Crude oil prices declined again last week as tensions eased between the United States and “rogue states” Iran and Syria.
At the United Nations, the five permanent members of the Security Council agreed upon a resolution that will require Syria to give up its chemical weapons. This agreement, proposed by Russia, could avert U.S military action.
Meanwhile, the U.S. and Iran met last week to discuss international oversight of Iranian nuclear programs. This meeting between U.S. Secretary of State John Kerry and his Iranian counterpart, Mohammad Javad Zarif, represented some of the most substantial talks between the two nations in decades and was described as a “good start” to addressing international concerns.
As a result of these developments, it seemed less likely that there would be large-scale conflict in the Middle East that could derail crude oil production and transportation. By midday Friday, crude oil for delivery in November was trading for $102.64, down $2.11 during the week.
Cattle corralled higher
The USDA’s monthly Cattle on Feed report showed that U.S. cattle herds are shrinking with a record-low number of animals placed into feedlots during August. A smaller supply of young cattle, called “feeders,” will ultimately lead to fewer full-weight or “fat cattle,” indicating a smaller supply of market-ready beef in the months to come.
Additionally, the cattle market was rattled last week by an announcement from the Chicago Mercantile Exchange (CME) that it would no longer accept cattle fed with Zilmax, a growth additive that may cause lameness.
The CME is the leading futures market in the U.S., and this change could cause a ripple effect throughout the industry. Zilmax is fed to cattle to increase weight gain, and the removal of the additive could cause beef supplies to tighten.
By Friday, live cattle futures had risen to a five-month high, trading over $1.28 per pound.