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Soymeal
I believe in meal long term due to 30-year lower harvests in the US Hard Red Winter Wheat belt and potentially EU due to heat and drought. The thinking is less wheat moving into feed rations, where meal is a cheaper alternative . I’m not looking for miracles here, just an eventual move in May 2027 meal from 310 to 350/360. Should weather throw a wrench in either US or South American bean production due to EL Nino, we could see deferred beans and meal rally significantly, since China at least verbally is scheduled to buy 25 MMT of 26/27 US production. Pay attention to what they do and not what they say.
Suggested Course of Action. 10 spreads
Sell the May 2027 410/360 put spreads for 46.00 points or a $4600 collection less trade costs and fees.
Risk is $400 per spread plus commissions and fees.
Objective should futures move from 311 to 350/360, is to cover the spread @ 25.00
10 spreads at a $2100.00 =21k less commissions and fees.
Natural Gas
Gas has been stuck in the mud since winter with no direction . No one wants to sell it below 3.00, nor buy above 3.50. Demand is at a record, but so are supplies domestically. Foreign gas markets are much higher. Currently the spreads show, no reason for Henry Hub to tighten near term vs Euro and Middle East markets. Supply over demand for Nat Gas domestically has supply running over demand by 30% according to Nat Gas execs. These same execs see the spread tightening to near parity in 2027. This market has an exportable demand story. That has been baked into the market and absorbed. The reason why it would rally further on demand is domestic. Data centers, pipelines, and Crypto data mining all require enormous amounts of power that the grid can’t handle. Which begs the question, what power source do we have domestically that’s cheap enough to power all of it? Nat Gas. That’s why many execs see the supply/demand spread moving to parity.
Suggested Entry-10 spreads
Buy the June 5.00/6.00 call spreads for $250.00 per.
Looking for a 10/1 return to sell the call spreads at $2500 per for a gain of 25K, less trade costs and fees.
Spec Trades
Soybeans: Buy the December 26 Soybean 10.80 puts for 5 cents.
Sell the May 2027 soybean 14/13 put spreads. For 85 cents.
Package collection is 80 cents.
Risk no more than 12 cents or $600 from entry plus commissions and fees.
Either we have crop issues or not.
Beans either fill a gap at 1297 or go back to last August 2026 lows at 9.80.
If we sell the 3 way strangles for 80, work to buy back at 40 for a gain of 40 cents less trade costs and fees.
Suggest entry 5 spreads.
Crude Oil
Read snippet below
Buy the June 2027, 100/110, call spread for 35 points or $350.00 per spread plus commissions and fees.
Objective is to sell the 100/110 call spreads for $2500 per less trade costs and fees.
5 spreads are suggested. I could see crude retesting high 80s /early 90s by year end.
Risk 25 points or $250 per spread plus trader costs and fees from entry on a stop.
It continues to be very hard to discern what is really happening with the Iran negotiations. While Iran seems happy to keep them going, it may be what Trump wants as well. While the talk continues, tankers continue to come out loaded with 2 million barrels each in some cases, and new empty ones go in and fill up. Iran is now shipping oil at discount prices. So, the flow of oil is almost back to normal, and strategic reserves are getting refilled. Meantime the Saudis and UAE are expanding their pipelines to avoid the gulf. Buyers are moving some of their purchases to the US and Venezuela. China is able to cut its imports by 5 million barrels a day as they have done recently. It is not possible at the moment to know where all this settlest as to how oil will flow in the future, nor where the price stabilizes, but it seems sure the Gulf will become less critical. Trump is watching gas prices plummet, and he needs that to continue into November. I have suggested that they need to show average
gas prices not including CA since CA is 10% of the total and is now $2.00 higher than everyone else, so it skews the average by a material amount. The real national average now, not including CA, is $3.45. It is very likely that gas prices in some places like the gulf states, may get back to $3.00 if the standoff continues. That also means inflation peaks around now, and may be down around 3.0% or less by November. That is all good news for GOP candidates.
The midterms are a main focus of Trump now since he cannot afford to lose the House. So, it is very possible Trump is the one dragging the negotiations, with periodic attacks to get to November. Then after the election he can launch an all-out attack with Israel and kill the IRGC leaders. I have no idea if that is his real plan, or if he really thinks he can make a deal. It seems clear to me that there will never be any real deal with the Iranians, and even if they were to agree to anything, it is not going to last more than a day. They insist they will control the Straits, and Trump will never allow that. Then there is Lebanon. The Lebanese government wants to get rid of Hezbollah and go back to being a safe prosperous nation. That can never happen if Israel leaves the south before Hezbollah is wiped out. So, there will never be any real deal.
It is unclear what game Oman is playing as they go back and forth regarding fees. One day they agree no fees, and the next they say the made a deal with Iran. Classic Mideast. You can never trust anyone there. It is also very unclear what the Saudis are really doing as their relationship with Trump now seems very tense. They also play a lot of games. Meantime there is no way Israel is leaving Lebanon until Hezbollah is eliminated. They cannot risk more attacks, and the Lebanese army is not capable on its own to deal with Hezbollah, but they also need it eliminated so they can have a functioning government. More reason it is likely no deal will get done by November. Trump has gotten a lot of pushback regarding how he treated Israel, and that pushback is growing from key voting blocs. What we might be watching is a giant game of three level chess, or a giant Kabuki dance. Meantime, Trump gets to talk about falling gas prices going into November, and tankers continue to move out filled with
oil, gas, hydrogen and fertilizer, and oil prices drop more than expected by many. What happens in the second week of November if there is no real deal- my bet is a full out attack and decapitation, but I really have no idea what Trump is thinking. That is just my assumption.
The development of data centers is a huge boost to the economy. For every dollar spent, there is an economic multiplier of the recipients of that spending, then spending their incomes from the development. For companies like Corning, which supply equipment to data centers, they pay wages and taxes, and they pay their suppliers, who then pay their workers. All those workers then go buy things or save. Consumer spend then goes higher. It is estimated the multiplier effect is 1.7-2.5x the dollars spent to do the development, so $800 billion of spend on construction and fit out in 2026 equals anywhere from $1.4 trillion to $2 trillion of multiplier impact. Since that is private spend, not government waste, it has a major positive impact on the economic growth not just this year, but for the next 3 or more years. This is why I believe the economy and jobs will remain good to strong over the next 2 years. On top of that, AI will be materially improving productivity, and that added factor will
show far greater improvement over the next two years as AI gets far greater adoption, so there will be good economic growth and improved earnings, and a good job market. Good for stocks. Data center development is the greatest private sector boost to the economy in history.