Howdy market watchers! 

Can you believe the year is already half over?  We are just days away from the end of Q2 2025, followed soon after by Friday’s market holiday on July 4^th.  

This Independence Day also marks President Trump’s desired deadline for the ‘Big Beautiful Bill’ to be passed.  It is crunch time and I’m sure the rhetoric from Washington will become even more heated this next week as that deadline approaches.  The days are also numbered for the expiring tariff extension on July 9^th.  

In another surprise development, Trump announced on Friday that all trade talks would be cancelled with Canada in retaliation to a digital tax that our northern neighbor is going to place on US tech firms.  Yet another knee jerk reaction in the ongoing trade and tariff war with our otherwise allies. Meanwhile, domestic and international dialogue continues around the Middle East conflict after the US bombed three Iranian nuclear facilities last weekend.  Democrats in the US are wrangling over the President’s authorization to drop such bombs without Congressional pre-approval while Trump defends that such brute force is what has or will end the conflict between Israel and Iran, at least for now.  

A ceasefire was announced early in the week to which Israel fired more weapons much to Trump’s annoyance.  Iran then retaliated against a US base in Qatar, but this was seen as more ceremonious with advance warning and limited impact, but necessary for the Ayatollah’s domestic political standing.  In a defiant move, Iran’s parliament voted to withdraw from the Nuclear Non-Proliferation Treaty.  Central to the debate is rather there was as much destroyed at the three bombed sites as the Trump Administration claims.  The UN Nuclear Watchdog said on Thursday that the centrifuges at the Fordow location were no longer operational, suggesting that it may not have been the highest priority target.  The reason I highlight these developments is that this mission may not yet be accomplished nor its impact on the markets.  

The dramatic selloff in crude oil on Monday in the order of $6.80 per barrel and then Tuesday caught many off guard followed by a sideways trade pattern the rest of the week.  The risk premium that had been building from Middle East escalation since early June all but evaporated this week.  Should we see threats re-emerge, energy prices could begin to add back some risk premium.  However, if not that, it is hard to see much else driving energy markets higher with consumer spending softening worldwide.  

The Department of Commerce released US GDP growth for Q1 this week revealing a 0.5 percent contraction versus only 0.2 percent expected.  May’s PCE, the Fed’s preferred inflation index, increased 0.1 percent above April, which was in line with expectations and ever closer to the Central Bank’s 2.0 percent target.  This put 12-month PCE gaining 2.3 percent, slightly above the prior month’s annual increase.  Excluding food and energy prices, core inflation advanced 2.7 percent, also 0.1 percent above the prior month.  

These data points and employment conditions across the US economy factor into the Fed’s decision on interest rate changes.  The next FOMC interest rate meeting is in one month with the announced decision on July 30^th at 1 PM CDT.  After consecutive pauses, there are indicators that a rate cut could come as early as this next meeting or sometime in the fall.  That will be welcome news for businesses and consumers, but there remain plenty of factors that could continue to increase inflation and require steady-to-even higher rates.  

The easing US dollar, now the lowest level since late February 2022, may seem to suggest that lower interest rates are ahead.  The US dollar had 4-consecutive days this week of lower closes with Friday being an inside chart day as the selloff paused at a key trendline.  Such weakness should be supportive for US-produced commodities, but we sure haven’t seen that in recent weeks.  

The wheat market that finished last week two-month highs, made a dramatic selloff this week, trading back to recent lows.  The plummeting crude oil market didn’t help, but the weather turning from wet to hotter and dryer aided wheat harvest to accelerate with quality issues limited despite earlier concerns.  Yields have also been impressive, for the most part, while farmers hurry to beat the next round of storms next week and the greening fields from crabgrass and weeds.  The USDA called winter wheat harvest only 19 percent complete on Monday versus 38 percent last year and the 28 percent average.  Conditions also dipped to 49 percent Good-to-Excellent (G/E) versus 52 percent expected.  

Corn conditions also came in below trade expectations at 70 percent G/E.  Soybean conditions came in at 66 percent G/E, but only one percent below expectations.  

Despite these lower-than-expected conditions, grain and oilseed prices dropped from the de-risking of the Middle East conflict and decent weather overall. Monday’s USDA quarterly grain stocks and annual acreage reports have the potential to be market movers especially after the recent weakness across the commodity complex.  Monday, June 30^th is First Notice Day for July futures, which required long July futures to be rolled to September futures by close of business on Friday or risk-taking delivery.  Note that basis bids will also adjust to reflect the 15-cent premium of September futures over July futures.  

Cattle futures finally re-found some support on Friday after lower trades since the all-time record high on June 10^th.  Despite another outside reversal lower chart day on June 24^th, the market chopped sideways until Friday’s breakout higher.  Feeder cattle contracts surged above the 9- and 20-day moving averages as did the fed cattle futures that bounced off the 50-day moving averages. This strength was helped by the recent equity market rally that have reached the highest levels since late February/early March.  

Fed cash cattle began to trade again this week with the peak at $233 in Nebraska. We could see more strength next week depending on Monday’s grain reports and equity market strength.  I’ve just started hearing about the high prices in cattle market futures on mainstream television, which often seems to be a sign of a top, but that’s not very scientific.  Be cautious though as we approach the recent highs as we get into the summer months for which purchasing has been completed.  

We should also expect increased ICE raids on meat packing plants that even the threat of causes major disruptions in labor supply. 

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.