Merry Christmas market watchers!  

Only four days until we celebrate Christ’s birth and sharing the holiday spirit with family. This year has been an especially exciting season at the Sidwell household with our kiddos now fully aware that the pomp and circumstance also comes with gifts, only if they are ‘nice’ of course.  

Unfortunately, it will not be a white Christmas, but we do have chances of much needed precipitation.  After an extremely wet start to November, weather patterns have turned warmer and drier for much of the Southern Plains.  As we’ve witnessed in recent years, true winter weather will probably hold off until February and then arrive all at once with compounded strength.  

That seemed to be how market moving headlines stacked up this week with the FOMC’s interest rate decision, politicians scrambling to find compromise in funding the government and programs including a Farm Bill extension, release of the PCE and finally Cattle-on-Feed.  Overall, uncertainty is rampant and likely to continue building through the inauguration.  

The week started with hope that NOPA crush would stabilize the bean market that closed last week dangerously close to the multi-month support level around $9.80. While November’s NOPA soybean crush was only modestly lower than expected, it lacked the needed strength to keep the confidence of the bulls.  
 

That wasn’t the only headwind however as rhetoric from Washington began to create concern Tuesday that a Continuing Resolution to fund the government and extend payments for farmers at least another year of an expired Farm Bill would be passed without issue.  Soybean futures plummeted Wednesday along with pretty much the entire commodity as well as equity market complex.  

The Federal Reserve’s FOMC announced at 1 PM CDT that the federal funds rate would be cut another 25 basis points.  Leading up to that announcement, equity markets were largely holding in the green, but then joined the rest of the marketplace in turning south.  The Dow Jones closed down over 1,100 points mid-week while beans finished the day down 25-cents.  Then, Congress said they had a deal only to be talked down by Elon Musk followed by President-Elect Trump at the end of the day.  

Prior to these events that were still playing out at the close of business on Friday with a midnight deadline, it seemed that the GOP was well-aligned.  What this has exposed is that perhaps Speaker Johnson and President-Elect Trump and crew are not all on the same page.  There was even talk that perhaps Musk should be elected Speaker of the House, which then exposed the little-known fact that this position does not in fact have to be filled by a member of Congress.  

As we well know these days, anything is possible.  I suspect we will be reminded of that between now and January 20th and perhaps for those first 100-days following.  Reading between the lines, major changes are coming and it is not all going to feel good when it is happening as is the case with needed change.  

In talking with some clients this week, I would advise curious minds to look into the detail of Project 2025 to gain insight on the changes to come.  While there was discussion that this ‘plan’ was not Trump’s plan, it seems that changes already being suggested and appointments being made are eerily close to that plan.  Access it for free online and browse the surprising detail that it goes through for USDA government programs among other agencies.  

This next year is going to see deck chairs moving in unfamiliar fashion that could wreak havoc for certain market segments, particularly those with healthy valuations in sectors called out for major changes in Project 2025.  

The CBOE VIX, or the nervousness index as I like to call it, that I wrote about in a recent article, spiked amid the uncertainty this week going from a low of 16.20 on Monday to a high Friday at 22.80 before selling off into Friday’s close with potential for a funding deal.  However, this will be an index to watch and trade during uncertain times.  Rule of thumb is that when the VIX is high, it’s time to go long equity markets. While that may be true generally, it all depends on how uncertain the environment is and at what level before making a move.  

The US dollar has continued to be stubbornly strong and even after the Fed’s rate cut, it actually surged.  That is counter to what ‘should’ happen when interest rates are cut, but Fed talk of fewer loosening of monetary policy in 2025 and increased market interest rates following the rate cut only served to support the US dollar index.  

US grain exports have maintained surprising strength despite the rally in the US dollar.  That asserts confidence that global demand is stronger than it may appear through weekly sales.  

Despite the lackluster performance in the wheat market this week with the Chicago contract making new contract lows, Saudi Arabia’s wheat tender announced last week for 595,000 metric tons demonstrated demand strength with an oversubscribed 804,000 metric tons being purchased and all from non-Black Sea origins.  Both points here are big news as the Black Sea has dominated the wheat export value for years.  While Germany shared optimistic news for next year’s wheat crop this week, Russia lowered winter wheat plantings by nearly 2.5 million acres from last year.  They also announced even tighter export quotas through June 30, 2025, for wheat on Friday reducing from the previous 11.6 million metric tons to 10.6 million metric tons versus last year’s 21.9 million metric tons.  

So, where are the wheat buyers?  Conditions in Russia are the worst we’ve seen in decades and yet, buyers remain on the sidelines.  Having said that, be ready as this market has the potential to skyrocket when funds are ready to further short cover and buy into volatility.  Until then, corn is taking the lead.  Corn futures had a solid move and close for the week above the 20-day and 9-day moving average.  
 

The market with potentially the most headwind from broader market uncertainty is the cattle market.  Fundamentals are undeniably tight and bullish, but money movements matter.  Cash trades could remain strong while futures slump and so don’t let your bullish sentiments over-run your ability to capture volatility gains. Of course, it takes money to make money and so come to the table with an open mind.  The markets are complex, but necessary and can be managed with the right strategy and broker.  

Fed cash cattle trade topped out the week at $192 per cwt, which was $3.00 per cwt lower than last week’s pinch.  USDA’s October Cattle-on-Feed was released Friday at 2 PM.  On-feed figures came in at 99.7 percent of last year versus trade estimates of 99.8 percent, largely in line with expectations.  Placements came in at 96.3 percent versus 95.6 percent and so again, above trade guesses although THE CATTLE ARE NOT THERE.  They are being ‘pulled forward’, but when are we going to run out of the lighter weights to pull them forward?  Marketings were 98.5 percent versus trade guesses of 98.2 percent. While bullish fundamentals continue to dominate, the movement of the futures contracts can be a different phenomenon, surprisingly.  But that is the way it is.  

If the government shuts down, there is no LRP.  Have your trading account with Sidwell Strategies ready to act.  The LRP may not be a dependable protection mechanism going forward.  Read Project 2025 and interpret from there, but I believe when all is said and done, there will be less government support for farmers and more reliance on financial tools in the market, which are futures and options.  The earlier you get started, the quicker you will be able to embrace this critical tool for the success of your operation and risk management. 

Sidwell Strategies is the one-stop shop to protect cattle with futures, puts, LRP or a combination of all, which is probably the best strategy overall.  If you’re ready to trade commodity markets, give me a call at (580) 232-2272 or stop by my office to get your account set up and discuss risk management and marketing solutions to pursue your objectives.  Self-trading accounts are also available.  It is never too late to start and there is no operation too small to get a risk management and marketing plan in place.  Wishing everyone a successful trading week!  Let us know if you'd like to join our daily market price and commentary text messages to stay informed!

Brady Sidwell is a Series 3 Licensed Commodity Futures Broker and Principal of Sidwell Strategies.  He can be reached at (580) 232-2272 or at brady@sidwellstrategies.com.  Futures and Options trading involves the risk of loss and may not be suitable for all investors. Review full disclaimer at https://www.sidwellstrategies.com/fccp-disclaimer-21951.