Perspective: Mid-Day Commentary for October 23

By: Arlan Suderman, Chief Commodities Economist

Thu, 23 Oct 2025, 16:26

Today's Perspective Video: November WASDE is at Risk

October 23 – The U.S. has sanctioned Russia’s two largest oil companies, Rosneft and Lukoil, who combine to account for over 5% of global oil production. This notable ramp-up in pressure on Russia comes after the decision to suspend the potential meeting this week between President Trump and Russian President Putin in Hungary to discuss the prospect of bringing the war in Ukraine to an end, with Trump noting the lack of legitimate progress made thus far despite previous talks. The move has been met with expected outrage from Russia, as oil and gas revenues are by far the most important source of funding for the country’s government and, in turn, their war effort, accounting for roughly one-quarter of their budget. It’s also worth keeping in mind the added impact of these fresh sanctions given the fact that the U.S. had already sanctioned Russia’s third and fourth largest producers, Gazprom Neft and Surgutneftegas, in early 2025. These four companies combined account for roughly 7% - 8% of global oil output.

The crude oil market has rallied sharply in response, with nearby WTI adding another 4.2% after yesterday’s gains to trade near $62/barrel at the time of writing, up over 10% from Monday’s low. Meanwhile, the stock market is pushing higher at mid-day, with the Nasdaq leading the way, followed by the S&P 500, and Dow Jones. The VIX is cooling notably today after spiking above 21 yesterday, hovering back below the 18 level at the time of writing. The dollar is ever so slightly in the green, sitting around 98.98 after putting in a week-plus high yesterday before falling off to end the day in the red. The grains and oilseeds are largely higher at mid-day, with November 2025 soybeans putting in a fresh month-plus high today as optimism over a potential easing of trade tensions between the U.S. and China continues to rise—more on that below.

This decision also adds another layer of complexity to anticipated upcoming trade talks between the U.S. and China, as China remains one of the largest buyers of Russian crude oil (along with India, Turkey, and to a lesser extent, Hungary and Slovakia). Chinese state oil majors today suspended purchases of seaborn Russian oil in response to the new U.S. sanctions. This does look to have some impact on overall Chinese demand for Russian crude in the near-term, but it’s important to also recognize that much of China’s current purchases are not by state-owned firms, but rather independent refiners (sometimes referred to as teapot refiners). Additionally, much of China’s Russian oil imports are brought in via pipeline (~900k bpd) and are expected to see minimal impact. On the U.S. trade front, Beijing today confirmed that Chinese Vice Premier He Lifeng is set to meet with U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer in Malaysia over the weekend. This is an important first step towards confirming an in person meeting between President Trump and Chinese President Xi Jinping at the APEC Summit in South Korea late next week, with considerable implications for the entire global economy. Could China’s quick announcement suspending purchases of Russian oil in response to the U.S. sanctions be a signal of a willingness to ease tensions ahead of these talks?

Both feeder and live cattle futures are attempting a rebound this morning after yesterday’s sharp losses following the release of USDA’s herd rebuilding plan and President Trump’s social media post saying ranchers “have to get their prices down.” It’s frivolous to treat the current upcycle in beef prices as a new event instead of part of an ongoing longer-term issue. As shown in the below chart, the tightness in U.S. beef fundamentals is in large part a function of the divergence in U.S. beef supply and demand seen in the last few years. USDA is pegging this year’s expected domestic consumption at a second consecutive all-time high, up 0.8% year-over-year, while domestic production is seen at an 8-year low, down 1.1% year-over-year. Looking back a little further, U.S. beef production is down 5.7% from its recent peak in 2022, with consumption up 2.8% over the same span. This puts the deficit between U.S. beef production and consumption at its widest level in 20 years. The measures announced for helping rebuild the U.S. cattle herd should help the industry in the longer-term, but again we must emphasize this is not a quick fix, it’s part of a longer-term problem. Those actually involved in the industry recognize that fact, but the fear of the cattle complex being caught in the crosshairs of the administration is likely enough to scare some speculative longs out, contributing to the downside pressure being seen.

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