General Comment:
The grain markets all moved sharply higher on Friday due to the release of the USDA prospective plantings and stocks report. Volume was extremely heavy across-the-board. Below, I’m listing the percentage increase of the grain complex in Friday’s trading. It is readily apparent that in the soybean complex, new crop soybean meal and soybeans are outperforming old crop. The real surprise was the strength of Chicago wheat. According to the Commitment of Traders Reports large speculators (managed money) are still net short 29,618 contracts, and small speculators are net short 8,496 contracts for total of 38,114 contracts net short. This represents potential fuel for the upside if shorts need to buy back their positions.
Performance on March 30
May Chicago wheat +7.88%
May Chicago corn +6.62%
December soybean meal +5.25%
November soybeans +4.08%
May soybean meal +3.65%
May soybeans +3.50%
May soybean oil +2.82%
Corn:
May corn closed up the 40 cent limit on extremely heavy volume of 515,988 contracts. Open interest increased by 16,932 contracts. In the weekend wrap of April 1, I outlined some of the key pivot points for corn to generate a buy signal. I suggest that readers review the corn post of the weekend wrap for further information on the pivot points.
Wheat:
May Chicago wheat closed 48 1/4 cents higher on very heavy volume of 200,456 contracts. Open interest increased by a mere 484 contracts. Although price and volume were up substantially, the minuscule increase in open interest really tells the story. The contrast between corn and wheat cannot be anymore evident when their performance is measured by their open interest increases on Friday. The corn open interest increase shows that there is a great deal of disagreement on the part of new longs and shorts as opposed to a much smaller disagreement in wheat as evidenced by the minuscule increase in open interest. I have examined the peak prices of wheat going back to early March and it is apparent that each high has been successively lower than the previous high. This is bearish.
March 5 high: $6.77 3/4
March 19 high $6.75 1/4
March 26 high $6.70 1/2
March 30 high $6.68 3/4
Soybeans:
May closed 47 1/2 cents higher on very heavy volume of 362,818 contracts. Open interest increased by a massive 31,497 contracts. In the April 1 weekend wrap, I provided a great deal of information with respect to the soybean market, and I suggest that readers take time to review it.
Sugar:
May New York sugar closed 11 points higher on volume of 106,007 contracts. Open interest declined by 469 contracts. Stand aside
Crude oil:
May New York crude oil closed 24 cents higher on very light volume of 459,683 contracts. Open interest declined by 9,482 contracts. Although the market is on a short-term sell signal, all speculators should stand aside.
Gasoline:
May gasoline closed 3.16 cents lower on volume of 218,270 contracts. Open interest increased on the decline by 515 contracts. See April 1 weekend wrap. Stand aside.
Gold:
June gold closed $17.00 higher on very light volume of 127,881 contracts. Open interest declined on the price advance by 1,708 contracts. Volume was the lightest since February 13, 2012 when gold traded 113,169 contracts. The light volume combined with the decrease in open interest on the advance shows a lack of enthusiasm on the part of longs.
Silver:
May silver closed 49 cents higher on light volume of 36,247 contracts. Open interest declined on the advance by 762 contracts. Volume was the lowest since March 19 when silver traded 36,062 contracts. Again, there is a lack of speculative enthusiasm for silver as there is for gold.
Euro:
The June Euro closed 47 points higher on volume of 236,906 contracts. Open interest declined on the advance by 1,484 contracts. The price and open interest action is abysmal, however, the market does not appear that it wants to go lower at this juncture. Stand aside.
Australian dollar:
The June Australian dollar closed 10 points higher on volume of 95,860 contracts. Open interest declined by 1,052 contracts. Stand aside.
S&P 500 E mini:
The June S&P 500 E mini closed 5.00 points higher on volume of 1,619,764 contracts. Open interest declined on the rally by 20,513 contracts. Long put protection should be in place.
Interest Rates:
The June 10 year note made a new high for the move at 130-02, which took out the old high of 129-31 made on March 29, and then reversed to close 13 1/2 points lower. Volume on Friday was 1,109,612 contracts and open interest declined by 471 contracts. Buy stops on short positions should be in the 130-02 area. A major decline in the stock market will likely cause notes to rally, and therefore stops should be in place.
