDA raised its food price inflation outlook for both 2024 and 2025, with all food prices in 2024 now expected to rise 2.3%, up from 2.2% in September. Grocery prices are forecast to increase by 1.2%, while restaurant prices remain unchanged with a 4.1% rise. The 2025 forecast saw larger upward adjustments, with food prices expected to climb 2.4%, grocery prices 1.6%, and restaurant prices 3.4%.

Egg prices continue to show volatility, with 2024 costs projected to rise 8.8%, driven by the ongoing impact of highly pathogenic avian influenza (HPAI). The 2025 egg price increase was revised even higher to 10.5%, a sharp jump from the 4.7% forecast in September. USDA noted that HPAI outbreaks have significantly reduced the U.S. egg-layer flock, contributing to the price surge.

While food inflation has eased since the 2022 spike, consumers are unlikely to see much relief in 2025. Despite falling energy costs and stable agricultural input prices, the USDA warns that macroeconomic policies and inflationary pressures on services may continue to affect food prices. However, with time left in the 2025 forecast cycle, future adjustments are possible.

— China’s September industrial profits plunge. China’s industrial profits plunged 27.1% from a year earlier in September, the steepest fall of the year. Industrial profits dropped 3.5% to 5,228.16 billion yuan during the first nine months of the year, reflecting an uncertain economic recovery due to persistent weak demand, deflation risks and a property downturn.

— China again warns EU against separate talks with EV makers. China renewed warnings to the European Union that if the bloc conducts separate negotiations with electric vehicle (EV) companies while in talks with China, that would “shake mutual trust” and interfere with the overall negotiations, Chinese commerce ministry said. This reiteration from warnings earlier this month comes days after China and the EU agreed to hold further technical negotiations on possible alternatives to tariffs on Chinese EVs.

— Trump hints at RFK Jr.’s role in health and food policy. Donald Trump’s recent comments on Joe Rogan’s podcast and at his Madison Square Garden rally have shed light on the potential role Robert F. Kennedy Jr. could play in a future Trump administration, focusing primarily on health and food policy.

Trump expressed his intention to give Kennedy significant latitude in health and food policy areas: “I’m gonna let him go wild on health. I’m gonna let him go wild on the food. I’m gonna let him go wild on medicines,” Trump stated at his rally. However, Trump emphasized he would limit Kennedy’s influence on environmental matters, particularly regarding oil policy.

Kennedy has outlined some of his priorities if given a role in the administration:
• He criticized the current USDA dietary guidelines, claiming they have been “hijacked” by corporate interests.
• Kennedy promised to revitalize American agriculture and health, suggesting significant changes to current policies.
• He pledged support for psychedelics, raw milk, and “clean foods” as part of his health agenda.

The alliance between Trump and Kennedy could face several hurdles:
• Kennedy’s anti-pesticide and anti-processed foods stance may clash with Trump’s previous agricultural policies and business ties.
• There’s a stark contrast between Kennedy’s environmental advocacy and Trump’s pro-oil stance.
• Kennedy’s controversial views on vaccines and other health issues could face scrutiny if he’s given a significant role.

Kennedy has taken a confrontational stance towards current FDA policies:
• He declared that the “FDA’s war on public health is about to end,” suggesting major changes to the agency’s approach.
• Kennedy warned current FDA employees involved in what he sees as a “corrupt system” to preserve records and prepare for changes.

— Stefanik presses FBI on alleged Iranian interference in 2024 election. House Republican Conference Chair Elise Stefanik (R-N.Y.), a member of the House Intelligence Committee, has raised concerns about alleged Iranian interference in the 2024 presidential election. Writing in the Wall Street Journal (link), Stefanik criticized the FBI for not answering her 13 questions, which include inquiries about when both campaigns were notified of Iran’s targeting efforts and who leaked hacked materials to the media or the Biden-Harris campaign. She emphasized that the FBI could provide answers without compromising investigations or classified information, stressing Congress’s duty to hold the executive branch accountable.

— Early voting is in full swing across the United States. According to the University of Florida Election Lab, over 41 million Americans voted early as of yesterday afternoon. More than 65 million mail-in ballots were requested; of those, about 21 million have been returned. Additionally, over 20 million people have cast early in-person votes.

— NWS outlook: Moderate to heavy snow over parts of the Northern/Central Rockies on Tuesday... ...Temperatures will be 20 to 30 degrees above average over parts of the Plains and Mississippi Valley... ...There is a Marginal Risk of severe thunderstorms over parts of the Upper/Middle Mississippi Valley and Central/Southern Plains on Tuesday.

(NWS)

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